Category: Blog

Are you a small business owner that has not yet opened a business bank account? Business bank accounts allow small businesses to manage their finances, easily track invoices, and quickly file for taxes.

It should be noted that there is more than one type of business account you may choose from. As a small business owner, you will have the following options to choose from:

• • Business checking account
  • Business savings account
  • Business credit card
  • Merchant services

The best option for your business will be based on the needs of your business. Each of these has its own benefits and it is very likely your small business can benefit from more than one. 

Nowadays, opening a business account is fairly simple. With the right information and documentation regarding you and your small business, you can quickly open an account online within minutes. 

Continue to read this article to learn about what you need to open a business account and to learn about a few tips to help you along the way. 

Everything You Need to Open a Business Account

The requirements for opening up a business banking account will vary depending on the state your business resides in and the bank you choose. Here is a list of documents that are generally required.  

Personal Identification

In order to open a bank account, you will need a government-issued ID, such as a driver’s license or passport. Some banks will require you have both to open a bank account. You will also need to provide the bank with your personal mailing address, date of birth, and contact information, such as telephone number and email address. Additionally, you will need to provide the bank with your social security number. 

For every owner that takes at least 25% ownership of the business, you must provide this information.

Employer Identification Number

You must provide the employer identification number if your business has one and any relevant documents from the IRS. If you are a sole proprietor or single member LLC, banks might accept your social security number instead. 

Business Information

When applying for a business account, business owners will be asked about the business’s name, address, trade name or DBA, and entity type. The entity type will either be a sole proprietorship, partnership, LLC, or corporation. You may also need to provide the industry type your business is in. 

Documents and Agreements 

The documents you need will vary depending on your business type. Here is a list of what different business’s generally need.

Sole proprietorship

• • Business name registration certificate
  • Business License

Partnership 

• • Partnership agreement
  • Business License 
  • LLC operating agreement 

LLC

• •  Business License 
  • Articles of organization
  • LLC operating agreement.

Corporations

• • Business License 
  •  Articles of incorporation
  • Corporate bylaws 

Opening Deposit 

Upon opening a business bank account, you may be required to deposit cash. Some require $5 to $1,00 minimum. Alternatively, some banks will not require a deposit.

Different Types of Bank Accounts For Your Small Business

Here is useful information regarding the different types of bank accounts. 

Business Checking Account

Business checking accounts after best for everyday use. 

Cons of business checking account for your small business:

• • There may be limited ATM machines
  • There may be monthly fees
  • If stolen, it is hard to prove fraud

Business Savings Account

Business savings accounts are best for long-term small business savings.

Cons of business savings account:

• • Annual percentage yield (APY)
  • There may be account fees
  • There is normally a minimum balance required to earn interest 

Merchant Accounts

Merchant accounts are best for businesses that are accepting debit and credit as a method of payment. 

Cons of merchant accounts:

• • There may be bundled merchant services
  • There may be additional fees

Choosing a Bank 

 It is important to do your own research when it comes to choosing the best bank for your small business. You don’t want to choose a bank with costly monthly fees if your business is not quite there yet. Consider the financial needs of your business. Consider the following:

• • Transaction fees
  • ATM access
  • Monthly fees
  • Minimum balance requirements
  • Mobile/online banking
  • Integrations such as bill pay
  • Incidental fees
  • Wiring, transfer, and payment options and fees

Here are a few banks we recommend. Please remember to do your own research to ensure the bank you choose is best for your small business. 

Novo

What is the monthly fee for Novo?

There is no monthly fee for Novo.

Is there a minimum opening deposit requirement for Novo?

The minimum opening deposit requirement for Novo is $50.

Is there an APY for Novo?

There is no APY with Novo.

Are there transaction fees for Novo?

There are no transaction fees with Novo, and you get an unlimited amount of transactions.

Is there a bonus when signing up for Novo?

There is no bonus when signing up for a BluevÍne business account.

Is there branch access with Novo?

There is no branch access with Novo. It is an online bank.

Chase For Business 

What is the monthly fee for Chase For Business?

The monthly fee for Chase For Business is $15. This fee may vary and can be waived each month depending on your account. 

Is there a minimum opening deposit requirement for Chase For Business?

There is no minimum opening deposit requirement for Chase For Business. 

Is there an APY for Chase For Business

There is no APY with Chase For Business.

Are there transaction fees for Chase For Business?

With Chase For Business, you have unlimited electronic deposits and 20 free in-person (teller) and paper transactions per month.

Is there a bonus when signing up for Chase For Business?

If you meet the requirements, receive a $300 bonus when signing up for Chase For Business. 

Is there branch access with Chase For Business?

There is branch access with Chase For Business. 

BluevÍne 

What is the monthly fee for BluevÍne? 

There is no monthly fee for BluevÍne.

Is there a minimum opening deposit requirement for BluevÍne?

There is no minimum opening deposit requirement for BluevÍne.

Is there an APY for BluevÍne?

The APY for BluevÍne is 1.50% on balances up to and including $100,000.

Are there transaction fees for BluevÍne?

There are no transaction fees with BluevÍne, and you get an unlimited amount of transactions.

Is there a bonus when signing up for BluevÍne?

There is no bonus when signing up for a BluevÍne business account.

Is there branch access with BluevÍne?

There is no branch access with BluevÍne. It is an online bank.

Prior to opening an account for your small business, make sure that what the bank offers aligns with your business goals. Additionally, look into credit cards that have a reward system with cash back, and alternative payment methods. 

Unfortunately, many small businesses suffered after the worldwide pandemic and the fight is not over yet. An expected recession is putting pressure on small and large businesses. Small businesses are frightful of what is to come and should start to prepare in case a recession occurs. 

Focus on the following 4 things for your small business to push through a recession if it were to occur. 

