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In this article:\nOnline appointment scheduling benefits\nIncrease web traffic\nImproved customer retention\nSave company time\nAnd more!\nThe more information and access to your business that you can provide online, the better opportunities you’ll have to gain new customers. \nOne way to help your salon really improve online sales and gain new customers is to include a platform for online scheduling on your website or app. We’ve outlined several ways that an online booking system can help your salon. \n1. Increase web traffic and customer loyalty for your salon\nThe ability to schedule salon appointments online is appealing to customers and may just help you get more traffic to your website over your competitors’ sites. \nHaving a website and a platform to book appointments will attract more customers to your website and help your existing customers to engage with your business easier. \nWhen someone lands on your website and sees that they can book an appointment online, they are more likely to stay on your site and schedule an appointment right then and there, rather than looking through other options. \n2. Provide a clear call to action\nAn online booking platform will help you to provide a clear call to action on your salon’s website. Rather than encouraging customers to call your business, you can direct them to schedule an appointment on your website. \nSometimes people land on a website and aren’t sure exactly what they are looking for, but if you provide a clear CTA for them to book an appointment, they don’t need to know because you already have the answer right in front of them. \n3. Give your salon customers instant results when they schedule online\nPeople don’t like waiting for things. So the thought of having to call a business to schedule an appointment and being placed on hold while the salon tries to figure out the best openings for that customer can deter people from calling you. \nOnline scheduling allows your customers to see the openings your employees have available and instantly get their appointment set up. This is much more gratifying and takes less time for the customer. \n4. Provide more information about your salon business\nOnline booking forms can provide more information about your services, which makes choosing your salon a lot more appealing. When a customer is in research mode, they want all of the information they can get upfront. \nThey are looking for availability, prices, and the services you offer. Most online booking platforms will have places for you to show all of these types of information and more. \nThis also provides a place for your clients to see their scheduled appointments, update their contact information, access purchase histories, and check loyalty point balances. \n5. Accept online payments\nWith online scheduling, you can often collect payments from your customers online before they even show up to their appointment. This helps improve your salon’s cash flow and ensures that customers will keep their appointments because they’ve already paid for it. \nYou don’t have to accept payments at the time that customers book their appointments, but you can encourage it by offering a discount for those that do pay for their appointments at the time of booking. \n6. Fewer missed salon appointments\nAs we’ve mentioned, if customers pay online when they book their appointment, they are less likely to miss it. \nOnline scheduling for your salon can also help remind customers of upcoming appointments so they don’t forget if they booked it months ago. \nEven if a customer doesn’t have an appointment scheduled, you can set up reminders to go out at the time when they will need a trim or touch-up on their coloring. This will encourage more appointments and increase customer retention. \n7. Manage employee schedules\nWith online scheduling, your employees’ (if you have any) schedules are more easily managed. Their time slots get filled automatically as customers go online to book appointments. \nYou can enter each employee’s availability into your online booking system so it will manage their schedules for you. You can even let the system show each individual employee’s schedule on your website so customers can select which stylist they want to have for their appointment. \n8. Save time for your hair or nail salon business\nAll of the reasons mentioned above help save time for your business. The more you can do to automate some of the tedious tasks like scheduling appointments and managing employee schedules, to more time you can save and revenue you can gain for your salon.\nHere are a few well-known online booking solutions that you can try for your salon:\n\nDaySmart Salon\n\n\nPhorest\n\n\nRosy\n\n

8 reasons why your hair or nail salon needs online scheduling

