New Merchant Account Quick-Start Guide For Small Businesses

The process of getting a new merchant account can be pretty intimidating. There's a lot of information out there about merchant accounts and most people don't have time to wade through all of it before getting a new account. If you're that person, this tutorial is for you. If you're pressed for time, here's the vital information that you need to know before, during and after you get a new merchant account.

Merchant accounts are very important and we suggest investing the time to learn about them when possible. But for now - this tutorial will get you started down the right path.

Laying the Ground-work:

There's a lot of competition out there. Use it to your advantage.

The market for new merchant accounts is highly competitive and providers are willing to do whatever they can to get your business. Use this competition to your advantage and get quotes from at least three different providers. Most importantly, don't be afraid to let each provider know what their competitor is offering. Processing rates and fees aren't set in stone. Providers can move things around to try and best their competition. Let each provider know what the other guy is offering and you'll see rates and fees drop.

An online service called CardFellow is a great resource for getting quotes for a new merchant account. All you need to do is create a free account and providers will give you quotes right online. CardFellow will also help you select the best quote by working with you and the provider through their on-site Merchant Message Board. It's great service definitely worth checking out.

Not all contracts have a term.

Technically, all new merchant accounts have a contract - it's the contract term and the cancellation fee that you should watch out for. A contract term is the period in which if you cancel a merchant account, you will have to pay a cancellation fee. Month-to-month merchant accounts without a term can be cancelled at any time without a fee.

Don't disqualify a merchant account just because it has a contract term. Sometimes imposing a contract term will make it possible for a provider to lower rates and fees or lend a piece of equipment free of charge for the length of the term.

If you do end up considering a merchant account with a contract term, here are a couple of things you should be sure to ask about.

Term Auto-Renewal - Some merchant accounts have language in the contract that automatically renews the contract term if the account isn't cancelled within a certain timeframe. The cancellation period is usually about thirty day, but all accounts are different.
There's no guarantee - Merchant account contracts with or without a term don't guarantee that rates and fees will remain the same. Merchant account agreements have out-clauses that make it possible for providers to change rates and fees so long as they give notice of the changes. The notice of any changes will be posted on your monthly merchant account statement - that's why it's so important to read them every month.

You have to pay all rates and fees.

Even though discount and transaction fees account for the majority of credit card processing expense, you still have to pay all the other fees. Keep this in mind when you're comparing new merchant accounts. Providers know that discount and transaction fees are scrutinize the most by prospective providers and you may not find there's much of a difference in these fees between providers. However, fees like monthly minimums, statement fees, and other important but less visible fees may vary greatly. When you're looking for a new merchant account, compare all aspects and fees of the accounts, not just discount and transaction fees.

Equipment doesn't cost a fortune.

One of the biggest misconceptions about credit card processing is that credit card machines cost a fortune to purchase. That's just not the case. Very good terminals with thermal printers and other bells and whistles can be purchased new for $400 or less. Wireless terminals and other specialty equipment may be slightly more expensive, but it's still very reasonable if you find the right provider.

Before jumping into an expensive leasing agreement, shop around for different equipment prices and deals. Many providers even give terminals away with a new merchant account. Sure, you'll have to give it back if you close the account - but you didn't have to pay for it in the first place.

When you're applying for a new account:

There are no hidden fees.

I know it goes against all of the horror stories you've heard - believe it or not - merchant accounts don't have hidden fees. With that said, they do have hard to see, often overlooked fees. Merchant account providers can't charge you anything that you haven't agreed to in the merchant service agreement that you have to sign when opening a new account.

When you're opening a new merchant account, the provider will give you a couple documents to review. The first document is called the merchant service agreement and it's usually between fifteen and twenty-five pages long. The second document is called the schedule of fees and it's usually two or three pages long.

Be sure that you receive and review both of these documents very carefully before signing anything. It won't be the most interesting read that you've ever had, but it will be one of the most important. If you've unsure of anything in either document, ask the provider for a thorough explanation.

Give thought to your processing volume and average ticket.

When you're filling-out your new merchant account application, you'll have to declare a monthly processing volume and an average ticket. The term processing volume refers to the gross credit card sales in a monthly period and average ticket refers to the average dollar value of a credit card sale.

