Switching to Paypal Here

I recently made the decision to start using PayPal Here as my main merchant account for accepting credit cards. I already have a merchant account with one of those old swipe terminals that spit out the thermal paper slips. This is one of the main reasons I wanted something else, I didn’t want the responsibility of storing all those receipts and I am going paperless in the studio. Since I’ve been with this company a long time they have extended me some pretty good rates. The problem is all the extra fees on top of the rates and monthly fees, which is about to go up with new compliance laws. So I started looking around, mainly at 3 providers: PayPal Here, Square Up and Intuit. I finally settled on PayPal Here and here are the top reasons why.

1. Everything under one provider

PayPal offers a one stop solution for all my needs. I already use them for my online shopping cart and accepting session fees online. Neither of the other two offer this service. This way I don’t have so many accounts to reconcile and fuss with. PayPal is also one of the biggest (if not the biggest) methods for payments online and used by millions.

2. I Want my Money Now

With PayPal Here the money appears in my account within minutes! Not days with the others or even my current provider. Hell with American Express payments it has taken 5+ days before. It’s kinda cool that after I swipe a clients card, while we are talking I hear the ‘ding’ of an email saying I have new funds, it’s that fast. Yes the money is in your Paypal account and when you transfer it to your bank that does take a couple days. But a lot of my vendors I can pay with PayPal as well, and PayPal offers you a debit card to access the money (even withdrawing up to $400 a day). So bottom line is you have access to the money minutes after accepting payment.

3. Keep More of my Money

With a basic swipe rate of 2.7% they beat square and intuit by .05%, ya not much but it adds up. Now I have a better rate with my current provider but they also charge a per transaction fee (which changes by card type). If its a reward card you pay more, if its American Express even more. Plus there are all sorts of other transaction fees and monthly fees that when you put it all together Paypal Here is pretty close if not better. The big thing with PayPal is 2.7% is it. No other transaction fees, stays the same with every card, and no monthly fees!

Even better is that when your monthly average exceeds $3,000 you can apply for a lower rate of 2.5% (for regular web payments which normally are 2.9%), which is where I’m at now.

If you type in card info you do get charged a higher rate of 3.2% plus .30 per transaction, so just don’t do that if you can avoid it (all the others do the same so it’s not a negative point) Also the one sticky point is that if you key in more than $2,000 or so in a 7 day period you can have the excess held for 30 days.

3. How Would you Like To Pay For That?

With PayPal Here you have more options for accepting paypents. Not only can swipe your clients card but if the card can’t be read, or what ever reason, you can type in the card info (see above on rates for this) or if your fingers are to tired you can snap a photo of the card.

You can also deposit checks with the app, something the others don’t offer, by snapping a photo of the front and back of the check and there is no fee for this. This method does take 5-7 days to clear, but since I’m to lazy to go to the bank for the couple checks I receive its perfect.

Of course you can also accept payment with PayPal. If your client has the PayPal app on their phone they can check in to your store and they show up in the PayPal here app. You can also send an invoice, and the client also has the option to use PayPal’s ‘Bill Me Later’ (but you get paid now).

4. The Triangle

I figure PayPal was reading all the compliants that have been made online about Square’s reader because their reader seems to answer them well. The biggest one I was worried about was that whenever you swipe a card the reader would swivel around making it had to read. Well Paypal Here’s reader has a little ‘flap’ that slides down just enough to prevent it from swiveling around on you. Also the triangle shape gives you a longer base and more surface area to swipe the card making it easier to read the first time.

Biggest part, I can accept swipe cards anywhere! Yes I know they all can do that as well, but this was a point for me over my current provider which has been promising a reader for a couple years.

5. I’ll take 3 Jellies please

The Paypal Here app also turns your phone into a virtual store. You can add in all your regular items and pricing (even include a photo) then you can quickly tally up your clients order and charge them. With square this would be a another separate app and only for the iPad, although it is more robust turning your iPad into a register. I do most of my orders through special presentation software so I typically just need totals, but this is nice to have.

