PEO and Employee Health Insurance

  • Small businesses can work with PEOs to expand their profit offerings and take off human resource administration functions.
  • PEOs are an excellent resource for businesses that want to start paying benefits to their employees.
  • Providing health insurance to employees through a PEO helps small businesses provide higher quality, more cost-effective health insurance options.
  • This article is for small business owners who want to learn more about offering health insurance through a PEO to their employees.

Providing your employees with health insurance can improve employee retention, help your business attract more applicants, and keep your workforce healthy and happy. However, finding and administering health insurance benefits for small businesses can be costly and time-consuming.

A Professional Employer Organization (PEO) is an excellent resource for businesses that want to save time and money on health insurance and other human resources tasks. We'll explore what's involved in providing health insurance to your employees and how PEOs can help.

did you know?did you know? Health insurance is not just a benefit. You should be aware of occupational health insurance requirements when setting up your employee benefits package.

How Much Does Offering Health Insurance Cost to Employers?

The cost of providing health insurance can vary widely. Employers typically receive better rates when they have more employees to insure. This means that Fortune 500 companies will typically have access to lower rates, more plan options, and better coverage for employees, while smaller businesses can pay hundreds of dollars per employee for limited offerings.

The Kaiser Family Foundation reported in its Employer Health Benefits Survey that the average cost of employer-sponsored health premiums in 2021 was $7,739 for individuals and $22,221 for families. The manner in which this premium is split between employers and employees varies. Employers typically cover most of the premiums for employees and about half of the premiums for dependents.

The cost of providing healthcare can add up, especially if you are a small business unable to access the most competitive rates.

How does a PEO affect health insurance costs?

Partnering with a PEO is an excellent option for small businesses that want to reduce costs while providing better health insurance for their employees.

A PEO shares the responsibilities of an employer with those of a business. It acts as the employer of record and provides payroll, human resources, benefits and administrative support. However, the business retains managerial responsibilities and makes all hiring, promotion and firing decisions. Using a PEO is a way to take off some of the paperwork and responsibilities while maintaining control of your workforce.

PEOs can often offer better benefits and rates to small businesses. The PEO negotiates on behalf of all of its employees and customers, so it can reach offers and rates typically reserved for very large companies.

How PEOs Help Deal with Important Health Insurance Factors

While a business can research and obtain health insurance for its employees, obtaining insurance yourself can be exhausting. You will need to research your options and build a relationship with an insurance broker or provider. Working with a PEO can be an easy path, providing an organization with insight, detailed knowledge, and better pricing.

Here are some important factors to consider when getting health insurance for your business and how PEOs can help.

regulatory requirements

There are some important federal and state regulations you need to consider when applying health insurance to your employees.

  • Affordable Care Act: The ACA provides specific guidelines for what employer-sponsored health coverage must cover and who is eligible. Employers must adhere to specific reporting options under the ACA.
  • Consolidated Omnibus Budget Reconciliation Act: COBRA is a federal law that provides employees and their families with the opportunity to extend their health insurance benefits for a limited period of time if they lose their coverage. The most common example of this is when an employee leaves a company. Employers with 20 or more full-time employees are generally required to continue coverage in specific instances. Under COBRA, employers and plans must give notice to employees if they are eligible to continue coverage.
  • Employee Retirement Income Security Act: ERISA is a federal law that regulates self-funded health and retirement plans. Under ERISA, employers must provide plan features and funding details to employees. ERISA also sets standards for participation, vesting, grievance procedures, etc.

You can manage these requirements and benefit from administration functions on your own, but if you use a PEO, you delegate those responsibilities to experienced professionals who have a detailed knowledge of regulations and state requirements. Is.

did you know?did you know? In addition to handling your health insurance and other employee benefits, PEOs handle payroll processing and payroll tax payments.

health plan options

It is important to understand the different types of health insurance and the plan options available so that you can provide employees with what they need.

Common health insurance plan options include health maintenance organizations (HMOs), preferred provider organizations (PPOs), and high-deductible health plans (HDHPs).

Cost, flexibility, provider and health savings account (HSA) options vary. Here's how to compare them:

HMO PPO hdhp
cost somewhat high cost; Different premiums, copays and deductibles depending on the plan (Bronze, Silver or Platinum) high cost; Different premiums, copays and deductibles depending on the plan (Bronze, Silver or Platinum) Low monthly premium, but high deductible
FLEXIBILITY restrictive flexible flexible
providers covered In-network care only, sometimes limited to specialized hospital systems (possible exceptions for emergency care) a large number of in-network providers; Access to out-of-network care at higher rates a large number of in-network providers; Access to out-of-network care at higher rates
HSA Eligibility No No Yes, people enrolled in an HDHP plan are also eligible to enroll in an HSA where pretax dollars can be specified for health expenses

Employees' plan preferences will depend on their needs.

  • Continuous access to doctors: In some areas, HMOs such as Kaiser Permanente are popular, and employees may feel strongly about continued access to current doctors and care centers.
  • Low Premium: Other employees may not need health services as often, and prefer HDHPs or Bronze PPOs to keep premiums low.
  • High level of care Employees who use care frequently to manage ongoing health conditions may prefer a Silver or Platinum HMO or PPO.

Ideally, you will be able to offer your employees the best plans for their needs. While this can be challenging for businesses acting alone, PEOs make it easy. PEOs can negotiate rates with different providers and are more likely to have the bandwidth to manage benefits across different plans and provider options.

significant achievementsImportant achievements: When choosing a PEO, ask about its plan offerings. Consider your employees' preferences and choose a PEO who can provide them with what they need.

Top Benefits of Partnering with a PEO for Health Insurance

There are two main benefits you will experience when partnering with a PEO to meet your organization's health insurance needs.

  • Better benefits will be available in less cost: The co-employment model of a PEO helps small businesses access benefits that are typically only available to large corporations. Employees can access health plans at lower negotiated rates if the business can purchase coverage directly from insurance companies. Employees enjoy better healthcare along with other PEO-negotiated benefits, including wellness programs and retirement plans, along with dental, vision and workers' compensation insurance.
  • Less administrative burden: Small business owners often don't have the time or inclination to perform the additional tasks of managing benefits, but they still want to provide excellent health coverage to their employees. PEOs handle the administrative side of providing benefits, processing and handling paperwork. Without these administrative burdens, you can focus on growing and maintaining your business.

How to choose the right PEO for health insurance

If you are interested in partnering with a PEO to provide health insurance to your employees, evaluate your options carefully. Weigh the following factors before choosing a PEO.


Not all PEOs are accredited, but working with an accredited PEO can reduce your risk.

Three agencies provide accreditation or certification for PEOs: the ESAC, the IRS, and the Certification Institute.

  • ESAC: Employer Service Assurance Corporation (ESAC) recognizes PEOs who meet its gold standard for best practices and financial responsibility. ESAC accreditation demonstrates a PEO's financial stability, ethical business conduct and adherence to operating standards and regulatory requirements.
  • IRS: IRS-certified PEOs, or CPEOs, can work directly with the IRS when handling small business tax information, streamlining the tax filing process.
  • Certification Institute: Risk Management Certification is the focus of the Institute. To become certified, PEOs must have comprehensive risk management practices with additional qualifications and requirements, and must go through a review process.

Working with a PEO accredited by any of these three organizations ensures that you are choosing a reliable partner and minimizing the risks associated with co-employment arrangements.

did you know?did you know? According to ESAC, only 9% of PEOs have obtained its accreditation.

cost and fee

Your PEO should be tailored to your budget as well as your support needs. The cost of working with a PEO varies. PEOs typically use one of two pricing structures: a per employee or a percentage basis.

  • Per Employee Basis: Some PEOs charge a flat monthly fee based on the number of employees. These fees generally range from $40 to $160 per month per employee.
  • Percentage Basis: PEOs may also charge a percentage of your total monthly payroll. These rates range from 2% to 13% of the company's total monthly payroll.

Many PEOs use only one pricing model, but some let you choose the structure that works best for your business. Ask about your options when shopping.

Costs also depend on the services your business needs. Most PEOs offer bundled plans with core HR support services such as benefits, payroll and compliance. PEOs can also provide add-on services or customizable options to suit the specific needs of the business.

