Merchant Services

July 2007 Previous month Next month
Many small business owners wait until the end of the year to reevaluate the services they currently use and to decide what new services they are going to implement in the coming year. Here are some tips you can use to evaluate financial and insurance services for your business.
By Chris Freeburn

Payroll
When you have employees who need to be paid, the one business function that must run error free is payroll. Accountants and companies like ADP or Paychex all offer the same basic services: payroll check creation/calculation and tax filing. You can also purchase software packages that do the same thing. The two biggest factors to weigh when considering any payroll option are its accuracy and total cost. In making your evaluation, think about the following:

  • Accuracy - Does this payroll option guarantee the accuracy of withholdings and tax filing? With the average small business incurring an $845.00 tax penalty, accurate tax filing and withholding is key.
  • Needed Services - What services do you actually need? Many payroll options offer ancillary services such as HR functions, wage garnishments, FICA tip credit calculations, etc. as a part of their basic package. If your payroll is just you and two employees, why spend $1,600 a year on payroll?
  • Direct Deposit - Do you want direct deposit? Many software packages and payroll companies charge for direct deposit. Yet direct deposit saves the payroll companies money because there is no production of live checks and no delivery fees. So why should you have to pay for it? \\ Regardless of how you manage your payroll, it is an extremely important business function and must be done correctly to avoid accounting headaches, tax penalties, and frustrated employees.

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Credit and Debit Card Processing
When you break merchant processing down to its most basic requirements, you want to be able to accept payments from your customers and receive those funds as quickly as possible without incurring huge processing fees. Here are some things to consider when evaluating any card processing solution:

  • Card Acceptance - When most merchants think of the cards they’d like to accept, Visa®, Mastercard®, and American Express® come to mind. But there are many other card types including Discover®, Diners®, etc. that your customers may carry. And the more payment options you can offer your customers, the more likely you are to make a sale.
  • Processing Fees - All card processing services charge fees for allowing you to accept credit and debit cards from your customers. They may use flat fees, percentages of the sale, transaction fees, etc. to determine how much of your sale ultimately goes to them and how much stays with you. From a fee standpoint, it's important to understand how the fees are calculated and what you’ll have to pay. The better services will often customize your fees based on your business, rather than charging blanket or arbitrary fees.
  • Access to Funds - Accepting credit or debit cards for payment is not like accepting cash – you don’t have immediate access to the funds. However, you should not have to wait days to receive the proceeds from your sales either. And, depending on the type of business you run, waiting more than a few days for your credit or debit funds to be deposited can really affect your cash flow. So before choosing a merchant processing service, make sure you get a clear estimate of how long it will take to receive funds from a basic credit or debit transaction.

Insurance
Health insurance is a vital component in any employee benefits package, but it can be a major expense for small businesses. So keep these things in mind when searching for health insurance coverage:

  • Affordability is often a question of flexibility - Your goal as a business owner is to find a plan that balances the needs of your business with the health care concerns you have for your family and your employees. If comprehensive coverage is not economically feasible, look for alternative plans with high deductibles that still provide meaningful protection for you and your employees.
  • You should only have to pay a regular monthly premium - The services provided by a health insurance agent should be at no cost to you or your company. Typically, the compensation they receive comes from the insurance company that writes the policy.

Chris Freeburn is an associate editor/writer for Business 24/7 magazine.

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