Goldman Sach has published \nan infographic \nthat details exactly why there’s so much fuss over the so-called Millennial generation (those born between 1980 and 2000). Here are a few highlights:\nMillennials are the largest generation in history, at 92 million people in the U.S. alone. Compare that to 77 million Americans who are, or were, part of the Baby Boomer generation\nThey use technology to make better informed decisions on the fly. As one example, 57% compare prices in stores, often using their mobile devices to do so.\nSocial media plays a big role in their overall social behavior. In fact, 34% of Millennials say they like brands that have a social media presence better, compared to just 16% of older consumers.\nIn summary, Millennials are quickly becoming the main consumer force in America and beyond, and everyone is trying to figure out how to better sell to them, including one-person startups, sole proprietorships, contractors, and more.\nA changing payments landscape\nSmall businesses, solopreneurs, and freelancers, need to adjust, also. In addition to thinking about ways to make your products and services more compelling to younger buyers, it’s important to make payment easier, as well.\nResearch shows that small businesses are doing a better job of accepting credit cards, which is an important starting point. The vast majority of consumers prefer to pay with credit or debit cards, and small businesses are making more money from card transactions thanks to getting on board.\nSmall businesses must accept peer-to-peer payments\nAnother avenue worth exploring to attract younger consumers who’ve grown up with social media is accepting payments from peer-to-peer applications like Venmo or Cash App. If you’re not familiar, these payment apps allow consumers to pay each other, which is helpful if you’re splitting a restaurant bill, bar tab, or just want all your friends to know where you’re spending money.\nHere’s how \nFortune Editor Adam Lashinky described Venmo\n, which processes about $8 billion in peer-to-peer transactions every quarter: "\nIf you haven’t used Venmo, it’s tough to understand what millennials might have to do with cash transfers. The reason is that Venmo makes it easy to tell one’s friends about transactions, like: “Just split a meal with Britney.” I use Venmo, which fundamentally works a lot like PayPal and Square Cash, in that it links to a checking account and makes it easy to send cash to personal contacts."\nOne of the interesting aspects of peer-to-peer payment apps is that Millennials, in particular, treat them like a social media platform, kind of like Facebook, Instagram, or Twitter. They login to see what their friends are doing, not just to send them money.\nIf younger buyers are attracted to the uniqueness and originality of your business in the first place, it’s likely that they’ll want to share the fact that they’ve spent money with you online, as well. So, accepting payments from these kinds of apps could be beneficial in two ways: first, because Millennials like to make their payment experiences social and simple, and second, because it’s free publicity when others see that their friends patronized your business.\nIf you’re not accepting credit card payments, start there. If you are, consider whether accepting peer-to-peer app payments is right for your business.\nSolo makes it easy to pay and get paid\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay and get paid. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cash out your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at \nSolo.co\n.

Should your small business be accepting payments from peer-to-peer apps like Venmo or Cash App?

In this article:\nTraditional & Roth IRAs\nSEP IRA\nSimple IRA\n401K & Self-employed 401K\nKeogh Plans\nRunning your own business or being self-employed definitely has its perks—choosing your hours, choosing who you want to work with and where you want to work, and being responsible only to you. But this also means that you’re responsible for your own benefits packages, such as retirement plans. \nWhen it comes to planning ahead, you need to decide whether or not a retirement plan is a good option for you and what options are available. Throughout this article, we’ll go over several types of retirement plans for business owners and self-employed individuals so you can make an informed decision about which is best for you. \nPlease note:\n This article is for informational purposes only. Solo does not assume any liability for the accuracy of this information. Consult a licensed, qualified retirement investment broker and/or financial advisor. \nWhat’s the best retirement plan option for small business owners or self-employed individuals?