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How do you accept payments from customers?
Posted by Anne Springer
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How do you accept payments from customers? March 16, 2006 04:42PM |
Registered: 17 years ago Posts: 147 |
<HTML>I'm just starting my business out of the garage, and I was wondering how you guys accept payments from customers?
I've done some research and I know it can be really tough to get a merchant account for accepting credit cards, and some of those services charge a bit of money for using them.
I also know the risk of accepting checks, and I am debating whether or not it would be worth it to get a telecheck service or some sort of "check security".
I want to just accept cash, but I know people don't carry much thesedays, and I want to make the transaction as simple as possible. Any ideas?</HTML>
I've done some research and I know it can be really tough to get a merchant account for accepting credit cards, and some of those services charge a bit of money for using them.
I also know the risk of accepting checks, and I am debating whether or not it would be worth it to get a telecheck service or some sort of "check security".
I want to just accept cash, but I know people don't carry much thesedays, and I want to make the transaction as simple as possible. Any ideas?</HTML>
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Cash! March 16, 2006 11:15PM |
Registered: 17 years ago Posts: 59 |
<HTML>If you're just starting out... and sort of taking the detailing business out for a test drive, stay strictly CASH. Your clientele will adjust. Their incentive will be some obvious savings... and yours will be the avoidance of paperwork, governmental oversight, and cost.
If you've already decided to take the plunge full-time, and your volume of business will justify recorded sales, there is a lot of governmental paperwork that will be triggered... including the reporting and collection of any applicable sales tax. (federal, state, county, municipal, etc.)
Think twice before launching yourself on to the slippery slope of business registration becauase there is no easy and inexpensive way to turn back.
Think twice - Act once.
-Steve</HTML>
If you've already decided to take the plunge full-time, and your volume of business will justify recorded sales, there is a lot of governmental paperwork that will be triggered... including the reporting and collection of any applicable sales tax. (federal, state, county, municipal, etc.)
Think twice before launching yourself on to the slippery slope of business registration becauase there is no easy and inexpensive way to turn back.
Think twice - Act once.
-Steve</HTML>
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Re: Cash! March 17, 2006 01:36PM |
Registered: 17 years ago Posts: 147 |
<HTML>Yes, I've given all that a lot of thought! Right now I have no choice but to do this as a full-time job, and I am prepared for the commitment.
I think cash would be the easiest way to go, but like I said I know most people carry plastic, not paper. It sounds messy to get into accepting plastic, and I might be able to accept checks if I make sure I have coverage for bounced checks.
I was ready to register my business name, and between that and filing legal newspapers it will cost about $50. I also have the forms for registering for tax IDs. Is there anything else besides insurance I need to do?
Since I am not distributing products, do I have to charge sales tax for a detail job?
And what do you mean by "no inexpensive way to turn back"? I thought if I chose to end my business, I settle up any accounts and debts, and I could leave...</HTML>
I think cash would be the easiest way to go, but like I said I know most people carry plastic, not paper. It sounds messy to get into accepting plastic, and I might be able to accept checks if I make sure I have coverage for bounced checks.
I was ready to register my business name, and between that and filing legal newspapers it will cost about $50. I also have the forms for registering for tax IDs. Is there anything else besides insurance I need to do?
Since I am not distributing products, do I have to charge sales tax for a detail job?
And what do you mean by "no inexpensive way to turn back"? I thought if I chose to end my business, I settle up any accounts and debts, and I could leave...</HTML>
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Re: Cash! March 17, 2006 02:49PM |
Registered: 17 years ago Posts: 9 |
<HTML>Anne,
If you're going to detail full time then I would definitely recommend accepting other forms of payment besides cash. Less than 5% of my clientele pay with cash, about 35% pay by credit card, and the rest by personal check. Knock on wood...but I've only had one instance of accepting a bad check, it was just an innocent mistake and the client cleared everything up promptly. The thing with cash is you have to worry about giving correct change back. I don't carry much cash on me, so I carry a seperate stash for giving change back...Not a big deal, but just something to think about. As for accepting credit cards, I just go through my local bank's (Fifth Third Bank) merchant services. It's a dial pay system, meaning I just call an 800# and through automated responses, enter the card info right on site. I get confirmations back within seconds and the funds are deposited in my account in 24-48 hours. Very quick, painless, and very inexpensive process. They charge just a little bit more per transaction than other services, however, there is no equipment you have to buy. Also, there is a $20 minimum monthly charge, but I almost always meet that minimum through my transaction fees. Lastly, I'm pretty sure I had to have a registered business name and tax ID number to sign up with merchant services.