Additionally, many PEOs have minimal staff. If you only have a few full-time employees and want to find health insurance for them, contact a potential PEO to see if they require a certain number of employees.

PEO Service Provider

There are several PEOs out there, each with slightly different insurance and benefit options. Read our in-depth PEO reviews to find the best fit for your needs:

View cost, accreditation, service offered and customer support ratings to find the best PEO service provider for your business.

15 Accounting Payment Terms and How to Use Them

  • Getting paid on time is important for any small business owner.
  • By setting reasonable payment terms with your customers, you will avoid overdue bills, poor cash flow and financial stress.
  • Your understanding of common accounting payment terms and strategies can optimize your ability to receive charges on time.
  • This article is for small business owners who want to use better accounting practices to receive payments on time.

When you are a small business owner, getting paid on time is a top priority. If you don't set the right payment terms with your customers, it can lead to late payments, poor cash flow and unnecessary stress to your business. ,

Luckily, you can take some easy steps to improve your billing methods. This article will look at 15 common accounting payment terms and how to use them in your business.

What are the payment terms?

When you send an invoice to your customers, the payment terms set out expectations regarding future payments. They let your customers know how you prefer to pay, and when they need to pay you.

Payment terms will sometimes also include penalties for missed or late payments. It's important to set transparent payment terms so your customers know what to expect. The more direct these are, the easier it will be for your customers to pay you on time.

What is included in the invoice payment terms?

When you send a new invoice to a customer, it should include all the information you need to make accurate and timely payments. Here is an overview of the information you should include.

  • Date of invoice: This is the date you are sending the invoice.

  • fixed date: The due date is when you expect to receive payment on the invoice – many invoices include standard payment terms such as Net 14 or Net 30. (You'll learn more about those terms below.)

  • Invoice Number: Invoice numbers allow your customers to keep track of all the invoices you send.

  • How much is the invoice: The invoice should clearly state how much the customer owes you.

  • The currency you wish to pay in: If you frequently work with international clients, you will want to specify the currency in which you wish to make payments.

  • Payment methods you accept: The invoice should include a list of acceptable payment methods. For example, you can accept credit cards, online payments, and ACH payments.

  • Other Payment Terms: Your invoice should include any other payment terms that the customer needs to know. For example, you may want to include early payment discounts or if you expect an upfront deposit.

normal payment terms

Payment terms are usually included in the invoice as an abbreviation. Here are some of the most common invoice payment terms you need to know.

  • 1MD: It shows the credit paid for the entire month's supply.

  • PIA: It stands for “payment in advance”, which means that payment must be made in full before goods or services can be delivered.

  • CIA: It stands for “cash in advance”, which means that full payment must be made in cash before goods or services can be delivered.

  • On receipt: The payment is expected as soon as the customer receives the invoice.

  • net 7: Payment is made within seven days.

  • Net 21: Payment is due in 21 days.

  • net 30: Payment is due in 30 days. You will also sometimes see Net 60, Net 90, etc.

  • EOM: Payment is due at the end of the month in which the invoice was received.

  • 15 MFi: Payment is due on the 15th of the month following the date of invoice.

  • 2/10 Net 30: Payment is due in 30 days, but customer can avail 2% discount for payment within 10 days.

  • cod: It stands for “cash on delivery”, which means that the goods or services must be paid for in cash at the time of delivery.

  • cnd: It stands for “cash next delivery”, which means the payment must be made before the next delivery. This payment term is usually reserved for recurring deliveries.

  • CBS: It stands for “cash before shipment”, which means that the balance must be paid before the product is shipped to the customer.

  • CWO: It stands for “cash with order”, which means that the customer must pay the invoice in full before the goods can be produced and shipped.

  • Accumulation Discount: This is a discount offered on a large order.

Importance of payment terms

The cash flow of your small business depends on how quickly your customers pay you. Having clearly defined payment terms will make it easier to predict cash flows, take on new projects and invest in new opportunities.

According to a study by US Bank, your business's cash flow could suffer if you're too lax in payment terms or don't follow up with customers who have outstanding balances – something that causes 82% of small businesses fail.

How to use Payment Terms

You can use payment terms to control how and when your customers pay you. These terms set the expectations on payment from the outset, so you avoid any confusion down the road.

Here are some tips on how to use payment terms to your advantage:

  • Ask for advance payment. In some cases, you can ask for an advance payment. This can be a good option for service providers who want to guarantee payment before commencing work.

  • Request a deposit. If the need for an advance payment is not genuine, consider asking for a deposit. For example, requesting a 50% deposit is a good option for larger projects.

  • Create a monthly retainer. If you have clients you work with regularly, you can set up a monthly retainer for them. This is a set payment amount that you agree to every month.

  • Set the terms of the invoice. If you work on and off for customers, you'll need to decide on the terms of the invoice. For example, you can set the terms of an invoice to be payable upon receipt, or you can choose payment terms up to Net 90. It all depends on what matters to you and your customer.

How to set effective payment terms

If you struggle to get your customers to pay their invoices on time, you may need to set more effective payment terms. Here are seven tips for setting better payment terms for your customers.

1. Use accounting software.

First, if you use accounting software, you can simplify your invoicing process and finances. The right accounting software will allow you to send invoices more quickly and with fewer errors.

Plus, you'll be able to track your upcoming payments, send automatic late payment reminders, and resolve your account with ease. And accounting software will ensure that your financial records stay organized and that you are prepared for tax season.

TipTip: Are you interested in trying out accounting software, but overwhelmed by all the options available? Check out our Best Accounting Software guide of 2022 like our QuickBooks Online review for details on small businesses or specific products.

2. Be prepared about your payment terms in advance.

Before you start working with a new client, make sure they understand and agree to your payment terms. Explain the terms verbally to your client and include a written statement in the contract you send. This will help clear up any misunderstandings customers may have about how much you owe and when the payment is due.

3. Be polite.

Want an easy hack to get your customers to pay you faster? Be polite when you invoice your customers, and include the words “please” and “thank you” somewhere on the invoice.

A study by FreshBooks found that invoices that include “thank you” in the invoice are paid about 90% faster. And 45% of those invoices are paid in seven days or less, while 12% are paid in 14 days or less. Using “please” has a similar result; These invoices are paid up to 88% faster.

4. Offer various payment methods.

Have you ever tried to shop at a store and found that the business only accepts cash payments? Think about how you felt when you realized it – were you frustrated and annoyed by the discomfort?

That's probably how your customers feel if you offer them limited payment options. If you want them to pay on time, make it as easy as possible for them. Offer different payment methods like credit card, debit card, online payment, ACH or even cryptocurrency payment.

5. Set shorter payment terms.

One of the best ways to get your customers to pay sooner is to shorten the due date. It sounds obvious, but if you give your customers a long time to pay, they'll usually take it.

For many industries, Net 30 is considered the gold standard for payment due dates. This is a good time frame, but if you have a client who regularly ignores your Net 30 due date, you might consider shortening it to Net 21 or Net 14.

6. Be flexible.

Obviously, you want your customers to pay you on time, but you want to recognize that sometimes you're dealing with another business, and that company may struggle with cash flow issues of its own. Is. Some businesses simply cannot accommodate Net 14 or even Net 30 payment terms, and would appreciate more flexible terms.

TipTip: If you have a customer who regularly makes late payments, talk to them without putting unnecessary pressure on them to find out what the holdup is. Try to come up with payment terms that work for everyone.

7. Provide discount for early payment.

Consider offering your customers early payment discounts. For example, your standard terms might be net 30, but customers receive a 2% discount if they pay the invoice within seven days.

So, if you send your customer an invoice of $5,000, they will receive a $100 discount if the invoice is paid early. These discounts tend to increase over time, so many customers can take advantage of it.

Of course, this type of discount means you'll accept less money on the invoice. But better cash flow may be worth it for your business.

how to use gel for business

  • Zelle for Business reduces the number of paper checks and cash payments for P2P and B2B transactions.
  • Zelle can offer instant payments, so you don't have to wait to receive your money.
  • Zell for Business has lower transaction fees than more popular competitors.
  • This article is for business owners and merchants interested in using Zelle for instant digital B2B transactions.

With businesses moving towards contactless forms of payment, digital payments offer many advantages over traditional paper checks and cash. Mobile payment processors like Zelle transfer money from one person's or business's bank account to another in minutes.