\nAs you are looking into retirement plans for yourself, you should become familiar with the different options that are available in order to make the best decision for your situation. First, it’s good to have an idea of how much money you’ll need to retire comfortably. Use this \nretirement calculator\n to determine that amount. \nOnce you’ve determined how much retirement income you’ll need, let’s go over several types of retirement plans that can help you reach that goal. \nTraditional or Roth IRA\nAn individual retirement account, or IRA, is a retirement savings account offered by financial institutions, and it is generally tax-free. IRA’s are an investment that grows over time. You can choose how involved you want to be in these investments and based on that, pick a provider through which to invest your money and start your IRA. \n(Image)\nThe main difference between a traditional IRA and Roth IRA is when you want to take advantage of the tax deduction. \nWith a traditional IRA you can deduct contributions to your IRA from your business taxes and you won’t owe any income taxes on your IRA contributions or earned interest until you withdraw the funds. If you are in a lower tax bracket when you retire, this could be a great advantage of this type of IRA. \nRoth IRAs are the other way around: you don’t pay taxes on the money when you withdraw it in retirement, but you can’t deduct contributions to a Roth IRA from your annual business taxes. In other words, you are contributing Roth funds “after taxes.” Additionally, any earnings your Roth account makes grow tax-free, subject to certain limitations, while traditional IRAs’ earnings are tax-\ndeferred \nuntil you start withdrawing your funds at retirement. \nThere are also contribution limits for traditional and Roth IRAs, so it’s important to be aware of what that limit is each year. If you are wanting to put away more than the annual contribution limit for these types of plans, then you may want to look at other options. \nThe contribution limit for 2020 and 2019 for traditional and Roth IRAs is $6,000 ($7,000 if you are over age 50). \nWith a traditional or Roth IRA, you must wait until you are a certain age (or meet specific exceptions) before you can withdraw your retirement funds. The current age is 59½, so if you are planning on retiring before then, you may want some additional funds to get you through to that time. \nOne more thing to keep in mind when deciding between traditional and Roth IRAs: anyone with earned income can contribute to a traditional IRA, up to age 70.5. However, Roth IRAs have a limit on modified adjusted gross income if you want to contribute. In 2019 you couldn’t choose a Roth IRA if you earned more than $122,000 if single, or $193,000 if married filing jointly.\nSEP IRA\nA “simplified employee pension,” or SEP IRA, is a good choice for a retirement account for business owners and self-employed individuals. You can deduct your annual contributions from your business taxes and your taxes are deferred on your retirement savings until you withdraw it as income.\nImportant note: If you have employees that are eligible for the SEP IRA (they are at least 21 years of age, have worked for you for at least 3 of the last 5 years, and have been compensated more than $600 each year), then you must contribute to \ntheir\n IRA accounts at the same rate that you contribute to your own. For example, if you are contributing 10% of your income to your SEP account, then you must contribute 10% of your employees’ income into their SEP account. Because of this, a SEP IRA is best suited for self-employed individuals or those who have few or zero employees. \nOne reason that SEP IRAs are appealing is that they allow a significantly larger contribution limit than traditional and Roth IRAs. The contribution limit for 2020 is $57,000. However, one thing to be aware of is that that you cannot contribute more than 25% of your compensation. So if you earn a more modest salary, you may not be able to max out that $57,000 annual contribution limit. \nSimple IRA\nSIMPLE IRAs are generally offered by companies with 100 or fewer employees. This allows you to offer your employees the same retirement plan that you have for yourself. If you don’t have many employees, this option probably isn’t the one for you. \nSIMPLE is an acronym for “Savings Incentive Match Plan for Employees.” With a Simple IRA, employers must contribute to their employees’ accounts based on set requirements from the IRS. A Simple IRA also allows employees (and you, as an employee of your own company) to choose the amount that they want to contribute, up to $13,500 in 2020. \nThe contributions to each employee’s (and your own) account will reduce the taxable income for the year and income taxes on this account won’t apply until it is withdrawn. \n\n401K & Self-employed 401K\nA 401(k) is similar to IRAs in that you set aside money into a retirement plan for investments. The major differences between 401Ks and IRAs are the contribution limits and when you can pull out your retirement funds. \nThe 2020 annual contribution limit for a 401K is $19,500 for employees. If you have a self-employed 401K, you can contribute as the employer \nand\n as an employee of your own company, meaning that you can contribute $19,500 as an employee and then as an employer contribute 25% of your earnings, up to $57,000. \nThe second major difference between 401Ks and IRAs is the conditions surrounding when you can withdraw your retirement funds. Under an IRA, you can pull your retirement savings at any time, with the caveat that you’ll face a 10% tax penalty if you pull them before age 59½. \nWith many 401K and self-employed 401K plans, you must meet one of the following requirements if you need to access your retirement funds before age 59½:\nRetire from or leave your job\nDie or become disabled\nExperience certain hardships (outlined by the plan)\nThe plan gets terminated\nIf your plan allows early withdrawal under the above or other circumstances prior to age 59½ you will be subject to the 10% tax penalty, in addition to paying your standard income tax rate on the funds. This can be a healthy chunk, so think very carefully before you try to withdraw 401K funds.