Increase Cash

Many small businesses put aside one month’s worth of business expenses in cash. However, if a recession were to occur this would not be nearly enough for a small business to survive. When a recession occurs business slows down, which means you must pay for expenses, inventory, and products/services/materials without the funding that was driven by customers and clients. 

In order for a small business to survive, it has been suggested to have at least 6 months’ worth saved up, or 30% of their annual revenue. To be extra cautious, save 12, 24, 04 36 months’ worth of expenses aside. Many small business owners make irrational spending decisions while in a panicked state. Saving a significant amount will ensure you have enough even if you spend a lot during a vulnerable time.

Instant Pay

It is likely customers and clients will also struggle during a recession. Many small businesses offer payment plans, however, some clients and customers may not be able to pay off what they owe during a recession. This will lead to money loss for your small business. For this reason, it is important to receive payments instantly from clients and customers. 

If you can’t set up an instant payment plan for your customers and clients, you can closely monitor invoices and their due dates. You can also encourage clients and customers to set up an automatic payment plan so that they pay their invoices on time, and keep in contact when they are late on payments. 

Consider Your Credit Line

Your line of credit should be no more than the amount of cash you have on hand. Of course, that doesn’t mean you should spend all of the credit you have available. Since credit is borrowed, you don’t want to spend any of your credit if you do not have to. You should only consider credit as an additional emergency resource on top of what you already have saved in actual cash. 

Since credit is normally used as a backup plan for small business owners, it is important to avoid racking up your credit bill. If a recession were to occur, the last thing you want to worry about is paying off credit card bills, while also still trying to maintain your business. You will need the extra funds during a recession. Additionally, if you do not have large credit card bills and need an extra few hundred during a recession, you can turn to a credit card to get you by. 

Learn How to Adapt

Recessions will enforce you to become creative and willing. It is important to be creative, pay attention to the market that your small business is in, recognize when it is time to pivot and how to pivot, and network with others to remain calm and meet others who are in the same boat as you. 

You may also want to research small business loans and credit card balance transfers. Consider all options when it comes to saving as much as you can. Furthermore, get involved with the community of small business owners, discuss how they are making it through, share thoughts and worries, and alter your mindset to a positive one to push through the really tough times. 

Are you a small business owner who is looking for an effective gateway payment method? There are many different payment methods to choose from for your small business. However, not all payment methods are cheap, and not all payment methods will be beneficial for your small business. Small business owners should be saving as much money as possible and one way to do that is to lower the cost you are paying for your payment method. Continue to read this article if you are a small business owner who is looking for a cheap payment gateway.

What is a Payment Gateway?

A payment gateway is a payment method that is used to read and transfer payment information from a customer or client, to a business bank account. It allows customers to securely enter their card information, and submit the payment. It is the payment gateway between the customer or client and the business. 

If you are a small business owner that sells online, you will need a payment gateway. Here are the best payment gateways that are cheap, secure, and easy to use. 

Transact

Transact is an efficient payment method for both small and large businesses. It is accounts receivable and allows businesses to instantly send and collect invoices via SMS. with Transact there is no monthly fee. Businesses are charged a transaction fee, which may vary depending on your business.

Transact has many different invoices to choose from and you can download them for free, customize them, and send them to clients and customers instantly. 

Helcim

Helcim is a payment method that offers both online and in-person payment processing services. It is not only a payment gateway but also a payment processor. A payment processor is similar to swiping your card. If you have clients and customers that are not tech-savvy, they will most likely pull out a card. Helcim allows customers and clients to physically pay if they choose to, instead of virtually paying. 

Helcim is interchange plus 25 cents and .5% for businesses that receive up to $25,000 monthly on a card. As volume increases, the rate will get cheaper. Additionally, if the normal variety of cards by customers and clients, and the average sale is $50, businesses will pay an average of 2.61% and 25 cents per transaction.

Stripe

Stripe is a financial service software that offers payment processing for e-commerce websites and mobile apps. Stripe is $10 per month for hosting site checkout. Otherwise, it is a 2.9% fee plus an additional 30 cents. With Stripe, there are many different customization options, and great for small businesses that have built their website. However, this software may require coding and advanced technical skills. 

Braintree

Braintree is similar to Stripe because it specializes in mobile and web payments. It is also for e-commerce companies and does not require a fee if you use it as a processor as well. If you only use Braintree as a gateway, it is $49 per month and 10 cents per transaction when using a different payment processor method. The flat rate fee is 2.59% and 49 cents per transaction. 

Braintree is a company that is owned by PayPal, except it is cheaper. There are also additional payment options such as Venmo where clients and customers can buy now, and pay later. With Brain tree, you don’t have to use it as both the gateway and payment processor. You can invest in a different payment processor if you choose to do so. However, Braintree can become pricey and also require coding skills. 

Stax 

Stax is an all-in-one payment method that allows customers and clients to pay online, on the go, or in person. There is a monthly subscription fee starting at $99 and an interchange plus 15 cents for keyed-in transactions. This fee is only 15 cents and a percentage is not added to the margin. Though, fees may be pricey for some individuals. 

Chase Payment Solutions

Chase payment is a payment processing system created by JP Morgan Chase. With this payment method, clients and customers are able to pay using a digital wallet. Instead of using a card or apple wallet, a QR code is scanned and the funds are taken out of the account. 

The fee for Chase payment varies and may be applied in certain situations. There is a flare rate of interchange plus is available for large businesses. The price is 2.9% plus 25 cents per transaction. The Chase payment method has a more competitive flat-rate pricing and businesses receive their payment the following day. However, you must be using Chase products to quickly receive deposits and there may be a monthly fee. 