Transferring money instantly without any fees can be a game-changer for small businesses. You can provide convenience to your customers with little effort on your part. Plus, digital payments allow you to deposit and send money 24/7, whether you're an e-commerce or brick-and-mortar store owner.

While you're probably familiar with NFC mobile payment providers Apple Pay and PayPal, you may still be learning the ins and outs of Zell. So let's take a look at the fundamentals of Zelle and answer your questions about this emerging digital payments platform.

What is Zelle?

Zelle was founded in 2016 by Early Warning Services, headquartered in Scottsdale, Arizona. Its US-based peer-to-peer (P2P) and business-to-business (B2B) mobile services allow users to send and receive money using only the recipient's mobile phone number or email address.

More than 500 financial institutions are partnered with Zelle. However, your financial establishment must offer Zell as an option for your business account type for your company to use it. (Everyone is eligible to use Zelle's personal P2P service through their bank or the Zelle app.)

TipTip: Not all financial institutions that facilitate Zelle integration provide P2P and B2B services through their apps. Check with your bank or credit union to see what payment options it currently offers.

Zelle helps businesses and individuals reduce the number of paper check and cash transactions. Mobile transactions through Zelle provide instant payment, and Zelle can automatically remind customers who haven't paid. With continued adoption by small businesses and increasing consumer usage, Zell moved hundreds of billions of dollars in 2021 alone.

How does Zelle for Business work?

Prior to 2018, Zelle was only used for P2P transactions. Currently, Zelle is available for both P2P and B2B transactions. The expansion of B2B makes it easy for business owners with an established checking or savings account to access Zelle through their financial institution or app.

If you are dealing directly with your bank, be sure to read the information provided for Zelle B2B. Unfortunately, not all financial institutions offer B2B payment services, and some banks have business account restrictions.

Pros and Cons of Using Zelle for Business


  • You get instant payment without any routing number.
  • Payments get delivered to your bank account quicker, whatever the day or time, than with PayPal or Venmo.
  • There is no fee if you use a checking account.
  • It is a convenient way to pay without contact.
  • You can categorize your digital payments for stress free accounting.

did you know?did you know? While Zelle does not charge a fee, your financial institution may charge you a fee for Zelle transactions (although this is unusual). Zail allows banks to set their own transaction transfer limits for small businesses. Ask your bank about this before adding Zelle to your payment options.


  • Zelle for Business requires both the sender and the recipient to enroll in Zelle through their bank's mobile app.
  • Zail does not accept debit cards for transactions.
  • Gel does not offer purchase protection.
  • If a purchase has already been made and your customer wants to return the item, you must return the purchase with a different payment method.
  • If your recipient has more than one phone number and you send Zelle payments to the wrong one, it can delay the money transfer for a few days, as the recipient will need to add the mobile number you used to receive the transaction. had to have.
  • Zelle is not compatible with international banks.

Which banks and credit unions use Zelle?

The complete list of financial institutions that use Zelle includes hundreds of options. These are some well-known banks and credit unions that accept it:

  • associate bank
  • America First Credit Union
  • BMO Harris Bank
  • City Bank
  • farmers and traders
  • navy federal credit union
  • PNC Bank
  • People's Bank
  • USAA
  • Wells Fargo

Is the gel safe?

Zelle does not rely on paper checks or cash, so payments can be transferred from one account to another instantly. It also does not store transaction data on the user's server.

However, instant payment is not correct. If you send a payment to the wrong person, you can request a chargeback only if the charge shows up as a pending transaction, contact your bank immediately, or if the recipient doesn't have an account with Zelle. If you successfully cancel the transaction, you may have to wait up to 14 days (in case the recipient does not have a Zell account) to receive your money back.

TipTip: When you send money through Zail to a new recipient, it's ideal to send $1 for the first transaction. Once the initial transaction is complete, you can immediately verify that it was successful. This extra step prevents you from sending a large amount of money to the wrong contact.

How much does the gel cost?

Currently, Zelle does not charge any fees for its service. However, since banks can set transaction limits, they may charge a fee for using Zel. Check with your bank to see if any charges apply.

How to set up a Zell Business Account

To start using Zelle for Business, verify that you have an eligible bank account. You'll need at least a qualified business checking account and credit card (debit cards are not accepted). If you don't have Zelle as a payment option on your bank's mobile app or website, you'll need to download the Zelle app directly (on iOS or Android).

Select an email address and phone number to link to your Zelle business account. This email address and phone number may not be the same as those associated with your personal account. While it will give you one more login to remember, Zail is doing you a favor by keeping your personal and business transactions separate. [Related: How to Get a Business Phone Number]

To create or receive a transaction, you will need the customer's email address or phone number. Similar to PayPal and Venmo for Business, transactions are automated, with no routing number required. You can then use Zelle to send and receive money, and easily split bills through your bank or Zelle's app.

Zelle Frequently Asked Questions

Is Zell integrated with accounting software?

Currently, Zelle for Business is not integrated with accounting software. However, the best accounting software has options to record ZELL transactions manually. Use your bank account associated with Zelle to find a list of business transactions.

QuickBooks Online

Follow these steps to manually enter expenses through QuickBooks Online:

  1. On the left pane, select “Expenses”.
  2. Click on the Seller tab.
  3. Click on the seller's name.
  4. Find the bill and click “Pay”.
  5. Click “Save & Close”.
  6. Do the same for the other bills.

To learn more about this accounting software, read our review of QuickBooks Online.

oracle netsuite

Watch this useful video tutorial to manually enter expenses through the program. You can also read our Oracle NetSuite review to learn more about the software.

Zoho Books

While Zoho doesn't provide specific instructions for Zelle, it does have tutorials for popular payment gateways like Stripe, PayPal, Square, ACH, and WePay. Learn more about this software in our Zoho Books review.

Are there any transfer restrictions with Zelle?

Zell currently does not limit transactions when using a small business account. However, your bank may limit both the number of transactions and the amount of money transferred regularly. Contact the bank you are interested in connecting to Zelle to confirm specific transaction restrictions.

How does Zelle compare to other digital wallets?

Zelle is one of the many B2B payment options that has caught your attention. Let's see how Zelle compares to popular competitors in the B2B digital payments space.

number of users Accepted Payment Type compatibility transaction fee
15.1 million checking account debit card web, ios, android
  • 2.5% per B2B transaction ($0.25 min, $15 max)
  • Free for P2P accounts
500 million iOS
  • 2%-4% for credit card transactions
  • Free for Debit Card and Bank Transfer
30 million
  • P2P in-app payments to a business
  • Cash card or Visa prepaid card linked to customer's account
web, ios, android
  • 3% for credit card transactions
  • Free for Debit Card and Bank Transfer
100 million
  • Credit Card
  • Debit Card
  • Bank transfer
web, ios, android
  • 2%-4% for credit card transactions
  • 1.5% or $0.31 (whichever is higher) for debit card transactions
  • free for bank transfer
300 million
  • Credit Card
  • Debit Card
  • Bank transfer
web, ios, android
  • 2.9% + $0.30 for credit card transactions
  • 2.9% + $0.30 for debit card transactions
  • free for bank transfer
70 million
  • Credit Card
  • Debit Card
  • Bank transfer
web, ios, android
  • 3% for credit card transactions
  • Free for debit card transactions and bank transfers

High-risk credit card processing and merchant accounts

  • High-risk credit card processing and merchant accounts can provide companies with reliable payment processing services with high chargebacks and refunds.
  • Excessive chargebacks, typically over 0.9% of your transaction, can automatically put you in a high-risk category.
  • High-risk credit card processing and merchant accounts may offer multiple currency support and chargeback protection.
  • This article is intended for business owners who operate in an industry with a high risk or high rate of chargebacks and are considering a payment processing solution.

Whether your business falls into a certain industry category or has a high chargeback or refund ratio, it can be considered high risk. However, most business owners don't realize they are at high risk until they start applying for a merchant account to process their monthly transactions for ACH, debit and credit cards.

According to Bankcard, chargebacks increase by 41% every two years—a threat that should be on every entrepreneur's radar. Chargebacks don't just happen because of fraud; They can also arise from simple cardholder claims, such as “items were not described” or “merchant was not received.”