You want to make it as easy as possible for the clients to use your services. I know it sounds strange and silly, but I would imagine that some people will not use your services if you only accept cash, as a trip to the bank is just one more errand they'll have to run before dropping their car off to you.
To answer your last question, Yes, in Ohio I have to charge sales tax on all services rendered.
Hope this helps a little, good luck with your new start-up!
Matt Williams
Silver Lining Detail</HTML>
If you're going to detail full time then I would definitely recommend accepting other forms of payment besides cash. Less than 5% of my clientele pay with cash, about 35% pay by credit card, and the rest by personal check. Knock on wood...but I've only had one instance of accepting a bad check, it was just an innocent mistake and the client cleared everything up promptly. The thing with cash is you have to worry about giving correct change back. I don't carry much cash on me, so I carry a seperate stash for giving change back...Not a big deal, but just something to think about. As for accepting credit cards, I just go through my local bank's (Fifth Third Bank) merchant services. It's a dial pay system, meaning I just call an 800# and through automated responses, enter the card info right on site. I get confirmations back within seconds and the funds are deposited in my account in 24-48 hours. Very quick, painless, and very inexpensive process. They charge just a little bit more per transaction than other services, however, there is no equipment you have to buy. Also, there is a $20 minimum monthly charge, but I almost always meet that minimum through my transaction fees. Lastly, I'm pretty sure I had to have a registered business name and tax ID number to sign up with merchant services.
You want to make it as easy as possible for the clients to use your services. I know it sounds strange and silly, but I would imagine that some people will not use your services if you only accept cash, as a trip to the bank is just one more errand they'll have to run before dropping their car off to you.
To answer your last question, Yes, in Ohio I have to charge sales tax on all services rendered.
Hope this helps a little, good luck with your new start-up!
Matt Williams
Silver Lining Detail</HTML>
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Plastic March 17, 2006 03:39PM |
Registered: 17 years ago Posts: 59 |
<HTML>Okay, Anne. Since you're not simply flirting with detailing, but intend for it to be a commitment, I urge you to accept plastic.
Studies have shown that credit card purchases typically boost sales averages well beyond 50% more than if purchased by cash or check.
I agree with Matt about seeking the easiest, fastest and most cost-effective clearing system without tying up money in equipment. Also explore debit card incentives.
Regarding easy exit from the business, it depends on where you reside. Many states, counties and municipalities continue to track defunkt corporations for 3 years afterwards and some ask that forms be filed. The IRS also tracks continuity in most cases, especially if you're a sole proprietorship. New bankruptcy laws also make life more difficult, so avoid that risk unless absolutely unavoidable. Check with your accountant.
-Steve</HTML>
Studies have shown that credit card purchases typically boost sales averages well beyond 50% more than if purchased by cash or check.
I agree with Matt about seeking the easiest, fastest and most cost-effective clearing system without tying up money in equipment. Also explore debit card incentives.
Regarding easy exit from the business, it depends on where you reside. Many states, counties and municipalities continue to track defunkt corporations for 3 years afterwards and some ask that forms be filed. The IRS also tracks continuity in most cases, especially if you're a sole proprietorship. New bankruptcy laws also make life more difficult, so avoid that risk unless absolutely unavoidable. Check with your accountant.
-Steve</HTML>
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Re: Plastic March 17, 2006 08:19PM |
Registered: 17 years ago Posts: 147 |
<HTML>Thanks, you two, for your advice! I am planning on checking with a couple of the local banks here that offer merchant services. I have not registered my business name yet (next week!), and I don't need a state tax ID but I think I will get the EIN for banking purposes.
I forgot about having to carry cash around, and its something I hate to do too. I thought plastic would be easiest, but I was afraid getting a merchant account would be tough since I don't have spotless credit and I am a brand new start up. I guess I'll find out! I was also referred to merchantservices.com, but I don't know if I want to deal with an online business, I'm just a little old fashioned.
I am still leary of doing checks because I am not in a super rich neighborhood, and I cannot afford to have people not paying me. I will just make sure to have two forms of ID written on the check, and a phone number, and I should be okay, I hope!
What kind of a timeline do I need? Can I send in the registration for the name and EIN, but still open business, or do I have to wait for a certificate or something? And how long does registration usually take?
Anne</HTML>
I forgot about having to carry cash around, and its something I hate to do too. I thought plastic would be easiest, but I was afraid getting a merchant account would be tough since I don't have spotless credit and I am a brand new start up. I guess I'll find out! I was also referred to merchantservices.com, but I don't know if I want to deal with an online business, I'm just a little old fashioned.
