How Credit Card Processing Helps Small Business Startup

Small businesses thrive or die daily due to how well they maintain cash flow. Although there are a number of ways to generate revenue, often small business owners worry when a sale occurs but the actual payment is in arrears. This puts the business in the position of having to front cash for expenses while waiting for a payment to post. The business remains in a tenuous position, especially with traditional payment formats such as checks and cash.

By offering credit card processing, however, a small business enjoys multiple benefits that immediately augment cash flow while making the business compatible with the most popular way to buy services and goods today. Just about everyone, individuals as well as other businesses, have the ability to pay electronically via bank cards, credit cards, and other charge cards. If a business doesn’t offer credit card processing as a payment option, an entire group of customers is lost every day, especially if the business operates on the Internet.

Internet small businesses are the majority of today’s start-ups. Why? It’s far cheaper to start an online business than a brick-and-mortar store. For these businesses, accepting credit cards is an absolute must. Whether through a third-party website processor or through one’s own card processing service, customers expect to pay electronically if the Internet business is to be viewed as viable and reputable.

If this option is not available, many Internet consumers simply move on to the next service or product provider that does accept credit card payments. So even if a small business doesn’t want to incur the cost of a credit card processing service up front, at a minimum it needs a default option so customers can pay electronically through a third-party website.

Credit card processing also provides a huge benefit for small businesses regarding storing information needed for federal and state tax filings. Because a credit card processor tracks and records every transaction, producing both monthly and annual reports, the small business has a readily available record of all income and expenses, types of transactions, and dates when transactions occurred. All of these records are important for tax reporting as well as for explaining how income was generated and expenses were calculated for tax deductions. This provides a far easier method of tax accounting than sifting through multiple paper receipts in folders. One of the biggest problems new small businesses have with tax agencies is keeping their tax-supporting documentation straight.

Accepting credit cards and payment cards on credit card networks also provides an easy way for customers to make purchases. Many times, even when they don't have cash on hand, customers complete the purchase, knowing they can carry the cost via credit card debt. And, as every experienced business owner knows, when people are in the moment, that's when the sale must happen. Fifty percent of the time the customer will change his or her mind and the sale won't happen if the purchase is hard to make. When cash flow matters each month, every sale counts.