What to Consider When Comparing Prices

As previously mentioned, the best payment gateway for your business will depend on the type of business and its needs and goals. Consider the following when comparing payment gateway prices:

Transparency

Prices on websites may be a lot different once you have bought a plan or subscription. Some payment gateway companies may charge more or less depending on the business, its location, website, and customers and clients. There may be payment gateway companies that have custom pricing. Make sure you do your research and get a quote before settling. Keep in mind that your end goal is to save more money over time, with a safe, effective, and easy-to-use payment gateway. Don’t let salesmen talk you into a plan or subscription if it does not fit your budget. 

Service

Every payment gateway will perform and function differently. Some will take web users to another webpage, navigating away from your website, while others are embedded into your website and keep web users on your website when they purchase something. This is something very important to consider because it could negatively impact your website and its performance. Other payment gateway methods allow you to customize how the payment will display and perform when customers are purchasing and checking out. This requires technical skills, however, contributes to a good user experience.

Consider the needs and goals of your business’s website and see which payment gateway method best matches the needs of your business. Don’t forget to consider not only how the payment gateway performs, but also its price.

Avoid Additional Fees

Most fees are unavoidable, however, you can avoid extra fees. For example, many payment gateway companies will offer a service to keep cards secure. Most payment gateway companies already secure the information of users.

Though you can avoid some fees, others are unavoidable and may not be as expensive as you thought. Write down the pros and cons of each payment gateway company that you are interested in and consider which one will best fit the needs of your business and which ones are worth the expense. If it works well for your business, sales will increase.

Are you a small business owner trying to save money? Small business owners have many different expenses and oftentimes don’t realize they are spending more than they need to. There are a lot of small money-saving methods that will allow you to save money long-term without having to do too much. This will provide you with an emergency fund, business savings, or to be more financially accessible. 

Here are ways you can save money as a small business owner. 

Set Up Automated Transfers

Open a savings account and set up automated transfers from your checking account to your savings account. When setting up an automated transfer, you can choose how much to transfer and how often the transfer occurs. This will allow you to save money over time. The transfer amount does not need to be a high amount. If you are on a tight budget, even $20 per month will make a difference. Continue to save money as an emergency fund, a vacation, down payment, or to pay off student loans. Eventually, you will save up enough money over time. 

Collect All of Your Coin and Bills

As a small business owner, you may have customers paying with cash and coin, or maybe you dine out each day for lunch and always have cash and coin on you. This can be a great way to save money. Instead of throwing your coin in your vehicle’s cup holder, take it home with you and throw it in a piggy bank each night. Or, set it aside and deposit it into your savings account each week. While this won’t save you thousands of dollars, it will contribute to your savings account which is better than not contributing at all.

Prepare for Grocery Shopping

Before going to the grocery store, check your pantries, cabinets, and fridge to list all of your grocery items. Avoid temptation and impulse buying. Additionally, consider coupons, savings, and rewards programs. 

There are many different credit cards with a rewards system that gives back when spending on groceries and certain grocery stores. Consider a credit card that gives back to receive rewards and cash back. When applying for a credit card, ensure you pay the monthly payment on time and consider their fees prior to applying.

Minimize Spending on Restaurants 

Everyone understands eating a meal at a restaurant is more expensive than eating a home-cooked meal. If you eat out often, you can save a significant amount of money by eating at home. Save eating out for special occasions, or consider skipping on expensive drinks and desserts. You can also apply for a credit card that gives back for dining out. 

Get Entertainment Discounts

Saving money does not mean you need to let go of the things you enjoy. There are plenty of entertaining activities that are low in cost or free. There are free museum days and national park days. Additionally, many communities host free events each week. Check local events prior to splurging on tickets. 

Map Out Your Most Expensive Purchases

Small business owners are always purchasing — furniture, appliances, tools, services, clothing, delivery truck, etc. Map out all of the expensive purchases that or forthcoming, both in and out of business. Take note of the price for each purchase. This will allow you to get an idea of when the best time is to purchase based on your expenses, bills, and priorities. Ensure you do not put yourself in debt because of an expensive purchase that conflicted with your bills and expenses.

Avoid Online Shopping

Stores have made it easy for us to buy online. Within seconds we are able to purchase our favorite pieces. Avoid shopping online by deleting your credit card history from your favorite stores and apps. This will enforce you to think twice about your purchase and buy only when necessary. 

Reconsider After 2 Days

When making a purchase small, or large, we often think that we need to buy the item to be content. Many people don’t realize this feeling is temporary with items that are a want and not a need. A good method to determine if a purchase is necessary is to wait 2 days. If you are still thinking about the item, or still considering it, then revisit the idea of buying it.

Affordable Gifts 

Everyone is going to need to purchase gifts at one point or another. Small business owners do not have the funds to purchase an expensive gift each time a celebration comes around. There are many affordable gifts such as herb gardens, plants, books, etc. Gifts also can be an act of kindness such as hosting a small dinner or baking a dessert. This will save you a lot of money during busy holidays and celebrations. 

Lower the Cost of Your Car

Refinance your auto loan and lower your interest rates to save you a significant amount of money. Keep an eye out for cheaper auto loans and ask others what auto insurance they have to keep lowering the cost of insurance. Save gas, drive less, and utilize apps that point out gas prices within the area you are in. 

Cable and Internet

As technology advances, many people cancel their cable services and watch their favorite movies on internet-based apps, such as Netflix and Hulu. Consider canceling your cable agreement, and searching for cheaper internet service.

Consider a Cheaper Cell Phone Plan

Look into cheaper cell phone plans to reduce the cost of your bill. Remove insurance from your plan to save close to $100 each year for each line that you have.

Reduce Electricity Usage

Try to reduce the amount of electricity you use each month to save money on each bill. Invest in smart power strips, and switch to a smart thermostat. You can also plug insulation leaks that are causing your bull to be slightly higher than it should be. 