\nNote: Some 401(k) plans allow for “hardship distributions” where you can use a portion of your savings for medical or funeral expenses (among others) under certain conditions, without facing an early withdrawal penalty. So be sure to discuss these options with your investment counselor.\nKeogh plan\nKeogh plans were created for self-employed business owners and unincorporated businesses to offer their employees and owners retirement benefits. Independent contractors do not qualify for a Keogh plan. \nKeogh plans fall into two categories: defined benefits plans and defined contribution plans. \nA defined benefits plan uses a formula to calculate a predetermined amount for the employee’s contributions. Generally, this will take into account the employee’s time with the company and their annual earnings. Due to the formula and variations between employees, this method can become more complicated than other retirement options. \nDefined contribution plans are basically 401Ks. They specify an exact amount of funds that can be placed into an employee’s account and have the same allowances and tax requirements as a 401K. \nAs you can see, you have several options for starting a retirement plan. You just need to decide which option is best for you as a business owner and your employees (if you have any). Once you’ve come to that decision, find a local provider that can help you get your retirement accounts set up. 

What are my retirement plan options if I’m self-employed or own my own business?

In this article:\nBest small business checking accounts\nCredit card options\nAlternative payment methods\nThings to watch out for\nIt’s important for every business, big or small, to have its own bank account. This includes gig workers, sole proprietors, solopreneurs, content creators, freelancers, and more. Keeping your personal and business finances separate makes things much simpler when tax season rolls around. \nMost banks offer some kind of business account, and some offer several. So, it can be difficult to narrow down your options and determine which one is the best for your business. \nWe’ve pulled together a small list of some of the best banking (and alternative payment method) accounts for small businesses to help you in your search. \nAnd, because it can be nice to keep your checking and credit accounts with the same vendor, we’ve included the best credit options from several banks as well. \nChase Total Business Checking\nThe Chase Total Business Checking account is a great starter for small businesses. The fees are low and they have tons of awesome benefits that your business should take advantage of. \nFeatures of a Chase Total Business Checking account:\nLow monthly service fee of $15/month (this is waived if you keep a daily minimum of $1,500 in your account)\n100 transactions per month with no charge\nUnlimited electronic deposits\n$5,000 in cash deposits per statement cycle without additional fees\nInternational wire transfers\nAccount alerts\n16,000 ATMs and 5,000 branches\n$200 cash bonus*\n*You can qualify for the $200 cash bonus with the Chase Total Business Checking account if you deposit $1,000 into your account within 20 days of opening it, maintain that balance for 60 days, and complete at least 5 qualifying transactions within those 60 days. \nCredit cards from Chase\nChase has some great credit card options for small businesses too. We’ve included three cards and the benefits they can offer your business. \nChase Ink Business Unlimited\n$500 bonus cash back when you spend $3,000 in the first 3 months\nUnlimited 1.5% cash rewards for every business purchase you make on this card\n0% annual interest in the first 12 months, and 14.99%-20.99% after that\nNo annual fees\nChase Ink Business Cash\n$500 bonus cash back when you spend $3,000 in the first 3 months\n5% cash rewards for select business purchases \n0% annual interest in the first 12 months, and 14.99%-20.99% after that\nNo annual fees\nChase Ink Business Preferred\n80,000 bonus points ($1,000 in travel rewards) when you spend $5,000 in the first 3 months\nEarn additional reward points on select business categories and travel expenses\n17.74%-22.74% annual interest\n$95 annual fee\nCapital One Spark Business Checking\nCapital One Spark Business Checking is another popular checking account for small businesses. They offer some great rewards and convenient benefits to make banking with them easy. And a bonus, the Capital One Spark plan has an entire suite of banking options, including lines of credit that your business should definitely take advantage of (more on these below).