Once your company is denied a merchant account from traditional banks, it can be overwhelming to navigate the high-risk credit card processing and merchant account providers. Read on for basic information along with pro tips to help you choose the right provider for your company.

What is a high risk merchant account?

A high-risk merchant account helps high-risk businesses, whether by industry or business practices, have top-notch payment processing services.

If your business has a large number of chargebacks and refunds each month, you may be subject to a rolling reserve on your account, which can help cover transaction issues and fraud.

did you know?FYI: To be approved for high-risk credit card processing and merchant accounts, you'll need to organize all of your business finances. Be prepared to provide financial statements, banking records and tax returns for review.

High risk vs low risk merchant accounts

Before applying for credit card processing and merchant account, you need to decide whether you are a low risk merchant or a high risk one. While merchant account providers generally classify businesses into one or the other, several factors can separate the two.

high risk merchant account

Your processing history – and, in particular, your chargebacks – could put you in a high-risk category. Merchant account providers can add their own characteristics to the list, but here are some of the features that will mark your business as high risk:

  • $20,000 or more in monthly sales
  • Credit card transactions that average $500. More than
  • Trade with countries known to have high levels of fraud
  • history of bad credit
  • frequent chargebacks

TipTip: When applying for high-risk credit card processing and merchant accounts, be as detailed as possible in your industry description. If you try to rein in your company's methods, you may receive an incorrect rate quote.

low risk merchant account

A low-risk trader may need to meet several requirements; However, the most important are: low revenue, few transactions, and low chargebacks and returns. These are additional features of the low risk trader:

  • Credit card transactions are $500 or less.
  • Transactions add up to less than $20,000 monthly.
  • Industry is considered low-risk – such as essential goods, clothing, household and baby goods.
  • Chargeback ratio is low – less than 0.9% of total transactions.
  • Trade is accomplished in low-risk regions – such as the United States, Europe, Japan, Canada and Australia.
  • The rate of return is low.

What types of businesses require high-risk merchant accounts?

Here is a list of industries that require a high-risk merchant account:

  • 1-800 Chat Site
  • adult content
  • Airlines or Airplane Charter
  • annual contract
  • Ancient
  • Attorney Referral Services
  • auction
  • automotive broker
  • bankruptcy attorney
  • restricted or illegal goods and services
  • brokerage
  • “Business Opportunities”
  • car parts
  • casino, gambling or gaming
  • chain letter
  • check-cashing services
  • Cigarette, e-cigarette, vape or CBD shops
  • Coins, collectibles or autographed collectibles
  • Collection agencies and other debt collection services
  • Coupons or Reward-Points Program
  • Credit protection, counseling or debt repair services
  • dating services
  • direct response marketers
  • drug paraphernalia
  • E-Books (Copyright Content)
  • Electronics
  • event ticket broker
  • extended warranty companies
  • Fantasy Sports Website
  • Finance brokers, financial counseling or loan modification services
  • furniture seller
  • indirect financial consulting
  • game codes and hacks
  • Receive get-rich-quick books and events
  • health and wellness products
  • high average ticket sales
  • how-to websites
  • Horoscope, astrology or psychic services
  • promotional products or services
  • Hypnosis Specialists or Self-Hypnosis Services
  • International shipping, cargo or import/export services
  • Internet Service Provider and Hosting Services
  • iptv services
  • life coach
  • lingerie sales
  • lottery or sweepstakes
  • magazine sales
  • mail or telephone order sales
  • medical care program
  • subscription-based companies
  • money transfer services
  • Merchants on Terminated Merchant File (TMF) or MATCH List
  • merchants with bad credit
  • modeling or talent agencies
  • multi currency sales
  • Multilevel Marketing (MLM)
  • Music, movie, or software download or upload
  • Nightclub or Cabaret Bar
  • nutraceuticals
  • Offshore Corporation Installation Services
  • mortgage shops
  • phone-locking services
  • prepaid calling card
  • prepaid debit card
  • real estate
  • Replica Handbags, Watches, Purses & Sunglasses
  • self defense, pepper spray or mace
  • SEO Services
  • Smartphones – Sale, Resale & Spare Parts
  • social networking sites
  • sports forecasting or betting
  • Subacquisition / Merchant Aggregation
  • subscription-based billing
  • Technical support and web development
  • timeshare or timeshare advertising
  • Tour operator
  • Travel clubs, services or agencies
  • holiday planner
  • vacation rentals
  • Vitamins and Supplements Sales
  • VoIP Services
  • Weapons of any kind, including parts

What Makes a Business High Risk?

Here are some reasons why your business may be considered high-risk.

  • New Business: If your company was recently established, you cannot submit a comprehensive transaction history to the financial institution.
  • Not enough transactions: A merchant account provider needs to calculate your chargeback ratio. If you don't do enough transactions each month to score an average, it can put your business in a high-risk category.
  • Industry Type: Certain industries – such as travel, gambling and adult sites – are particularly known for exorbitant chargebacks due to the high number of cancellations.
  • Multiple chargebacks, refunds and frauds: After your business receives a large number of monthly transactions, your risk increases if you have high average chargebacks, refunds or fraud.

Advantages and disadvantages of high risk merchant accounts


Here are some of the benefits of a high risk merchant account:


Here are some disadvantages of a high-risk trader:

  • high processing fee
  • Potentially mandated reserve account, which can be as high as 50% of the monthly amount
  • Rolling reserve which can be kept for 180 days from the date of closure of the account

What to consider when looking for a high risk trader

When you search for a high risk merchant account, you will see that there are many options available. It's important to do your research before choosing one, as it can affect how much time you spend monitoring transactions and how this may affect your future finances.

There are a few features you should consider when selecting a high-risk credit card processor:

  • Timely Support: Any erroneous transaction through your website can cause issues that quickly snowball. Choose a provider who offers proactive support and has your back when it comes to a problem.
  • Custom Payment Options: Your provider should be able to meet your complex business needs by enabling custom payment forms that allow multiple payment scenarios.
  • No hidden fees: Make sure you know all fees in advance. High-risk credit card processing and merchant account monthly costs should be easily found on the provider's website. If not, a quick phone call or chat should be able to answer all your questions.
  • Up-to-date technology: Your payment partner should be aware of payment trends and provide an open API. Onboarding should be seamless and should take days, not weeks. Avoid high-risk payment processors that have outdated websites, excessive downtime and lack the technical knowledge needed to meet your business needs.
  • Anti-fraud tools: Since high-risk accounts are subject to fraudulent behavior, look for a merchant account that has enhanced security measures — including chargeback prevention and multifactor authentication.
  • market leadership: Choosing a high-risk merchant account can take time, and you also need to take into account the time for onboarding and customization. Choosing a reputable company not only saves your time, but also protects your money.
  • Customer Support: If your business operates in a certain industry, several industries or with a diverse group of countries, choose a credit card processor that can meet all of your unique needs. Industry and country support should be readily available on the website.

did you know?FYI: Many high-risk merchant account providers try to lock their clients into long-term contracts. Just because you need this service now doesn't mean you'll always need a high-risk credit card processing and merchant account. Choose a company that allows you flexible contract terms, such as month-to-month contracts.

Since a high-risk merchant account is more strict than a low-risk account, always read the contract provided before signing. Fine print can affect your rates, fees and fines.

What is cost allocation? –

  • Cost allocation is an important factor in the profitability of any business.
  • Business owners can use cost allocation findings to evaluate employees' performance.
  • The process of cost allocation involves calculating both direct and indirect expenses, such as factory labor and small amounts of materials.
  • This article is for business owners who are interested in learning how to allocate costs.

For your business to make money, you must charge prices that not only cover your expenses, but also provide profit. Cost allocation is the process of identifying and assigning costs to cost items in your business, such as products, a project, or even an entire department or individual company branch.

While a detailed cost allocation report may not be important for extremely small businesses, such as a teen's lawn service, more complex businesses require a process of cost allocation to ensure profitability and productivity.

important achievementsImportant achievements: In short, if you can specify a cost for any part of your business, it is considered a cost item.

What is cost allocation?

Cost allocation is the method business owners use to calculate profitability for financial reporting purposes. To ensure that the business's finances are on track, costs are segregated or allocated into different categories based on the area of ​​the business.