Decrease Student Loan Payments

If you have student loans, you can enroll in an income-driven repayment plan to lower your monthly payments. Other ways to decrease student loan payments include: setting up autopay to receive a discount and refinancing your student loans to cut interest rates. 

Cancel Subscriptions

It is easy to accumulate many different subscriptions over time, especially as a business owner that is trying to invest in their business. Go through all of your subscriptions and cancel the ones you no longer use and need. Carefully review your bank statements to catch any subscriptions that you may have forgotten about. Furthermore, avoid signing up for more unnecessary subscriptions. 

Refinance Your Mortagage

Although refinancing can come with initial costs, you can be paying less each month. Refinance your mortgage to save you a large amount of money each month.

Determine Your Saving Goals

Set financial goals for yourself and be realistic with them. Use the SMART goal method to help you reach your financial goals and focus on your small business. 

Track Spending and Expenses

Tracking spending and expenses are important for anyone but especially important for business owners. Track your personal monthly cash flow to keep track of the progress you are making for your savings goal. This will give you an idea of how much money you are saving, and how much money you will be able to put towards your business. 

Prioritize Payments with High-Interest Debt

Debt is never good and can put a huge dent in your budget and savings. Prioritize paying off both the personal and business debt that you currently have. Paying off the high-interest debt first avoids the snowball effect of getting into even more debt. Additionally, the sooner you pay it off, the sooner you will free yourself from strain and stressors. 

Keep Your Savings in an Account that Pays Interest Rates

You can maximize the amount of money you have by opening a savings account that accrues interest rates. Make sure you meet with a banker to discuss any fees and the terms and conditions of different savings accounts that pay you for the funds you have with them. 

Small business owners spend a significant amount of money for their business to be successful. Oftentimes they resort to their personal funds and savings accounts to aid their business. There are many tips and tricks to reduce the amount you are spending and save more money for both personal and professional use. Additionally, there are payment methods businesses can take advantage of to receive client and customer invoices instantly. Save money, while also receiving payments within seconds.

Cash flow is the circulation of money within a business. It is the money that is incoming as well as outgoing. It includes the money a business is receiving and the money that a business is spending on expenses and inventory. Within a specified period, the total net balance is reported on the cash flow statement. The statement points out cash usage and its sources. 

Cash flow allows businesses to monitor the success of their business. Monitoring cash flow provides firms with information regarding profits. Businesses’ main goal is to keep cash flow moving so that more money is coming in than going out.

Though cash flow is a good sign, it doesn’t necessarily always mean the business is booming. Cash flow doesn’t measure the performance of the business, it is a statistical tool used to monitor expenses, and profits. Businesses should also consider their balance sheet and income statement. 

What is Cash Flow Used For?

As a small business owner, it is important to monitor cash flow to calculate expenses. When calculating expenses business owners should ask themselves if their cash flow is efficient enough to not only provide the company with money to pay for expenses but also enough to make a profit.

Are there Different Types of Cashflow?

When running a business, there will be multiple sources of cash flow. The different types of cash flow include:

Financing Cash Flow: 

Financing cash flow is all of the funding it took to start a business and ensure it continues to run. This may include equity, debt, etc. If you pull out a loan to start up your business, the money that you receive as well as the payments that you make towards the loan is a part of the cash flow within your financing resources. 

Operations Cash Flow:

Operations cash flow is the movement of money used to operate the business. This includes money received from sales and money spent on inventory, materials, and goods. Additionally, it includes outgoing money put towards employee salaries.

To determine the total value, you would need to subtract the operating expenses from the amount of money made from sales. Typically this is reported both quarterly and annually on the cash flow statement. 

Operations cash flow normally determined whether a business is financially stable or will need to consider a business loan. 

Investment Cash Flow 

Both large and small businesses often generate cash from business investments. This includes equipment, property, stocks, or bonds. Cash flow can come from the sale of assets, interest, asset purchases, and security losses.

What is the Difference Between Cash Flow and Income, Profit, and Revenue 

Cash flow is different than income, profit, and revenue. Here is how they are all different.

Income

Income statements present the business’s revenue and the total amount of expenses. Cash flow is the follow of money coming in and out of a business.

Revenue 

Revenue is the income that the business earned by selling goods, and services, while cash flow is both received and disbursed funds.

Profit 

Profit is the amount of funding that is left over after expenses have been calculated. Cash flow refers to the circulation of money.

It is important to measure cash flow, income, profit, and revenue separately from one another. You may calculate measurements and find them to be way different than you had expected them to be.

Cash Flow on Financial Statements

A cash flow statement displays the progress of a business if businesses are managing expenses and paying off debt. A business’s cash flow statements work closely with a business’s balance sheet and income statement. Public companies must report their statement.

Statements report businesses begging and ending balances, and where and how funds were used, spent, and received. Business reports take place either monthly, quarterly, or annually which state their cash flow.

What is a Balance Sheet?

A balance sheet is a sheet that presents a business’s total assets and liabilities. 

What is an Income Statement?

An income statement presents the amount of money made in profits within a specific time frame.

What is a Cash Flow Statement?

A cash flow statement points out a resolution of funding issues that are stated on a business’s balance sheet and income statement. Of course, the resolution to these problems is paying expenses and collecting revenue. 

The important value on a cash flow statement is displayed on the bottom line of the document which is either the net increase or cash equivalents and cash loss. This value points out the company’s change in cash and accessible assets. In order to check the accuracy, you can check the overall balance of a cash flow and the amount of cash shown on the business’s balance sheet. If they are equivalent then it is accurate. 

How Do You Calculate Cash Flow?

Determine the opening balance

The opening balance is the total amount of cash that you currently have in your business accounts.