The underwriter at the processor uses these two figures to access the risk associate with your new account. Basically, that means they take these numbers pretty seriously. If you grossly exceed either of these figures once you begin processing, your account may be frozen or even closed.

Declaring processing volume and average ticket is especially difficult if you're starting a new business and you don't have prior processing history to look at. In this case, work with your provider to arrive upon realistic numbers and then pad those by 10 or 20 percent to be on the safe side. But again, every business is different so be sure to ask your representative for assistance if you're unsure.

Once you start accepting cards:

How much you're charged is determined by how you process transactions and the types of cards that you accept.

It's a bit of backward terminology, but when a credit card transaction charges at a higher rate - it's said to have downgraded. The way a transaction is processed and the type of card that's being processed are the two main reasons why transactions downgrade.

The main types of credit cards that downgrade are:

Business or corporate cards
Rewards credit cards
Government cards
Foreign cards

There's not much you can do to limit downgrades due to card type because card issuers have strict regulations that bar merchants from discriminating against cardholders because of the type of card that they're using. The good news is that you can limit downgrades that are a result of processing errors. Two common and easily corrected processing errors that cause downgrades are:

Failing to clear your credit card batch daily

Credit card batches must be sent to the processor within 24-hours or every transaction in the batch will downgrade. Failing to clear your batch every day can be a very costly mistake. For example, imagine that you've processed $8,000 worth of credit card transactions and you forget to clear batch. The next day you send the batch to the processor, but instead of being charged the qualified rate of 1.7%, the transactions downgrade to 2.5%. That's a difference of $64 just for not clearing your batch in the allotted time. Providers offer something called auto-batch close. As the name implies, this feature will automatically close credit card batches when there are transactions that need to be settled. There's no charge for this service and it will help you avoid expensive downgrades.

Punching-in transactions on a card-present merchant account

If your merchant account was issued under the assumption that you'll be processing transaction when the credit card and the customer are present, you were given what's called a card-present account. Card-present accounts have lower rates when you're swiping credit cards, but all transactions that are manually entered will automatically downgrade. This is a common problem for retail businesses that also process catalog of Internet orders through the same machine. All keyed-in transactions will downgrade to a higher rate. The solution to this problem is to open a card-not-present merchant account.

Chargebacks are serious business

A chargeback occurs when a cardholder contacts the issuer of their credit card to dispute a transaction. When this happens the merchant that made the charge will get a notice regarding the dispute. If and when a chargeback happens to you, it's very important to deal with them quickly. Merchants are given a limited amount of time to respond to a chargeback dispute. If the window of opportunity passes, the cardholder automatically wins the dispute.

Ignoring the fact that chargebacks are very costly, excessive chargebacks may result in your merchant account being terminated.

The best way to protect you business from chargebacks is to stop them before they happen. To do this, create a chargeback prevention plan and be sure to follow it for every transaction. When you do receive a chargeback notification, deal with it immediately.

Scrutinize your merchant account statements

For many businesses, credit card processing charges account for a significant portion of monthly operating expenses. This is reason enough to read your processing statements every month. Statements are confusing and it takes time and effort to learn to read properly - but you can't afford not to!

If you throw your processing statements in a pile each month - stop! Open the statement every month and scrutinize the charges. If you're not sure how to decipher the statement, call you're provider and ask them to explain everything in detail.

Don't forget your processing volume and average ticket

This can't be stressed enough. Grossly exceeding the processing volume of average ticket amount that you declared on your merchant account application can result in your account being close and your funds being frozen. If you need to, write these figures down and post them where you can see them when charging credit cards.

Merchantcouncil.org offers new merchant account information as well a wealth of additional unbiased merchant account information to help businesses make an informed choice about their processing solution.

READ MORE - New Merchant Account Quick-Start Guide For Small Businesses

Accounting For limited Businesses

What do we have in mind, when talking about expansive corporations in terms of governmental regulations and the consume of accounting policies and practices? Of course regulations are heavier and stricter. Regulatory bodies like the Securities and Exchange Commission and Internal Revenue Service have oversight functions over corporate bodies that there is more interference on the fraction of the government. In some territories the SEC may even have quasi-judicial functions, resolving intra-corporate disputes and controversies.