I am still leary of doing checks because I am not in a super rich neighborhood, and I cannot afford to have people not paying me. I will just make sure to have two forms of ID written on the check, and a phone number, and I should be okay, I hope!
What kind of a timeline do I need? Can I send in the registration for the name and EIN, but still open business, or do I have to wait for a certificate or something? And how long does registration usually take?
Anne</HTML>
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Re: Plastic March 18, 2006 01:34AM |
Registered: 17 years ago Posts: 9 |
<HTML>It took me about 3 weeks to register my LLC...some states might be different and an expedited service might be available as well.
As for accepting checks, you probably won't need two forms of ID. Just ask for their drivers license, write down the license number and phone number, and make sure the address on the check is correct. Like I mentioned, I've only had one instance of someone writing me a bad check...I wouldn't be too worried about it. Not only is accepting checks free for you, but by not accepting them, most all of your clients will pay by credit card. You're guaranteed your money this way, however, every transaction is going to cost you money. It will certainly begin to add up over time.
Many of my clients have expressed they really like that I accept cc. And like Steve mentioned, many times they will spend more using a credit card than they would if they were paying in cash. Forking over $250 in cash seems to sting a little more than just handing someone a piece of paper in the form of a check or handing you a credit card. Always find ways to upsell your clients. I offer paint sealant as an upgrade with every package except my premium package, which includes applying the sealant. I also offer a small car care kit that clients can buy for $20 to help maintain their cars in between details and washes. And if the vehicle needs it, I always try to upsell the client to the next level detail package by educating them on the benefits of that particular program...some go for it while others just stick with their original package. Twenty dollars here...forty dollars there, doesn't seem like much, but add that up over a couple hundred or more vehicles and it really starts to add up.
Sorry, I'm getting a bit off topic now. Anyway, If I were in your shoes, I would accept all forms of payment. It just makes it that much easier for a customer to choose your service over the next guy that doesn't accept plastic. Take care.
Matt Williams
Silver Lining Detail</HTML>
As for accepting checks, you probably won't need two forms of ID. Just ask for their drivers license, write down the license number and phone number, and make sure the address on the check is correct. Like I mentioned, I've only had one instance of someone writing me a bad check...I wouldn't be too worried about it. Not only is accepting checks free for you, but by not accepting them, most all of your clients will pay by credit card. You're guaranteed your money this way, however, every transaction is going to cost you money. It will certainly begin to add up over time.
Many of my clients have expressed they really like that I accept cc. And like Steve mentioned, many times they will spend more using a credit card than they would if they were paying in cash. Forking over $250 in cash seems to sting a little more than just handing someone a piece of paper in the form of a check or handing you a credit card. Always find ways to upsell your clients. I offer paint sealant as an upgrade with every package except my premium package, which includes applying the sealant. I also offer a small car care kit that clients can buy for $20 to help maintain their cars in between details and washes. And if the vehicle needs it, I always try to upsell the client to the next level detail package by educating them on the benefits of that particular program...some go for it while others just stick with their original package. Twenty dollars here...forty dollars there, doesn't seem like much, but add that up over a couple hundred or more vehicles and it really starts to add up.
Sorry, I'm getting a bit off topic now. Anyway, If I were in your shoes, I would accept all forms of payment. It just makes it that much easier for a customer to choose your service over the next guy that doesn't accept plastic. Take care.
Matt Williams
Silver Lining Detail</HTML>
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Re: Plastic March 18, 2006 12:57PM |
Registered: 17 years ago Posts: 147 |
<HTML>Yes, I agree with you- accepting plastic is the way to go! I think the bank I was looking at charges around 3%, so its not too bad. I don't think they charge for statements; I think its just the original transaction. I will be talking with them come Monday... I can also do checks, and I just might discourage cash depending on how it goes because I really don't want to have to look after it and especially remember where I hid it!
I was thinking of offering paint sealant for an extra service too, although I'm still trying to set my prices. I will also do deodorizing, fabric protection and glazing as extra costs. I want to also add a $30 package, a $99 package and then the total package starting at I think $150.
I really could use advice on packages and pricing, and I really like hearing what you have to say! Please email me off the forum at teblhasa80@netzero.com.
Anne</HTML>
I was thinking of offering paint sealant for an extra service too, although I'm still trying to set my prices. I will also do deodorizing, fabric protection and glazing as extra costs. I want to also add a $30 package, a $99 package and then the total package starting at I think $150.
I really could use advice on packages and pricing, and I really like hearing what you have to say! Please email me off the forum at teblhasa80@netzero.com.
Anne</HTML>
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