Calculate cash sources

Calculate all incoming cash sources including money received, cash borrowed from loans, funds from assets, sales of assets, etc. Add the total to the opening balance and you will receive the cash balance. 

Determine the use of cash

Determine the outflow of money. This will include adding together all payments that were made.

Subtract your uses from the total balance

To find the value of your business’s cash flow, subtract the total you received from the outflow money and the total amount you received from your opening balance and cash source. The number you receive will be the opening balance for the following month.

It is important to consider cash flow to get an idea of how well your business is operating and plan what you can do in the future to better your company. Monitoring cash flow will provide you with statistics that can help your business grow in the future.

Starting your own business is very exciting but can be intimidating if it is something you have never done. There are many factors in starting a small business that should be considered before jumping into it, such as cost calculation, profitability, funding, inventory, and many more.  

It is very important to figure out the answer to the question — How much money do I need to start my new business? The initial investment for your business can end up being quite large. If you are starting big then you can expect to spend about $30,000. For instance, if you are opening a storage facility and need to rent or buy a location and hire employees, your startup cost will be significant. On the other hand, if you are a small business, such as a home-based nail technician, you will have startup costs, but they will be much lower. 

Regardless of the type of business you are running, it will be important to consider different business startup costs prior to officially opening. Continue to read this article if you are interested in learning more about these business startup costs.

How Do I Calculate the Cost of Starting a Business?

Creating a business plan is the best way to get an estimation of what your business startup costs will be. Your business plan should include an estimate of your revenue, profit, and business expenses for the next three to five years. 

It’s important to remember that business expenses will remain consistent throughout your journey as an entrepreneur. When running a business a smart rule to follow is to always have enough money to cover 6 months’ worth of expenses.  In this regard, you will always have funding in case of emergencies that are expected to happen at one point or another. It is likely you won’t make a profit during the early stages of your new business. Ensure that you have funds saved up to avoid any problems and debt in the future. 

There are also additional resources that allow you to visually compare and estimate your startup costs. Websites like SBA.gov provide easy-to-use templates to help you calculate startup costs. Otherwise, continue to read this article for a complete breakdown of startup costs for running your own business. We will cover not only annual cost considerations but also quarterly and monthly expenses such as rent, payroll, office supplies, etc. 

13 Business Startup Costs to Consider

When starting up your own business, it would be beneficial to include the following in your business plan:

• • Equipment
  • Incorporation fees
  • Space and rent 
  • Inventory 
  • Marketing
  • Website 
  • Furniture and supplies
  • Utilities
  • Payroll
  • Insurance 
  • Taxes
  • Travel 
  • Shipping

The above-mentioned list is startup costs for the general small business owner. Costs will vary depending on the type of small business you are running. If you are home-based, your business will most likely require the minimum to start up, like equipment, website, travel, and shipping. 

Equipment

If your business requires some type of space to run, you will be spending on equipment. The amount spent on equipment will vary depending on the type of business and its needs. However, the startup costs for equipment typically range between $10,000-125,000. 

If you are opening a restaurant, you will need to purchase ovens, stoves, utensils, dishes, soda machines, etc. Alternatively, a graphic designer may only need a laptop, microphone, and software. 

Incorporation Fees

Incorporation fees are fees that businesses have to pay once they become active. The fee will vary depending on the type of business and the state the business will be running in. Additionally, you may need to file articles of incorporation or articles of organization and apply for federal or state licensing or permits. Please check with your state about fees and filing. Incorporation fees typically start at $50 and can go as high as $730. However, many states require a $300 fee. 

Space

Renting a space or office will likely be the most expensive cost you run into when starting a business, regardless of if you rent or buy. The cost of rent will depend on the area your office is in and if employees are paying rent. For example, if you are opening up a salon, employees will most likely pay rent. On the other hand, if you are a hairdresser that is paying the salon rent, it will be on the lower side when it comes to costs. You can expect rent to range anywhere from $100-$3,000. 

Inventory

If you are running a business that involves wholesale, retail, manufacturing, distributing, etc. you will need to determine how inventory will be sold as soon as possible. This can be challenging because as a new business owner, you will not know how much inventory to carry, and when is a good time to restock. You don’t want to have too much inventory because it may be a loss, however, you don’t want to be in a situation where you don’t have enough and risk losing customers. 

Because inventory is so challenging to figure out, we recommend allocating between 17%-25% of your budget to inventory. Again, this will depend on the industry you are in as the market will play a huge role in it. When first starting a business, we recommend securing more inventory to test the waters and attract as many customers as possible as well as generate as much revenue as you can within the early stages of your business. 

Marketing

Many new business owners do not consider marketing when beginning their new venture. However, it’s important to consider it because you will quickly learn how useful it is, and how often you utilize it. Though you will utilize marketing strategies to spread brand awareness, you should keep marketing costs to a minimum. Fortunately, with the user of social media, this will not be an issue. 

There are many marketing materials such as signs, banners, and business cards. Additionally, there are paid ads, social media marketing, and website marketing. Marketing experts recommend keeping marketing costs under 10% of your budget. To begin marketing, start with social media, which is little to no cost, and expand your strategies when necessary. 

Website

When running a business, it would be helpful to create a website as this is the number one way customers and clients will find you. Your website should be user-friendly, informational, and professional. Some websites are costly, while others are free,  or cost efficient. Consider Wix, Squarespace, and Weebly which have plans that cost between $13-$40 per month. 

Furniture and Supplies

When first starting your business, you will start small when it comes to furniture and add to your collection as your business grows. Many businesses require desks, chairs, tables, computers, software, pens, printers, etc. The list goes on. The furniture and supplies you need will vary depending on your business and how many employees and clients are involved. To manage costs, we recommend keeping a budget for furniture and supplies and using only 10% of your total budget. 