For example, the cost allocation for a small clothing boutique would include the cost of materials, shipping and marketing. Consistently calculating these costs will help the store owner ensure that the profit from the sale exceeds the cost of owning and running the store. If not, the owner can easily decide where to raise prices or cut expenses.

For a large company, this process would apply to each department or individual location. Many companies use cost allocation to determine which sectors receive an annual bonus.

TipTip: Regardless of the size of your business, you'll want to review and choose the best accounting software to help make this process run as smoothly as possible.

type of cost

In the boutique example above, the process of cost allocation is very simple. For larger businesses, however, there are many more costs involved. These costs break down into seven categories.

  • Direct Cost: These expenses are directly related to a product or service. In your business's financial statements, these costs may be linked to goods sold. For a small clothing store, this may include the cost of inventory.
  • direct labour: This cost category includes expenses directly related to employee production of the goods or services your business sells. Direct labor costs include payroll for employees involved in making the items your business sells.

  • direct materials: As the name suggests, this category includes costs related to the resources used to manufacture the finished product. Direct materials include the fabric used to make clothes, or the glass used in making tables.

  • indirect costs: These expenses are not directly related to a product or service, but are necessary to create the product or service. Indirect costs include payroll for those working in operations. It also lists the costs of materials you use in such small quantities that their costs are easy to overlook.
  • manufacturing overhead: This category includes warehouse costs and any other expenses related to manufacturing the products sold. Construction overhead costs include payroll for warehouse managers, as well as warehouse expenses such as rent and utilities.

  • overhead costs: These include expenses that support the company as a whole but are not directly related to production. Some examples of overhead costs are marketing, operations and utilities for a storefront.
  • Product cost: Also called “manufacturing cost” or “total cost,” this category includes the expenses incurred to manufacture or obtain the product you want to sell. All manufacturing overhead costs are also listed in this category.

example of cost allocation

To better explain the process of cost allocation and why it is essential for businesses, let's look at an example.

Dave has a business that manufactures glasses. In January, Dave's overhead costs totaled $5,000. In the same month, they produced 3,000 glasses with $2 in direct labor per product. Direct content totaled $5 for each pair of glasses.

Here's what the cost allocation would look like for Dave:

Overhead: $5,000 $3,000 = $1.66 per pair

Direct Cost:

  • Direct Content: $5 per pair
  • Direct Labor: $2 per pair
  • Overhead: $1.66 per pair
  • Total cost: $8.66 per pair

As you can see, without the cost allocation, Dave would have made no profit from his sales. Large companies will apply this same process to each department and product to ensure adequate sales targets. [Read related article: How to Set Achievable Business Goals]

how to allocate cost

Cost items vary according to the type of business. However, the cost allocation process consists of the same steps, regardless of what your company produces.

1. Identify cost items.

To begin allocating costs, you must list the cost items of your business. Remember that anything that generates an expense within your business is a cost item. Review each product line, project, and department to make sure you've gathered all cost items.

2. Create a cost pool.

Next, collect a detailed list of all business costs. It's a good idea to classify costs based on the reason for each amount. Categories should include utilities, insurance, square footage and any other expenses your business incurs.

3. Allocate cost.

Now that you have listed cost objects and created a cost pool, you are ready to allocate costs. Add up the costs of each cost item as shown in the example above. At a glance, your report should justify all expenses related to your business. If costs don't add up correctly, use the list to determine where you can make adjustments to get back on track.

What is cost allocation used for?

Cost allocation is used for a number of reasons, both external and internal. The reports created by this process are great resources for making business decisions, monitoring productivity, and justifying expenses.

External reports are calculated based on generally accepted accounting principles (GAAP). Under GAAP, expenses can be reported in the financial statements only during the period in which the respective revenue was earned. For this reason, overhead costs are divided and allocated to different inventory items. When inventory is sold, overhead is incurred as a portion of the cost of goods sold (COGS).

Internal financial data, on the other hand, is typically reported using activity-based costing (ABC). This method assigns all products the overhead expenses incurred by them. This process may not include all overhead costs related to operation and manufacturing.

The cost allocation report describes which cost items cost the most and which products or departments are most profitable for your business. These findings can be a great resource to engage with employee monitoring software when evaluating productivity. If you determine that a cost item is not as profitable as it should be, you should evaluate further on productivity. If any other cost items are found to exceed expectations, you can use the report to find staff members who are eligible for recognition for their contributions to the company.

did you know?did you know? Recognition is one of the best ways to keep employees motivated.

What is a cost driver?

A cost driver is a variable that can change the costs associated with a business activity. The number of invoices issued, the number of hours worked by employees, and total purchase orders are all examples of cost drivers in cost accounting.

While cost items relate to the cost of a specific process or product, a cost driver highlights the reason for the cost amount spent. These items can take different forms – including fixed costs, such as initial fees during the startup phase. Cost drivers give a bird's eye view of the entire company and how each department works.

did you know?FYI: It is common with very small businesses to use only one cost driver, as they are focused on using minimal reporting to estimate overhead costs.

Benefits of cost allocation

  • This simplifies decision making. Cost allocation gives you a detailed account of how your business expenses are used. From this perspective, you can determine which products and services are profitable and which departments are most productive.
  • It helps in appraisal of employees. You can also use cost allocation to assess the performance of different departments. If a department is not profitable, there may be a need to improve the productivity of employees. Cost allocation can also be an indicator of departments that exceed expectations and deserve recognition. Rewards and recognition are a great way to motivate employees and in turn increase productivity. [Read related article: Best Business Productivity Apps]

Even if you operate a very small business, it's a good idea to learn the process of cost allocation, especially if you anticipate expansion in the future. Since the method can be complicated, it is ideal to use accounting software as an aid. Whether you start allocating costs with software yourself or hire a professional accountant, this is a process no business owner can afford to ignore.

Understanding MACRA and MIPS –

  • MACRA is the federal law that brought MIPS into effect. You may be required to file MIPS data if you or your practice meet certain criteria.
  • If you provide better care, the MIPS program can lead to higher reimbursements for your practice, just as lower quality care can lead to lower reimbursements.
  • Whether you qualify depends on your physician type, billing volume, and other factors. Some qualified practitioners are not required to participate, while others are required to participate.
  • This article is for physicians who wish to determine whether the individual or group care they provide qualifies them for MIPS.

Think about the last time you had a quiet day in your medical practice. If you can't remember one, it may be because you're operating on a traditional service-fee model, which requires you to see as many patients as possible to make a profit. Many doctors are not thrilled about this model, and neither are policy makers. That's why the federal government enacted a law called MACRA in 2015, creating the MIPS program that cuts some physicians away from the service-for-fee model. Learn all about MACRA and MIPS below.

What is MACRA?

MACRA is an acronym for Medicare Access and CHIP Reauthorization Act. (CHIP stands for Children's Health Insurance Program.) This federal statute went into effect in 2015 and changed how Medicare reimburses Medicare practices when they care for patients. It moves Medicare providers from a traditional service fee model to a potentially more progressive value-based health care approach.

According to the Centers for Medicare and Medicaid Services (CMS), MACRA rewards physicians for the quality of care they provide, not the amount. This definition is in line with widely accepted notions of value-based care.

When effective, MACRA replaced the Value-Based Modifier (VBM), the Medicare Electronic Health Record (EHR) Incentive Program and the Physician Quality Reporting System (PQRS). MACRA retained several key components of these programs and merged them into one: the Quality Payment Program (QPP). There are two avenues for practitioner reimbursement within the QPP: Advanced Alternative Payment Models (APMs) and Merit-Based Incentive Payment Systems (MIPS). Your practice should be familiar with the latter.

important achievementsImportant achievements: MACRA is a federal law that introduced the MIPS model for businessman reimbursement in 2015.

What is MIPS?

MIPS determines how much Medicare pays your practice for your services. This gives your practice an overall performance score that affects how much Medicare pays you. Your score will range from zero to 100 and depends on four factors: quality, promoting interoperability, improvement activities and cost.

  1. Quality: The quality of care you provide is based on standards set by CMS and professional medical groups. You choose six quality metrics that best suit your practice, and CMS will evaluate you based on only those. In 2022, quality will comprise 30% of your MIPS score.
  2. Promoting Interoperability (PI): This category encourages practices to use certified EMR software (see our AdvancedMD review for examples) to streamline the electronic exchange of health data and improve patient engagement. In 2022, your PI score makes up 25% of your total MIPS score.