With the passage of the Sarbanes-Oxley Act in 2002 that lead to the creation of PCAOB or the Public Company Accounting Oversight Board, accounting standards have been more stringent. Companies are now obliged to picture on the efficacy of their internal control procedures in obtaining their varied objectives. They were also required to form detailed disclosures based on the generally well-liked accounting principles. Because of the nature of corporations, their accounting demands also are great. In a corporate set-up, there might be a dozen of divisions, segments and business units. The challenge is how to consolidate the financial performance of these sub-entities to advance up with a consolidated statement of income. substantial businesses like that of corporations necessitates centralized, more structured and well-defined accounting system.



On the other hand, directly opposite these huge corporations are minute business, with capital ranging from a few hundred bucks to not more than 50,000 dollars, and usually taking the perform sole proprietorship. These businesses usually are owned by a single individual or few individuals without really formalizing their agreement to design a accurate partnership. As such, the capital is mainly coming from the owner. The proprietor also normally does multi-tasking, wearing different hats at the same time. Because the business is itsy-bitsy, the demands are also dinky, regulation and accounting wise. They are not the usual subject of scrutiny of governmental watchdogs. Of course the lean size of the business should not undermine the accuracy and completeness of accounting records. This matter transcends to all business entities regardless of the size. As a matter of fact, while the business is tiny, things must be spot moral and pleasurable so it would be grand easy to expand in the future.



Cost cutting is usually the strategy of microscopic business. Sometimes, these measures would even impair the need of an accounting system that generates records and transactions. Owners of diminutive business may have the tendency of not focusing on accounting concerns because it does not perform relate results on business. However, many gracious managers and finance people would recommend that a system, whether manual, or automated or a transition of both must be achieve in region.



Manual accounting is a acquire of accounting system that does not exercise accounting software or uses software but does not automatically process transactions. This is usually found in petite businesses that have the physical book of accounts like journals and ledgers. All or almost all of the steps in the entire accounting cycle are done with lay hands. Starting from entering transactions in journal, summarizing them by posting in the ledger, preparation of trial balance, adjusting entries, up to the generation of financial statements and supporting notes; all these are manually done. These companies have accounting system, only, it's manual. The main reason why companies calm embrace manual accounting system is obviously pecuniary in nature. The company might quiet be in the start-up stage or perhaps it has miniature number of transactions and these transactions are impartial routinary. Although of course, this cuts cost, the main criticism that could be leveled against this set-up is it requires a lot of dirty work and site for maintenance of physical documents and records. As considerable as some companies would like to have a fully automated accounting system, their resources would not permit. In the process, they resort to a manual one.



Acquiring integrated systems through Enterprise Resource Planning (ERP) producing a totally paperless environment would exhibit untenable also for miniature business. A paperless environment, where transactions are automatically initiated, entries automatically generated and master files are automatically updated is an attribute of a fully automated accounting system. Reports are also generated with diminutive or no human intervention at all. Moreover, these reports could be customized based on the specific need of the user. This would entail spacious volume of resources, however. For purposes of economy, shrimp businesses usually choose for an interface or commingling of both manual and fully automated systems, meeting half-way as they say. Although data are smooth inputted manually from source, productivity tools are employed to execute the whole process faster and more efficient. Say, the system has the capacity to group together similar accounts into one. Instead of manually calculating the balance of say, Cash record, the system does the automatic posting for you. From raw transactions in a period, trial balances can be made available, so as with the financial statements to wit, Balance Sheet, Income Statement, Cash Flows and Changes in Equity. This capacity is diagram below fully automated systems but is more efficient compared to manual accounting.



To finish, the business has to accomplish a rather well-known choice whether to adopt an automated or decide to manual accounting system. It has to effect an unprejudiced review of itself and check its capacity to shift. At the extinguish of the day, what is more famous boils succor to the accuracy, reliability and completeness of accounting records and reports.