Utilities

If you are renting a space for your business, you will also need to pay for utilities such as gas, internet, and water. This can be pricey depending on your location, but you can expect to pay $2-$3 per square foot.

Payroll

If you are a business that has employees, the most important task that needs to be done is payroll. Regardless of where your business financially stands, you need to pay your employees. If you aren’t paying your employees on time, your business will go downhill. Not only will you accumulate debt, but you will also lose employees and create a bad reputation for yourself and your business. Payroll consists of the following:

• • Net pay
  • Commission
  • Overtime pay
  • Bonuses
  • Paid time off

Payroll will cost you about 25-50% of your budget. Furthermore, you should be considering taxes and insurance.

Insurance 

Similar to a house and car, your business will need insurance for protection purposes. There are many different types of business insurance plans. The type of insurance will depend on the needs of your business, the actions of employees, and where your business is located. For example, a nail artist most likely won’t need to consider insurance options, but a construction company will. The average amount you can expect business insurance to cost is about $1,200 per year. Examples of business insurance are:

• • General liability insurance
  • Commercial property insurance 
  • Workers compensation insurance
  • Errors and omissions insurance

Taxes 

Of course, when running a business you need to pay taxes. When business planning and setting budgets, it can be confusing when trying to figure out how much your business taxes will be each year. This will depend on your revenue, deductible expenses, and business entity. However, corporations pay 21% corporate income tax. Though this is a varying factor of running a business, note a  21% tax rate to be on the safe side. 

Travel

Though not every business will need to travel for their business, we recommended considering it just in case another business opportunity arises and requires traveling. For instance, you may be starting an SEO business that does not require you to travel at all. You work from home but are introduced to an opportunity of a lifetime. You are invited to an SEO event where you will network and meet professionals that can significantly further your career. The only downfall is you need to pay for airfare. You don’t want to miss an opportunity like this. Ensure you do have room for traveling if it were to occur.

If you are a business that will be traveling often, do not underestimate how much you will be spending. Consider transportation, food, hotels, and employees who may need to travel alongside you as well. Consider looking into business credit cards that offer travel points and rewards. 

Shipping

If you are a retail operating business, you may need to ship your products to customers. This is another startup cost that may require shipping and packaging materials. This can quickly become costly, and both the location you are shipping out of and into will determine the cost of shipping. 

Overview 

Planning a budget and considering all of the startup costs for your new business can be overwhelming. It’s important to be realistic about costs and consider how much money you will need so you do not run into financial issues in the future. Overestimate the cost so there aren’t any surprises along the way. Additionally, save as much money as you can by getting a business credit card, or taking out a small business loan. Regardless of your decisions, once you commit, do not give up. Follow your business plan, consider your business budget, and watch your business grow. 

Are you a small business owner that has been denied a business loan? Opening, managing, and running a new business can be quite pricey, especially if you are just beginning your business journey. Many start-up companies and small businesses apply for business loans to help them jumpstart their new business, however, only a fraction of applicants are approved. Business owners run into the issue of being unable to pay for the expenses of starting up their small businesses and the issue of loan applicant disapproval is only going to get worse. In fact, within the last several years business credit card approval rates have significantly declined. As inflation is increasing small business owners are struggling to cover their expenses. Continue to read this article if you are one among many business owners that are looking for resources after being declined a business loan. We will discuss the following business loan alternatives:

• • Online lenders
  • Business grants 
  • Raise equity 

Online Lenders 

What is an Online Lender?

Online lenders offer loans that aren’t typically associated with a traditional bank. They are an alternative to a traditional bank.

Typically, online vendors offer a variety of small business loans. Additionally, they are more flexible than bank lenders when it comes to requirements. Though online lenders are more flexible, normally the cost to borrow is higher 

Due to inflation, it is likely that the Federal Reserve is increasing interest rates and will continue to do so. For this reason, banks are experiencing economic changes that drastically change the flow of money within their financial institutions, making it hard to be accepted for small business loans. This is where lenders come into play. They fill the space that financial institutions aren’t filling within the market, and offer revenue-based financing as well as business advisory services. 

Online alternative lenders won’t feel the pressure that banks are experiencing during inflation and a market crash because they normally charge higher interest rates than traditional banks, that in turn, make up for money lost during that time of the market. 

When looking for the best lender for you and your small business, it is important to do thorough research and consider the following:

• • Types of loans available 
  • Funding speed 
  • Customer service
  • Eligibility and requirements
  • Interest rates 
  • Fees

You don’t want to take out a loan for your up-and-coming business just to be even more in debt. In the end, the loan should help you while your business gets on its feet. There are lenders that can help you based on your needs and can provide you with the funding within a few days of submitting your application. If you are a business that does not have time to wait, online lending might be best for you. Many businesses such as construction contractors, may need funds as soon as possible.  This business loan alternative is the quickest way to receive the funds you need. 

Business Grants

What is a Business Grant?

Business grants are money that is awarded to businesses that are in need. Loans are money borrowed, while grants are awarded and do not need to be paid off. 

This option may be the best alternative to business loans. However, it may be difficult to be awarded a business grant. Business grants are awarded by federal, state, and local governments. Furthermore, many private corporations have business grants. 

The best way to find a grant that you are eligible for is by doing your own research. Depending on your needs, experience, and type of business, eligibility requirements will differ. Grants such as Grants.gov has thousands of different grants for small businesses. 

Additionally, there are local agencies and corporations that have programs made specifically for promoting companies, expansion, and job creation. To support these ideas, they offer free resources to small business owners. These local organizations often offer large business grants and some offer small loans at a low cost. 