  3. Improvement Activities: Your improvement activities score reflects the efforts you have made to strengthen your patient care processes. It also keeps track of how you improve patient engagement and access to all of your care. Like quality metrics, you can choose improvement metrics that best suit your practice. In 2022, improvement activities will account for 15% of your score.
  4. cost: As its name suggests, this final MIPS metric reflects the cost you incur to provide patient care. CMS uses the medical claims you send to Medicare to calculate this metric. Your cost score comprises 30% of your final score in 2022.

Note that all of the above percentages may change if you file an exception application or participate in APM instead of MIPS. If the CMS gives you special status they may change. Additionally, if you do not see enough patients to meet the eligibility of any cost metric, the cost will not be part of your MIPS score. CMS will distribute 30% of its load to other factors.

important achievementsImportant achievements: MIPS changes the amount Medicare will reimburse you based on the quality and cost of your care, as well as your practice's interoperability and improvement measures.

What do MACRA and MIPS mean for providers?

MACRA and MIPS influence the following practice and business ideas.

  • Your payment amount: If your MIPS score is above 75, you will receive reimbursement 27% more than you would otherwise receive. In contrast, a MIPS score of less than 75 leads to a 9% lower reimbursement than you previously received. A MIPS score of exactly 75 does not change your reimbursement amount.
  • Your use of medical software: The PI portion of the MIPS score shows that the government is pushing for medical practices to switch from paper records to digital records using medical software. The transition has been completed across almost all providers, CMS reported, adding that around 9 out of 10 providers currently use EMR systems. The Pi's persistence as a category suggests that now is the time to implement medical software that is interoperable with other systems if you haven't already.
  • Changes in the care model in the medical industry: There is a very different model to fee model for a value-based care service, and MACRA and MIPS may see the former gradually dominate the latter. This could mean that doctors who need to maximize their appointments to earn more revenue will no longer face this burden. The end result could be an industry with too little stress doctors trying to do too much.

Who Qualifies for MIPS?

In theory, all of the above criteria mean that if you see Medicare patients, you qualify for MIPS. In reality, that's not true at all. Some exercises do not qualify for MIPS. Below are all the qualifying factors.

some kind of doctor

CMS automatically qualifies the following types of practitioners for MIPS. If you fall outside of these categories, you may not qualify for MIPS:

  • Physicians (including doctors of medicine, optometry, osteopathy, podiatry, and dentistry and surgery)
  • medical assistant
  • osteopathic doctor
  • nurse practitioners
  • clinical nurse specialist
  • Certified Registered Nurse Anesthetist
  • certified nurse-midwives
  • Registered Dietitian or Nutrition Professional
  • Qualified Audiologist
  • Qualified Speech-Language Pathologist
  • clinical psychologist
  • clinical social worker
  • occupational therapist
  • physical therapist
  • chiropractors

individual and group qualifications

If you are an individual physician, you qualify for MIPS if the following statements are true:

  • Your Medicare Part B claim identifies you as one of the above types of physicians.
  • You enrolled as a Medicare provider on or before 2021.
  • You do not participate in the qualifying APM.
  • You as a person have exceeded the low-volume threshold (detailed below).

If you practice as part of a group the rules are mostly the same. The only difference is that your group, not just you, must exceed the low-volume limit. This rule also applies to virtual practice groups. Additionally, if you or your group meets only one or two of the three low-volume criteria (detailed below), you can join MIPS. In that case it would not be required to do so, but it could lead to more reimbursement.

low volume threshold

Your practice volume at the end of your MIPS determination period will also be a factor in whether you qualify. If you meet the following criteria, your practice exceeds the low volume limit and qualify for MIPS:

  • You billed at least $90,000 for professional services covered by Medicare Part B.
  • You had more than 200 encounters with Part B patients.
  • You have provided at least 200 covered professional services to Part B patients.

Note that any individual practitioner who qualifies for MIPS must report the data to the CMS. Opt-in merchants can choose whether or not to do so. Whether you're reporting MIPS data because you need it or because you've chosen to, the potentially high reimbursement can be worth your while.

Page not found –

We messed something up. That's why you are viewing this page. This is called a 404 page.

If you have an online business or personal website, you probably also have a page like this on your site. But your 404 page doesn't need to be a dead end for your customers. Instead, you can turn digital lemons into lemonade by making the best of a poor user experience. Here's some advice on how to design a user-friendly 404 page.

Make sure people know something went wrong.

This is our bad. You probably clicked a bomb link. Our fault, not yours.

An apology means a lot when someone tries to make things right.

We just looked at the page you came from and where you were trying to go. Now we can correct our mistake.

Credit Card Processing Scams Targeting Small Businesses

  • Credit card processing is essential for any business that accepts credit or debit card payments.
  • Unfortunately, scams are common within the credit card processing industry, and many small business owners are victims.
  • When choosing a credit card processing service provider, check customer reviews and Better Business Bureau information to make sure it's legit.
  • This article is for business owners who want to know the common scams when considering a credit card processor.

If you want to stay ahead of the competition in any industry, you have to accept credit card payments. As many business owners know, card payments are so popular that cash-only businesses can be a deterrent for many consumers. This means you'll need to find a credit card processor, and the process can be a bit tricky.

Credit card processors are well aware of the freedom to charge businesses for their services; Unfortunately, few business owners take advantage. Here's a look at the most common credit card processing scams and what you can do to avoid them.

How to Choose a Credit Card Processor

Every credit card processor you come across will offer a variety of pricing plans and features you may not need. To make the process a little easier, here are three keys to look for when weighing your options.

  • Price determination: A good rule of thumb is to stay away from processors at rates that processors can change at their discretion.
  • Purchase: Stay away from processors who try to persuade you to lease a terminal, as this can add thousands to your bill.
  • Customer Support: Do your research to make sure your processor offers live support during your business hours.

While these factors are a good start, they do not cover tips that some credit card processors may try. Let's dive into the details of the most common scams you may come across during your search.

did you know?FYI: Before you start your search, it helps to have at least a little general knowledge about how credit card processing works.

hidden transaction fees

Some payment processors use the following quotes to attract business owners, and then add up costs based on the types of transactions. For this reason, it's a good idea to stay away from credit card processors that offer tiered pricing models.

Tiered pricing means that the processor divides your fees into three different categories based on the type of payment method used: qualified, mid-qualified and non-qualified. Debit card transactions usually fall under the low-cost eligible tier. On the other hand, if your business accepts cardless transactions such as Apple Pay, the processor may list it as a non-qualified transaction. Typically, mid-qualified and non-qualified transactions come with very high fees that add up over time.

How to avoid hidden transaction fees

The number one way to avoid hidden transaction fees is to choose a credit card processor that charges a flat rate. If you feel like trying out a tiered pricing processor, always be sure to read the fine print before compromising. If you want to learn more, review these tips to reduce your credit card processing fees.

equipment leasing

Do your best to avoid equipment lease agreements with credit card processors, even if you don't have the capital to purchase your equipment. If you find that the credit card processor you're considering is pushing you to lease equipment, your best bet is to keep shopping.

Leasing equipment means no cost, but over the course of a few years, you'll end up paying thousands of dollars. On the other hand, buying your credit card terminal will typically cost around $300. So equipment leasing comes down to this choice: Would you rather pay $300 or $4,000 for your credit card terminal?

How to Avoid Leasing Equipment

So what should you do if you don't have the capital to buy a terminal? A short-term terminal rental may be worth considering. A better option is to restart the devices you already have. If you have between $100 and $300, it's best to do your own research and find a credit card machine that best suits your business needs before talking to a processor about leasing options.

hidden overload

After gathering all the details about your rates per transaction, be sure to ask about surcharges. It is not uncommon for credit card processors to add fees that are not included when they disclose rates.