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Accounting Basics For diminutive Businesses

The unique banking scandals of various major investments banks of the last year and the various failure of companies such as Enron expose that accounting can seem to be less a science than a very creative art. The puny business owner however doesn't typically have the luxury of such complicated accounting systems nor wants them and typically needs to simply understand the basics of the accounting world. The following is an attempt to provide a very simplistic bare bones come to various accounting models in expend. A professional accountant and bookkeeper is the ideal to handle your financial records and statements.



Double entry accounting and bookkeeping can seem what confusing to most uninitiated. Every time an entry is made on the expense side, another entry called an offsetting entry is made on the income side of the ledger. In short every for every plus, there must be a corresponding minus. assume about it as keeping balance in the force so to recount. In the world of accounting these entries are referred to as debts and credits. The kill goal must be a balanced or zero sum sheet.



Single entry characterize keeping works powerful like a personal checkbook register. Expenses and deposits are well-known as entries. In comparison to the double entry diagram, this come is not self balancing. While this blueprint requires reconciliation through a bank statement it often makes more sense to the average entrepreneur from the sheer idea of simplicity. Cash registers receipts are often an example of this model of narrate keeping.



Cash basis accounting is another contrivance which involves the following. This model records income at the time of entry and records expenses at the time they are actually paid. In short, this model insures that the date a check is posted or the date a deposit is made is when the action is actually recorded. Many diminutive businesses utilize this device of bookkeeping because it offers a simpler map and is easier to understand.



The last plan is the accrual design which records income at the time it is earned and deducts expenses when they are incurred. This way is typically weak by businesses having inventory. Most grand businesses and corporations utilize this plot. As is always the case, consulting with your memoir is the best option to insure you are accurately recording your transactions in a arrangement that is simple yet adequately addresses your future business needs.

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Top Accounting Software For minute Businesses

There are numerous free and low-cost accounting software programs for small- or medium-sized enterprises and solopreneurs that simplify accounting tasks, generate reports and provide tools that benefit you spend your financial data.



Intuit QuickBooks is a approved accounting, bookkeeping and payroll program designed for minute businesses. QuickBooks is available in Basic, Online, Pro and Premier editions. The Pro edition includes management tools such as a Vehicle Mileage Tracker and a Cash go Projector.



The free Simple initiate version keeps data organized, tracks sales and expenses for up to 20 customers, creates invoices, pays bills and prints checks. Simple open tracks tax-related income and expenses, and generates primary reports on sales, expenses, profits and losses. It comes with step-by-step tutorials and 30 days of free email befriend, and it interfaces easily with Excel. Your data transfers easily to other versions when you are ready to upgrade.



Simply Accounting by chronicle offers First Step, Pro, Premium, Enterprise and Accountants editions. Professional versions can track customers and suppliers, manage inventory, prepare invoices and process payroll. The First Step version is designed for start-up, miniature and home-based businesses and can develop simple entry-level accounting tasks such as preparing invoices, paying bills, and tracking revenue and expenses. The Simply Accounting First Step free trial version is available to download and consume for 60 days. Simply Accounting First Step remark is another downloadable version available free to Canadian users.



A key feature of Microsoft Office dinky Business Accounting is its tight integration with MSOffice applications such as Excel, MSMoney and Outlook's Business Contact Manager.



Office Accounting Professional has a slate of add-on features that can compose engage orders, track inventory, assess finance charges, benefit foreign currencies, do payroll and manage fixed assets.



The basic version called Office Accounting exclaim is free. It has the contemplate and feel of familiar Microsoft Office products and can gain quotes and invoices, write checks, track expenses and reconcile online bank accounts. A start-up wizard and step-by-step instructions collect you up and running quick. Office Accounting announce 2009 is designed for U.S.- and U.K.-based runt businesses and does not help local requirements beyond these two countries. Both the free version and the Pro version offer bilingual English and Spanish interfaces.



NolaPro v4.0 is a free web-based business management and accounting suite. It includes all standard accounting modules as well as order entry, inventory tracking, payroll services, and plug-ins such as point-of-sale, a business-to-business web portal and an e-commerce shopping cart. It has a flexible interface with customizable options for colors, icon sets, and menu displays. NolaPro allows multiple sets of books and unlimited simultaneous users, and it has no data restrictions and no license expiration. It features a high level of security for regulating user permissions by module plot.

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