Though this would be the safest and best option when searching for business loan alternatives, it is very competitive and time-consuming. Applications are normally lengthy and oftentimes require an in-depth essay submission. Furthermore, there are hundreds, possibly even thousands of applicants that are applying for the same grant as you. Once your application is submitted it may take months to receive news on whether you were awarded the grant or not.  So, if you are in a situation where you need funding as soon as possible, this may not be the best option for you. Alternatively, if you are able to wait, applying for a business grant does no harm. For example, if you own a small cleaning business, chances are you are quite busy and have the flexibility to wait for the results of your grant application submission. 

Raise Equity 

What is Equity Raising?

Equity raising is when a business raises capital to increase the funds they are receiving for business growth. This allows your business to increase the amount of money it is making by increasing prices. 

This business loan alternative will only work if your small business already has a solid customer base, and you are sure you can continue to rely on these customers. For example, if you are a home-based nail artist, chances are you will continue to grow customers, and maintain a busy schedule. Businesses like such can expect customers to pay the difference because they are paying for the experience, creativity, and capability. 

Similarly, small business owners can consider equity crowdfunding. This is when you raise your online capital, and investors give you capital in exchange for equity ownership. Essentially, it is selling shares of your business and company to investors. It is important to consider whether you would like others to be a part of your company and its growth and if you are willing to share your company. 

This business loan alternative is not easy or quick. To begin, business owners need to make sure they meet the guidelines rules, and regulations. Additionally, you would need to run fundraisers and campaigns which is time-consuming, stressful, and tedious. However, it may be worth it because of the potential money you can make. This business loan alternative is best for those who have a lot of time to spare prior to receiving the funds, are willing to share their company,  and put in the efforts and time for fundraisers and campaigns.

Overview 

Hopefully, you have found clarity on which business loan alternative would be best for you and the needs of your company. It is not easy running a small business in the times that we are currently in. Ensure you are thoroughly researching the method that you choose prior to moving forward. Below is a brief reminder of what we have discussed for business loan alternatives:

Online lender: 

• A loan from a non-traditional financial institution
• Typically costs more in the long run 
• Easier application process
• More likely to be approved
• Funds are often available within days 

Business grants:

• • Money awarded to a business in need
  • Do not have to pay any money back
  • Very competitive
  • It May take months-years before receiving funds if chosen

Equity raising:

• • Raising the price of your services, goods, or products
  • A slow progression to money increase
  • Only works if you have a steady, consistent customer base
  • Can consider shareholders 

There are both pros and cons to using Zelle for your small business. As a small business owner, one aspect to consider is the method of payment you will be utilizing to collect payments and invoices. Some small business owners utilize Zelle as their method of payment. Continue to read this article if you are interested in utilizing Zelle for your small business. We will discuss how to use Zelle, and its pros and cons.

What is Zelle? 

Zelle is a digital payment network that allows users to instantly transfer money. Zelle is used through certain financial institutions. In order to use Zelle as a method of payment, you would need to open a bank account. Essentially, you will be going through your bank to use Zelle. 

There are seven different US banks that own Zelle and it is used as a third-party payment method by most US banks and credit unions. In order to use Zelle for your small business, you just need to enroll by using your bank’s mobile app. The 11 major financial institutions in the US are eligible for Zelle. Additionally, Zelle offers their services to hundreds of financial institutions in the US. 

Although Zelle has extended their services to many different financial institutions in the US, they do not offer specific business features to business owners. The services that Zelle offers are the same for all users. However,  Zelle is a great way for businesses to receive payments, and it is free and contactless. Zelle offers free services, however, it is important to check with your bank if they charge fees for using Zelle. Additionally, it is not a service offered internationally and it does not have a purchase protection program.

Who Can Use Zelle?

Anyone who is interested in using Zelle needs to open a bank account. Both the business owner and customer or client need to have a bank account in order to use Zelle. Your customers and clients do not need to use the same bank as you, they just need to have a bank account open. 

For small businesses, you would need to open a business bank account with a financial institution that offers Zelle for businesses. Not all financial institutions offer Zelle to business accounts, so it’s important to make sure that you can use Zelle with the bank that you have opened your business account. To check if your bank offers Zelle as a method of payment, check your banking app about the specifics. If you can enroll in Zelle with your business banking account, you will use your mobile phone number and email address. This will be how customers and clients find your Zelle to send you their invoices and payments. If you already use Zelle for personal reasons, you may need to use different contact information when enrolling in Zelle for your small business. We will go more into detail about how to use Zelle later in this article. 

Here are the 11 financial institutions that offer business Zelle integration:

• • Chase Bank
  • Citi Bank
  • Bank of America
  • Frost 
  • FirstBank
  • Bank of the West
  • Truist Financial 
  • Wells Fargo
  • Morgan Stanley
  • US Bank
  • Investors Bank

How Do I Enroll in Zelle?

As previously mentioned, Zelle is a third-party method of payment and integration that some banks offer for small businesses. So, if you have opened a business account, you would just need to make sure your financial institution integrates Zelle with its services. If Zelle is not an option for you, but you would like to use Zelle as your preferred method of payment, you may want to open a business account with a financial institution that offers Zelle. The bank account that you enroll for Zelle with will be the account that money comes in to and goes out of. 

For example, Alex has a graphic design business. She enrolled in Zelle with her Chase Business Account. She designed a website for a client and has informed her client of the price. The client then sends Alex the money through Zelle, and the money is instantly transferred into the account that Alex enrolled her Zelle with. In order for Alex’s client to send the money, they had to access the mobile app of the bank account that they enrolled their Zelle with, and send the payment on Zelle through their bank’s mobile app. 

Prior to enrolling with Zelle, choose the bank account you would like to receive payments from and enroll through the financial institutions’ mobile app. On the banks’ mobile app,  you would just need to navigate to Zelle and enroll with your email or phone number. The email or phone number you use will be how customers and clients find you and send money to you. 