As you can imagine, surcharges can significantly increase the value of your bill each month, adding up to hundreds or even thousands more than you'd expect in the long run. When you review your contract, pay attention to the “surcharges” section to find out how much your processor charges extra.

how to avoid surcharge

Besides reading the fine print of your contract, there are other ways to avoid surcharges. Choose a credit card processor that will not charge cancellation fees. That way, if your first bill is higher than you expected, you're free to find a second processor to do the job for. Also, make sure you find a processor that you can pay for on a monthly basis so that you don't run into unexpected surprises. If you are a sole trader, you may want to consider a processor that does not have a contract, such as PayPal. You can learn more about its processing service in our PayPal review.

no customer support

Ask about customer support a few hours before you settle with your credit card processor. Some sales reps may be persistent until you sign the contract, but once you do, it becomes nearly impossible to reach someone for support.

This is especially the case when the credit card processor outsources it to sales representatives and customer service representatives. This is because the reps are focused only on the commission they get from the sale; Once they land for sale, they disappear.

How to avoid a lack of support

Do your research to avoid this scam. Get the opinions of other business owners who work with the credit card processor you are considering. It's also a good idea to read reviews online from reputable sites like the Better Business Bureau. Another good rule of thumb is to review their site for online resources, such as an FAQ or a section for blogs.

Speed ​​up the selection process

Don't let a potential credit card processor rush you into signing an agreement. If a sales rep you're working with tries to pressure you with offers of dates or limited times, take it as a big red flag.

This does not mean that credit card processors should not inform you about special offers. On the other hand, no company should use an offer deadline to force you to choose them. In choosing a credit card processor, you are essentially looking for a partner for your business, so always take your time.

How to avoid rushing into signing a contract

Stay away from this scam by taking your time to research more than one credit card processor. Even though one credit processor may initially seem like the best option, keep looking at at least two other processors. When you make a decision, base it on your own research, not pressure from a seller.

POS software

Another trick credit card processors can use is to try to sell you specific point-of-sale (POS) software. The fact that the software can handle all of your business tasks can be appealing. The problem comes when software drives prices through the roof because it's another expense your credit card processor can deal with on your bill.

Credit card processors know that if a business finds a better solution, it has the option of giving up. If you are using their POS software, this makes it harder for you to opt out. After all, would you really want to go through the trouble of starting from scratch when everything is already running?

How to Avoid POS Software Scams

If a credit card processor offers POS software, ask if the software is compatible with other payment processors. If the answer is no, that is a huge red flag. It might look attractive initially because of the convenience, but there is a chance that it will give you a big headache and will cost you big in the long run. It is also possible to find credit card processors that do not charge for POS software. Read our Square review for an example.

Finding Legitimate Credit Card Processors

In short, you will need to do your due diligence on the processor before entering into a contract. Are you considering the credit card processor a reputable company? If you need help figuring this out, take a look at this list of the best credit card processing companies.

Even with the best processors, service agreements can be lengthy and a bit confusing for a very established business owner. Resist the urge to leave out details. Before your search, know what to look for in your credit card processing service agreement. Choosing a processor is a big decision that can either speed up business operations or add an excessive amount of stress.

How to Run Payroll in QuickBooks

  • Processing payroll in QuickBooks Online is easy and effective.
  • You can sync both your business account and your employees' accounts and process payroll with same-day payments.
  • Creating a pay schedule allows for recurring payroll payments.
  • This article is for business owners, human resources professionals and accountants who want to run payroll in QuickBooks Online.

QuickBooks Online helps streamline accounting tasks while keeping all the data, information, and reporting in one place. Payroll is another feature that QuickBooks Online (QBO) offers, should your business have employees and need to do any of the following:

  • Pay your team.
  • Manage employee benefits.
  • Automatic tax calculation and withholding.
  • Store federal and state tax information.
  • Link payroll expenses to general ledger accounts.

did you know?did you know? QuickBooks is the No. 1 online payroll provider for small businesses. Read our QuickBooks Payroll review, and see how Quickbooks compares to Gusto Payroll.

Adding payroll options to your QBO account increases the cost of your subscription, along with additional features. These include the ability to make same-day or next-day direct deposits, the ability to manage employee benefits, and automatic tax calculations and withholding. [Related: Best Payroll Software Providers]

Editor's Note: Looking for the Right Accounting Software for Your Business? Fill out the questionnaire below to have our vendor partners contact you about your needs.

Before You Run Payroll in QuickBooks Online

If you're familiar with QBO, setting up payroll is easy. Here's a four-step process to set up payroll in QBO:

1. Under payroll Tab on Dashboard, click employees,

If you're new to QBO, you'll need to complete the Get Started steps the first time you log into your account. After a brief tutorial and setup, you will be able to access the Payroll tab.

The next command will ask you different questions about employees, working hours, human resource support, etc. This allows QBO to help you find the best payroll add-on for you, meeting your needs without adding any unnecessary features or functions.

2. Key to payroll information for employees.

After finding the best plan for your needs, QBO will ask if you have paid employees in the current calendar year. Whether you used accounting software or a manual system to pay employees, if you paid them in the current calendar year, you'll want to answer yes. If you are paying an employee or employees for the first time within this calendar year, answer no.

If you answer yes, you will need to enter current year payroll information for each employee you paid in the active calendar year. This helps ensure that W-2 information is accurate when you release the statement for tax purposes. QuickBooks Pro does a great job of creating tax documents like W-2s, which is another bonus of running payroll through QBO.

3. Set a date to run payroll.

The next prompt will ask when you plan to run your first QBO payroll. After you set up a date, QBO will ask about the location where most of your employees work.

If your employees live in the state in which the company is located, they are considered resident employees. Typically, resident employees owe state and local taxes, as well as state unemployment insurance taxes paid by their employer, while state taxes are withheld.

If your employees live in other states, it gets a little more difficult. Since remote working has become very popular over the years, it is no longer uncommon in many states to have employees. For non-resident employees or out-of-state employees, employers withhold state tax from the state in which their employee resides. Since states do not conform to their own laws and tax requirements, you may want to do some research about how your state and their state handles nonresident employees.

4. Enter employee information.

You must enter the following information for each employee.

  1. personal information: Here you enter their first name, middle name and last name. You also enter their rental date and email address. In this first step, you can also check if you want the employee to be able to add their own hours and view their pay stubs and W-2s online.
  2. Frequency of Salary: In this step, you can create a salary schedule and answer the following questions.
  • How often do you pay? There is a drop-down menu that allows you to select weekly, biweekly, semimonthly or monthly pay.
  • When is the next pay day? Enter the specific date.
  • When is the last day of work (pay period) for that pay day? Enter the specific date.
  • What do you want to name this pay schedule? Create a name.

After answering these questions, you can use the same schedule for all employees. QBO then shows you the next four pay periods and the next four paydays for your employee.

  1. rate of pay: There is a drop-down menu that allows you to select only hourly, salary or commission with the appropriate dollar amount. You can also add other payment types, such as overtime, paid time off, sick pay, vacation pay and holiday pay.
  2. Deduction: This move allows you to make a significant contribution to all deductions for this employee. Deductions you can add include healthcare, retirement plans, flexible spending accounts, HSA plans, garnishments, and loan repayments. The normal repetition is the same amount each pay period. You can filter the amount by dollar amount or percentage of gross pay.
  3. Withholding: You'll get your employee's information from their W-4 and key in all withholdings in this step. Their general information goes here, along with their Social Security number, tax filing status, dependents claimed, and any other income, deductions or withholdings mentioned on their W-4.
  4. payment method: The drop-down menu gives you the option of direct deposit, paper cheque, direct deposit in two accounts and direct deposit with the balance in the form of cheque.

After completing these steps, you are ready to run payroll in QuickBooks.

TipTip: Learn how to set up direct deposit for an effective way to pay your employees.

How to Run Payroll in QuickBooks

Processing payroll in QBO is a simple four-step process. Once you've entered all employees into the system, you're ready to run payroll.

1. Access your Dashboard payroll, then choose run payroll.

2. Enter hours. You will be prompted with the regular Pay Hours function. While QBO automates the number of hours worked for each employee, as you completed in the steps above, it is important to verify the accuracy of each pay period and adjust as needed.

3. If all is correct, select preview payroll and review.

4. Select Submit payroll. Like many of QBO's functions, you can review, download, and print a summary of the payroll report.

did you know?FYI: Once you submit payroll, you can print checks for your employees or have QBOs communicate with banks and financial institutions to transfer funds from your business account to their direct deposit accounts, thereby Your payroll will become part of the paperless office.