\nFeatures of Capital One Spark Business Checking:\nFirst deposit minimum of $250\nMonthly fee of $15 (maintain a balance of $2,000 to waive this fee)\nUnlimited fee-free transactions (including deposits, withdrawals, and transfers)\nFree electronic invoicing\n100% digital checking account complete with mobile and desktop apps\nCredit cards from Capital One\nHere are some of the credit cards that you can get with the Capital One Spark suite, and if you have Spark Card and a checking account, your monthly maintenance fee for the checking account will be waived. \nCapital One Spark Cash\n$500 bonus cash back when you spend $5,000 in the first 3 months, and $1,500 when you spend $50,000 in the first 6 months\n$0 annual fee for the first year, $95 after that\n18.74% APR\nUnlimited 2% cash back on every purchase\nFree employee cards with spending limits\nNo foreign transaction fees\nCapital One Spark Miles\n50,000 bonus miles when you spend $5,000 in the first 3 months, and 150,000 bonus miles when you spend $50,000 in the first 6 months\n$0 annual fee for the first year, $95 after that\n18.74% APR\nUnlimited 2x miles per every dollar spent\nFree employee cards with spending limits\nNo foreign transaction fees\nCapital One Spark Cash Select\n$200 bonus cash back when you spend $3,000 in the first 3 months\n$0 annual fee\n0% APR for first year, then 14.74%-22.74% after that\nUnlimited 1.5% cash back on every purchase\nFree employee cards with spending limits\nNo foreign transaction fees\nAxos Bank Basic Business Checking\nAxos bank is a great option for you if you want your banking experience to be completely digital. They don’t even have any physical banking locations, but they do offer surcharge-free ATM transactions when you use their national ATM network. \nFeatures of the Axos Bank Basic Business Checking account:\nMinimum opening deposit of $1,000\n200 free transactions each month (after that each transaction costs 30 cents)\n60 free deposits each month with their remote deposit capabilities\nNo monthly service fees\nFirst set of 50 checks free\nCompatible with Quickbooks\nAxos Bank doesn’t offer credit card options like other banks. They do offer some lending options, but these are on a much larger scale than most small businesses are looking for. If you want the Axos Bank checking account experience, we recommend choosing a Capital One Spark card to go along with it. \nSome things to watch out for when choosing a business bank account\nLooking at the features of different business checking accounts can make them seem appealing, but it’s important to be aware of any fees they might be hiding before going all in. \nHere are some common fees that banks aren’t typically upfront about, so be sure to know which fees will be associated with the bank account you choose for your business. \nMonthly transactions\nMost banks put a limit on the number of free transactions you can make with your business checking account. And then there will usually be a 30-50 cent fee for each transaction after that. Make sure you know what your limitations are.  \nBalance and deposit requirements\nIf your account balance falls below a certain amount, you may be subject to some additional fees. Know what that amount is for your bank and be sure to keep that average or daily balance where it needs to be. \nService fees\nCheck with your bank to see if there’s a monthly service or maintenance fee associated with your account. Most banks do require a monthly maintenance fee but will waive this if you keep a certain balance in your account or have multiple products with them. \nCash deposit fees\nEven though a bank may say they have “unlimited free transactions,” this doesn’t usually include cash deposits. Most checking accounts allow you up to a certain dollar amount in fee-free transactions, and then after that they’ll start charging you a small amount to deposit more cash within a statement period. \nFor example, you may be allowed to deposit $5,000 in cash each statement cycle, and after that they’ll charge you $1 for every $1,000 you deposit. It’s not a huge amount, but it’s good to be aware of these fees. \nBank location and size\nThe size and location of your bank is important to be aware of, especially if you travel a lot. If your bank doesn’t have a wide network of ATMs and you frequently need to pull out cash while traveling, then you might start racking up the fees from ATM transactions. \nFind out where your bank has ATMs and if it has a network of ATMs outside of their own that you can use without a surcharge. \nIt all comes down to doing your research and knowing which banking option is the best for your business. How many transactions or deposits are you making? What is your cash flow like? Do you prefer working with a local, hometown bank, rather than a bank with branches across the US? These kinds of questions can help you determine the best options for you.


