Why Your Bookkeeper Hates P2P Apps
Need printer ink or office supplies? Buy it with one click on Amazon.
Grabbing coffee? Pay with your phone with a quick tap.
Having dinner with a friend? Send her money via Venmo or Cash App.
Transferring money and purchasing anything you need has become so easy with apps like Amazon, Venmo, Cash App, and PayPal. Peer-to-Peer (P2P) apps like Venmo, Zelle, and Cash App were originally developed for personal use, TD Bank reports that 23% of small businesses use P2P apps to collect payments.
Many of your clients will want to pay you with Venmo because it is easy for them and there is no transaction fee.
So why do we hate them so much?
COMPLIANCE
Is your Venmo account a business profile? Likely not, since Venmo is rolling business profiles out gradually or you can submit your email as an interested party. However, personal Venmo accounts should not be used for business, unless explicitly authorized by Venmo. Doing so violates the Acceptable Use Policy. Click here for more information about using a personal Venmo account for business.
At Business by the Book, we want you to follow the rules. Doing this keeps you safe and keeps you from having IRS Paranoia. And that includes not using personal P2P apps to collect business funds. There are numerous negative implications of not following these rules, including losing your money. Any funds sent to you via Venmo are not insured by the Federal Deposit Insurance Corporation (FDIC). <---- This is a big deal!
(Also, Venmo for Business charges a transaction fee: 1.9% + $0.10 per transaction. Because transaction fees are a part of business.)
MIXING BUSINESS AND PERSONAL
There are SO MANY potential issues with you accepting Venmo or Cash App payments to your bookkeeping. Here are some examples:
Your invoice is for $4,894.76. Your client wants to make it easy on them and rounds up to $4,900.00. You record the payment in IVY as Paid in Full ($4,894.76). This does not match the amount you deposit into your account, and now your client has a $5.24 credit on their account that has to be tracked and managed.
Your client pays your invoice for $1,400. Since your Venmo account is for business and personal, you Venmo your babysitter $100 from your Venmo balance. Then when you get to the office the next morning you deposit $1,300. This does not match your open invoice report OR your IVY payment record. And we have to reconcile your Venmo account to your deposits and note the personal expense.
At Business by the Book, we are very upfront with our clients about discouraging the use of P2P apps for their business. There are so many better options out there for you to use. We hate these apps because we love you. We Are Here For You.