Ease of Running Payroll in QuickBooks Online

Whether you're a new or experienced user, running payroll in QBO is straightforward. While the system involves some manual data entry when entering each employee's information, running payroll through QBO weekly, biweekly, semimonthly or monthly will save you time so you can run and manage other aspects of your business. For other options, see our best pick of accounting software.

How to Use Variable Pay in Your Small Business

  • Variable pay includes bonuses, commissions or management by objectives (MBO) that encourage your sales agents to make more sales.
  • You can use six different commission structures to determine your variable pay.
  • In addition to incentivizing employees, variable pay is useful for establishing your competitive advantage in hiring and meeting your revenue goals.
  • This article is for business owners who are interested in adding variable pay to their sales agents., Compensation.

Employees of all stripes often receive bonuses around vacation time. This extra money can be a worthwhile gesture during a period characterized by generosity and gratitude. It works a little differently with sales employees, who often earn bonuses or other types of variable pay at several points throughout the year. Read on to learn how employers can use variable pay to incentivize their sales teams and set their own pay rates initially.

What is Variable Pay?

Variable pay includes additional pay that you pay to sales employees when they hit certain performance points or make more sales. For example, if your sales agents earn a certain amount of additional pay each time they make a sale, these additional salaries are variable pay.

The term “variable” refers to the fact that sales employees rarely, if ever, earn the same amount of this salary per payroll cycle. In contrast, base pay is constant and does not vary between pay cycles. Together, an employee's base pay and variable pay are known as the employee's salary mix.

significant achievementsImportant achievements: Variable pay is the additional money that your sales agents earn on top of their basic pay for securing a certain number of performance points.

What are the Different Types of Variable Pay?

Variable pay falls into three categories: commissions, bonuses and management by objectives (MBO).

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  • Commission: Many employers reward their sales agents with a percentage of the value of each sale they make. This structure is known as commission. For example, let's say your sales agents earn a 2% commission on all their sales. Let's say a sales agent makes $6,000 in sales in this pay cycle. You would then add 2% of the $6,000, or $120, to their next paycheck. [Related: How to Print Paychecks]
  • Bonus: Where the commission varies from the value of the sale, the bonus may be independent of the sale. Sure, you'll probably give your best-performing salespeople a bigger bonus than your lowest-performing agents, but the amounts you pay aren't tied to sales prices. Instead, bonuses are single-installment payments that have only an indirect effect of personal selling. [Related: Guide to Paying Holiday Bonuses]
  • MBO: When you set up an MBO for your employees, you set them goals by a certain time frame. You can provide financial incentives to encourage your team to achieve these goals on time. When you do this, you add another type of variable pay to your payroll.

What are the Different Types of Sales Commission Structures?

Should you decide on commissions as your primary form of variable pay, you can choose from several sales commission structures.

1. Level Commission Structure

In a tiered commission structure, the percentage of variable pay earned by a seller on each sale increases as their total sales price increases. For example, let's say your agents currently earn a 3% commission on all sales. This is a great start to a highly persuasive commission program, but it can be made even more effective. After $200,000 in total sales, increasing this 3% commission to 5% can further encourage your sales team.

2. Revenue Commission Structure

When you think of commissions you probably think of the revenue commission structure. This structure simply describes the flat-rate commission for each sale – for example, the above 2% commission on a sale of $6,000. It has the easiest commission structure to implement and track, making it a great option for small or new sales teams.

3. Draw Against Commission Structure

The draw-against additional wages result against commission structures that are somewhat more predictable than other forms of variable pay. The draw-against amount describes the additional wages you pay to your sales agents even if they don't make any sales. You can also deduct that amount from future revenue commission payments. It is a good commission structure option for new reps or during periods of economic uncertainty.

4. Gross Margin Commission Structure

The gross margin commission structure functions almost identically to revenue commission structures. However, under this structure, you would calculate the commission based on the gross profit of the sale, not its income.

Let's see how this structure will affect the above 2% commission on sales of $6,000. If the expenses associated with that sale were $500, the sales profit would be $5,500. You would then calculate the commission based on this slightly smaller amount – in this example, 2% of $5,500, or $110. Gross margin structures may be better if you are looking to motivate your team and maximize your profits.

5. Multiplier Commission Structure

A multiplier commission structure combines the key features of tier and revenue structures in a more complex approach. This combined structure can help you track and build your sales pipeline. You will calculate each seller's commission based on the percentage of the sales quota they have fulfilled. Employees up to 70% of their quota can earn 1% commission, while employees solely on their quota can earn 2%.

6. Commission-Only Structure

Under a commission-only structure, a salesperson receives only variable pay and no base salary. Removing basic pay from the salary mix can motivate salespeople, but they can experience greater levels of stress when they don't have a salary, which they can hold back on. They may also need to be pushed too hard or too hard, which can potentially lead to irritation.

What is the difference between bonus and commission?

Since commissions are a percentage of a seller's total sales, they theoretically have no limit. In contrast, bonuses are flat-rate payments made to salespeople who achieve certain goals. This flat rate ensures that payments do not exceed a certain amount and can help you motivate your employees without cutting into your profits too much. You can also set aside a bonus pool and give a percentage of a specific bonus to employees who partially meet a goal.

Given these differences, bonuses may be better for larger or older sales teams. They're also great for those on your sales team who don't do direct sales. Commissions may be better for new teams composed primarily of employees who generate leads, drive sales and interact with customers.

TipTip: Bonuses are a better option for larger, older, less sales-oriented teams. Commissions are percentage-based and better for new, sales-heavy teams.

How do you implement a compensation plan?

Once you know whether a commission, bonus or MBO variable pay plan is the best fit for your small business, you need to go about implementing it. Doing so is generally an easy process, but it does require some skill and care to install evenly. There are three main things you should keep in mind while implementing your plan.

1. Your sales agent can control the incentives.

Let's say your sales team interacts directly with customers. In that case, setting up a commission structure can be easy: You'll multiply each agent's total sales by your commission rate.

However, let's say your team does mostly business-to-business (B2B) sales, but your company also does business-to-consumer (B2C) sales, mostly as a result of effective storefront placement. In that case, tying commissions to consumer purchases may fail to encourage your team. Instead, tie your commission to the B2B service of selling B2C products in bulk to retailers for resale. This way, you give your sales team a fair chance of earning variable pay.

2. Offer variable pay based on the performance of the employee (not the team).

A poorly performing team may have one or two star players. You should reward these agents with their own variable pay rather than linking their commissions and bonuses to team performance.

3. Give more variable pay to employees with more direct sales impact.

Let's say your sales team includes employees who handle each of the following: lead generation, initial calls with prospects, and deal closing. Each of these parts of the sales cycle has a different effect on sales. Lead generation is less directly tied to sales than an initial call, which in turn has less impact than closing a conversation. Each of these roles should be linked to variable pay that reflects these distinctions.

For example, let's say three people were involved in a $10,000 sale. One person generated the lead, one person initially reached out and one account executive eventually sealed the deal. You can pay 1%, 2% and 3% commission to each of these individuals respectively. This rate comes to $100, $200, and $300, or a total of $600. This is less than the $900 that would come from paying 3% commission to all three people.

4. Use payroll software.

The more sales your team makes, the more difficult it can be to track sales and commissions for each employee. Payroll software can reduce these errors while streamlining the calculation and payment of your commission.

TipTip: Visit our reviews of the best payroll software to learn how these systems allow you to include commissions in your paycheck. Read our Intuit QuickBooks Payroll review for a specific example, or see how Quickbooks stacks up against Gusto Payroll.

What are the benefits of implementing a variable pay structure?

Variable pay structures encourage your employees to work more to make more sales, but that's not the only reason they're valuable.

When you offer variable pay, you give yourself a competitive advantage over other companies that recruit sales agents. This advantage can help you when you are looking to get hired and when you already have a strong team. Your team members may be less likely to leave when their salary mix can be found elsewhere.

Variable pay can also shape how your team makes sales. If you want to propel your team in a certain direction, you can relate their variable pay to how well they achieve these goals. Variable pay shapes your ability to reach your revenue goals. A team that is performing to your goals is more likely to reach your ideal figure, making variable pay good for both your employees and you.