Best banking accounts and credit cards for small businesses

In this article:\nMerchant accounts and traditional payments processors\nPayment service providers\nEcommerce solutions\nIn today’s digital world, customers expect to be able to make their purchases with a credit or debit card, even when paying super-small, one-person businesses. Fewer people carry cash or checks than ever before, so having some kind of credit card payment capability will be a valuable asset for your business. \nWe’ll walk through the most common ways to accept credit card payments and help you determine which way will work best for your business. \nHow to accept credit card payments in your business\nThere are three main ways to accept credit card payments:\nUse a merchant account/traditional payments processor\nUse a payment service provider\nUse an ecommerce solution\nIn some instances, you may even use a combination of some or all of these methods. \nMerchant accounts / payments processors\nA merchant account is essentially a bank account that assists businesses in accepting credit card purchases. You can use a merchant account through your bank or another financial institution that offers this service. \nMerchant accounts are not business bank accounts though. Their purpose is to accept the funds from your credit card transactions, and the money will then need to be moved into your business bank account once the transactions are complete. \nCheck out this article: \nSmall business guide: What is credit card processing?\nMerchant account providers will generally set you up with the tools and equipment you need to process credit card payments too, like a terminal, tablet, or phone add-on. These are commonly called POS (Point Of Sale) systems. Your bank may act as the “payments processor” or they may have an agreement with one of the many payments processor companies.\nIf you use a smaller bank that doesn’t provide payments processing or merchant accounts including credit card processing, ask around the local small businesses in your area and ask them who they process with, and see if they like their solution, POS system, and rates.\nOne thing to keep in mind is that most merchant accounts require you to sign a contract for a set amount of time. So before getting too deep into this process, make sure you are ready to commit to the provider you have selected. A good merchant services provider can explain all the rates and fees to you, and may be able to get you better rates overall than some of the third-party service providers, particularly if you do a lot of business.\nPayment service providers\nPayment service providers are third-party services, like Square/Block, Stripe, etc. that provide simpler online methods for processing credit cards. While you can still use a merchant account with this method, you don’t need to have one in order to use a payment service provider. \nThis is one reason why these payment service providers has been so disruptive to the traditional payments processor market space. They streamlined and simplified the process of accepting credit cards for small businesses, and their fee structure is very easily understood. This is all good for small businesses, particularly those who don’t know the ins and outs of the “payments” space.\nHowever, depending on your merchant account, you might actually get a better deal from one of the more traditional processors, so be sure to ask around, speak to your merchant services agent or salesperson, and ask whether they can give you better rates.\nMany payment service providers can provide you with a terminal for your store or office, mobile devices and add-ons, and online integrations for processing credit card payments. \nSome payment processors even have their own POS systems that you can use to track inventory, customer order history, and more. If you need or want a multifunctional POS system, be sure to ask your representative and compare features and prices between providers and processors. \nNote for independent contractors, micro-businesses, and one-person shops: Depending on the size of your business, you may also benefit from payments service providers like PayPal, Zelle, or Venmo. These allow bank-to-bank and person-to-person transfers for a fee (or sometimes no fees, depending on the funding source). If you are a one-person operation just starting out, you may be able to utilize this type of payment. PayPal users can pay you with a credit card (and you will have to pay the fee, about 3%, which is close to what accepting payments via a typical business processing setup would cost you). Learn more in our article: \nWhat are alternative payment methods and why should your business consider them?