For example, Alex received a new client and sent the client the email that they used to enroll their Zelle with. To find Alex’s Zelle to send money to, the client needs to access their Zelle through their bank’s mobile app and search for Alex’s Zelle by inputting Alex’s email. This is how clients and customers find your business — via email or phone number. 

Make sure you are not using an unprofessional or complicated email. This will avoid complications when customers and clients search for your Zelle and will also avoid money loss. Additionally, don’t use a phone number that you want to be kept private or that you plan on using for another Zelle account for personal matters. 

How Does Zelle Work?

It is fairly easy for both small businesses and customers to use Zelle. It’s easy because most US banks have already integrated Zelle with their mobile apps. So the only course of action you need to take is to enroll in Zelle through your financial institution’s mobile app. This process is quick and easy. In order to send and receive money, both parties need to have a Zelle account. So keep in mind that your clients and customers will need to have a Zelle account in order to send payments. Though we touched on how Zelle works, here is a step-by-step process of how customers can pay small businesses for purchases and services:

1. 1.  The business provides its clients and customers with their Zelle contact information. This will either be the phone number or email address that they used to enroll in their business Zelle account. Never give customers, clients, and strangers your banking information. To send money via Zelle, bank information is not needed. 
   2. The customer or client inputs the given email or phone number, and the amount that they owe. They then send the payment to the business owner. For first-time recipients, Zelle may send a verification code via text message or phone call for verification purposes. 
   3. The recipient of the payment— in this case, the business owner— will be notified via email, text message, or bank mobile app notification that the payment has been received and is available in their bank account 

How Much Does Zelle Cost?

Zelle does not charge a fee for money transfers. However, there may be fees and transaction limits depending on your banks’ rules and regulations. While most major banks do not charge service fees, you may want to double-check prior to performing transactions for your small business. 

Additionally, your bank may limit the amount and how many times a Zelle transaction is done per day. Limits may differ depending on the type of account you have and whether you are sending or receiving the payment as well. Below is a list of Zelle limits for major banks:

Bank of America 

$15,000 per 24 hours 

$45,000 in a seven-day span

$60,000 every 30 days for small businesses

Up to 20 transactions per day

Up to 120 transactions per month 

No receiving limit

Chase Business Account

$5,000 per transaction 

$5,000 per day 

$40,000 per month 

No receiving limit 

Wells Fargo

$3,500 per day 

$20,00 per month 

Receive up to $10,000 per day 

Capital One 

$2,500 per day 

No receiving limit

Discover

$600 per day 

No receiving limit 

PNC Bank 

Varying sending limits that can be found on your mobile app or account information

No receiving limit 

US Bank

Varying sending limits that can be found on your mobile app or account information

Citizens Bank 

$1,000 per day 

$5,000 per month 

15 transactions per day

No receiving limits 

What Are The Pros of Using Zelle for Small Businesses?

There are pros to using Zelle as a method of payment for your small business, but ultimately it will be up to you, as a business owner, to decide if this method of payment is the best choice for you and your clients and customers. Read further to find out what the pros of using Zelle are.

Contactless

Zelle is a contactless payment method. Business owners do not need a transaction resource to process payments, and clients and customers do not need a physical form of payment. Cash or cards are not required — the only requirement to complete a transaction with Zelle is a phone, bank account, and Zelle enrollment. 

Instant pay

As many transactions take at least 24 hours to complete, if not longer, Zelle payments are instant. When transferring funds between two bank accounts through Zelle, payments take no more than a few minutes to process.

No fees

As we previously discussed, Zelle is free to use. Very few banks enforce a transaction fee. Check with your bank to learn about their transaction fees and transaction limitations. 

What Are The Cons of Using Zelle for Small Businesses?

As with any other method of payment, there are a few cons to using Zelle for your small business. Zelle may not be for every business owner, and it’s important to understand what the cons are so you can decide if it is a payment method that will make running a business easier for you. 

Only available in the US

Zelle is not available to international banks, it is only available to US banks. So if you are a business that will be in a tourist area, you will not be able to sell your goods and services to tourists who only bank with international financial institutions. The same goes for online shops. International customers will not be able to send you money when they buy your online products. Additionally, if you plan to expand your business outside of the US, this method of payment will not be a good fit for you.

No purchase protection program 

Sending money with Zelle can be risky. Zelle doesn’t protect any payments made through their network. Payments made through Zelle also can’t be canceled. Once a payment is sent, there is no way of getting it back. If your customer inputs your number or email wrong and sends the payment, they cannot reverse or cancel the transaction. Because of this, customers and business owners prefer a secure method of payment so there is no loss of money. 

Can’t use credit cards

Credit cards cannot be used for Zelle transactions because Zelle is a network that directly transfers funds between two bank accounts. As many customers prefer to use credit cards this may be an issue. 

What Types of Businesses Would Benefit From Using Zelle?

Zelle will mostly benefit small businesses. Because large businesses have customers and clients throughout the world, do not have a protection program, and do not allow customers to use credit cards, it would be more of a hassle than a benefit. However, there are many small businesses that can benefit from using Zelle. Below is a list of examples of small businesses that may benefit from using Zelle:

• • In-house nail services
  • Gardener or landscaper
  • Cleaning services 
  • Graphic Designer 
  • Freelancer
  • Car mobile wash and detailing services 
  • Photographer 
  • In-home or online tutor 

Alternative Payment Methods 

Transact 

Transact is an efficient payment method that allows businesses, small and big, to instantly send and collect payments via SMS without users having to create an account. Once a business receives an order or purchase, a text message is sent to the buyer and they can directly pay from there. Within the text is a link that directs customers and clients directly to their bills. They do not have to create an account, they are able to quickly pay and complete their purchase.