\n\nEcommerce solutions\nIf you only want to sell online and don’t have a need for accepting payments in-person, then an ecommerce solution like Etsy or Shopify could be a great option for your business. \nThese ecommerce platforms have credit card processing built-in to them for all of their users to take advantage of. \nAgain, this can also be combined with one or both of the other two methods. It doesn’t have to be an online-only solution. You could have a physical store with a merchant account or payment processor and then use one of these ecommerce solutions for your online store. \nYou might be interested in: \nHow to get your business started selling online\nThere may (well, there WILL) be fees associated with each of these methods for accepting credit card payments. Within each method, there are several solutions available to choose from. Determine the method that seems the most fitting for your business and then research the different platforms available to find the most competitive offers and prices. It’s can be a good idea to talk to a local merchant services provider and develop a relationship there. They will may be able to provide you the best prices and service, and it doesn't hurt to check.\nHow to choose which way to accept credit card payments\nOnly you can decide which form of credit card processing will be the most beneficial to your business, but we’ll provide some instances when each of these methods can be useful. \nTraditional merchant accounts are the most beneficial for brick and mortar businesses or businesses where you are physically selling something in-person. If you have offerings online, ask your merchant services provider if they offer an online store/shopping cart or ecommerce solution in addition to your merchant account, as many do.\nPayment service providers are generally great for self-employed individuals and businesses that offer in-person and online solutions. Whether you are selling a product or a service, you can use this solution to allow your customers to pay online. The added benefit of including flexible and often lower-cost POS systems with your provider can be especially handy for retailers whether you have an online store or not. \nEcommerce solutions are great when you are selling a product online, particularly if you start small and sell only online. This allows you a way to start marketing your products without having to invest in a storefront. \nSolo makes it easy to pay and get paid\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay and get paid. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cash out your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at \nSolo.co\n.

3 most common ways to accept credit card payments for your small business

In this 5-minute read:\nWhat’s the lowest-cost option for processing credit cards\nFlate-rate processing vs. interchange plus\nSubscription flat-rate processing pros and cons\nExamples of credit card processing fees for different business models\nOne reason that many small business owners are reluctant to get set up to accept credit cards is that the fees for the service eat into their profits. Depending on your business model, your processing agreement, and the number and amount of your transactions, these fees can be significant. \nHowever, today’s customers expect every business—even super-small, local businesses and roadside carts—to accept credit cards, so not having a credit card payment option can prevent your small business from growing and staying profitable.\nLet’s go over what credit card processing really costs so you can determine a good fit for your business. \nThe “interchange plus” credit card processing pricing model is usually the lowest cost overall\nA lot of small businesses use one of the newer payments services providers or “aggregators” (like Square, Stripe, Clover, etc.) because they seem simpler and people can easily understand “flat rate” processing.\nWhat is flat-rate processing?\nIn typical flat-rate processing agreements, you pay a simple percentage for each card transaction (typically between 2.4% and 3.5% of the total purchase price) plus a fee per transaction (usually between $.10 and $.30). That’s it. This may seem like a good deal, especially when most of these payments providers will give you a simple card reader for free and get you set up to accept payments relatively quickly.\nHowever, you may get the lowest rates and pay the least overall if you opt for a traditional processor who offers competitive “interchange plus” pricing.\nWhat is interchange plus processing? \nEvery credit card network (Visa, Mastercard, American Express) charges an interchange fee that your processor pays to facilitate each transaction. Providers that use “interchange plus” pricing model charge the interchange rate plus a markup. So for interchange plus pricing, you pay the current interchange rate, plus your processor’s markup, plus a transaction fee (similar to the transaction fee added to flat-rate purchases discussed above), plus sometimes an additional monthly fee.\nThis may sound complicated, as interchange rates are subject to change so you might not always be paying the exact same fees for processing card transactions. But the fact is the interchange rate doesn’t vary much, and most businesses find that a reliable processor charging interchange plus will save them around 20% on processing costs (or more) compared to the flat-rate aggregators.\nWhat is subscription or “zero markup” flat-rate processing?\nSubscription flat-rate processing is gaining in popularity for a couple of reasons: it’s simple to understand, and it sounds like it would be cheaper than either the interchange plus model or the typical flat rate model. Some providers pump up the “zero markup” angle to imply that you will be paying less per transaction than with other pricing models.\nIn a subscription flat-rate processing agreement, you pay a fixed monthly cost to maintain your processing capability, plus a set fee per transaction. Since the monthly costs and transaction fees for various providers vary widely, it’s not practical to estimate what you might expect to pay for this type of processing from an average provider. Depending on how large your transactions are and how often you transact, a subscription flat-rate processor might be competitively priced with a traditional interchange plus processor, or it might be quite a bit more expensive.\nLet’s look at a couple of examples, as elucidated in \nthis article\n by Ben Dwyer at CardFellow:\nLet’s say that you sell furniture. You’re likely processing higher average ticket transactions, but fewer transactions per day than some other types of businesses. You’ve decided to take credit cards, and you have an offer from Processor A using interchange plus pricing with a markup of 0.10% and 10 cents per transaction and from Processor B using subscription flat rate pricing with a markup of 0% and 25 cents per transaction. Processor A has a $10 monthly fee, and Processor B has a $29 monthly fee.\nYou sell a couch for $2,000.\nWith Processor A, you’d pay $2.10 to the processor for their markup. (2000 x 0.001 + 0.10) With Processor B, you’d pay 25 cents. On the surface, it looks like a no-brainer in favor of the subscription pricing. However, to get the most accurate number, you’d also include your monthly fee divided by your number of transactions for that month. If you only sell that one couch all month, you’d be paying $12.10 to Processor A as a markup or $29.25 as a markup to Processor B.\nIf you sold 10 of those couches in a month, you’d pay Processor A $21 (20,000 x 0.001 + 10 x 0.10) and Processor B $2.50 (10 x 0.25). Again it looks like a big savings with the subscription pricing, but the monthly fee changes that. The monthly fee would add another $1.00 per sale with Processor A for a total of $31 or $2.90 per sale with Processor B for a total of $31.50. Those costs are pretty close, but it’s important to remember that the disparity could be even greater if you have a higher monthly fee for your subscription pricing. Memberships from some processors start as high as $69 for a basic plan.\nBut what if you sell smaller-ticket items but process more transactions daily? Let’s look at another example from Ben’s article:\nNow let’s say that you own a shoe store. Your average sale is $50 and you have 10 sales per day for a total of 300 transactions per month. With Processor A, that’ll cost you 15 cents per transaction (50 x 0.001 + 0.10). Adding in our monthly fee of $10 adds 3 cents per transaction for Processor A, bringing the total to 18 cents per transaction. With Processor B, it’ll cost you 25 cents per transaction, plus the monthly fee of $29 split over 300 transactions, equaling 35 cents per transaction. (29 / 300 + 0.25). For the month, you’d pay a total markup of $55 with the interchange plus pricing (300 x .15 + 10) or $104 with the membership pricing. (300 x .25 + 29). Guess what? That 0% processing just cost close to double as much as the competitive interchange plus processing. It’s easy to disregard the monthly cost because it doesn’t seem like it’s part of your processing costs, but these examples illustrate that it’s important to take it into account. When searching for the lowest cost processing, 0% markup doesn’t automatically equal lowest cost.\nAdditionally, Ben points out that, while the subscription flat-rate model may be a cost-effective option for new and growing businesses, you need to understand that many subscription pricing processors set a limit on the number of transactions you can process at each membership level. If your business processes more transactions, you might need to change to a more expensive monthly membership, which of course means you’re averaging more in overall costs per transaction.\nThe bottom line is that you need to discuss your needs and options with your merchant level sales agent or processor, and determine whether you value simplicity, or the absolute lowest processing cost, or personalized customer service, or useful value-added options that come with many processor agreements.\nSolo makes it easy to pay and get paid\nSolo is not a bank, but is a financial super-app for small businesses, freelancers, sole proprietors, contractors, and more. Solo is the easy way to pay and get paid. Your customers don't have to sign up to pay you, and can use several payment methods, including Apple Pay, Google Pay, and cards. QR codes make it easy to get paid, and you can easily cash out your Solo account balance for free, or spend it using your Solo Cash Card anywhere Visa is accepted. Learn more at \nSolo.co\n.

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