6. Tip Your Waitress

A cool litle feature that is great for service industry is you can turn on a ‘tip’ feature. So when you hand over your device for signature there are nifty tip buttons to prompt them to give you a tip. Starting with the obvious ‘no tip’ then 3 more buttons which you can set to whatever amounts or percentage. So far this really hasn’t helped me.

Ok it’s not all heaven.

I do like Square’s apps look and feel a little better, but that’s just me being picky. Speaking of picky the Paypal Here app is an iPhone app, no iPad version yet. It isn’t to bad cause it still works on the iPad, just be nice if they come out with a dedicated iPad app. One thing I still need is a virtual terminal and a way to do auto-recurring payments, both of which are not included in PayPal Standard or Paypal Here but this post is long enough so we’ll save that one for later.

That’s it, the only really bad thing I have to say about PayPal Here. I’ve been using it now for over a month and love it, having my money right away is an awesome feeling! I still use the merchant account as a back up in the studio and its virtual terminal for payment plans I offer, but if I decide on Paypal Pro (told you thats for another post) then it will go idle. I already am canceling the one I was using for online payments cause it had a monthly fee even if I had zero transactions.

I would recommend PayPal Here to anyone looking for away to accept credit cards any day. What are your thoughts?

There are so many new tech tools out there that I have been researching some to improve the workflow of the studio. As well as of course saving money and improving the clients experience. One of the first steps I have taken is to go digital with all my paperwork.

Currently, well before 2 weeks ago, I had paper contract for all my sessions as well as other miscellaneous forms. These would go into client folders that I have in different stacks depending on what stage of the process they are in. As you can imagine this takes quite a few trees to maintain and on top of that I have boxes of old paperwork. When its time to get rid of it I go through the shredding process which eats up a lot of time. Another issue is I at times forget the clients folder when I head to the studio, so I dont have important information that I might need.

Enter the iPad

Time I started using the iPad for more than puzzles and angry birds! I haven’t found the ONE app that will do everything I want (I’m considering having one written though) but have narrowed it down to 2.

Lets take all my agreements and forms. Now I could create actual pdf fillable forms and use one app, but with those forms you can not format your text fields (at least as far as I can tell). Plus you either have to by the full Acrobat product or use one of those free online services which Im not fond of. I found an app called Form Tools that does that will create a form from any pdf, only downside is you have to fill out the form in the app. They key feature I like in this app over a true pdf form is you can use the iOS field formats. For instance a date field will bring up the iPad’s date wheel, same for times. You can also choose which keyboard to bring up to fill out the field like numeric, email or normal. You can also tie fields together, like todays date, so that the client only has to fill out one field and the rest auto populate.

Once you have your form created you choose the form to fill out and click ‘new entry’, rename it to your clients name then have them fill it out. When they are done they click the pen tool and sign with their finger or a stylus! I would then next click email and email a copy to them and myself. The app does need a better filling system (no folders) but does save a copy on the iPad for you. I would like to see folders and Dropbox syncing like the next app I will tell you about, but it does the job for now.

My next bit of paper that I have pilling up are session orders. During an ordering session at the end I print out a copy of their order from them to review and sign, I then print out another copy for the client. I would then use the order as a checklist when processing the order. Wasteful!!

Now Instead of sending the order to the print I print it as a pdf to Dropbox. From their I open it up in my next app PDF Expert! This app is awesome, if only let me create forms like Form Tool I would be in heaven. This app directly syncs with dropbox so I created 3 folders:

• New Orders – where they are sent to from the ordering software
• Processing – Orders I need to work on
• Completed – when Im done they go here for awhile in case I need to reference them

So I then open the order in the app and click the pen tool and hand it to the client to review and sign. LIke the other app I then click to have it emailed to the client. No more paper! But what about my check list? Well in the same app I can use a pen tool or a highlighter or even a big X stamp to mark off the items as I complete them 🙂

Payment Processing

Currently I have a regular merchant account with a terminal at the studio. You know the one that spits out paper for the client to sign and then a receipt. Well I was doing some comparisons between Square, Paypal’s new Paypal Here, and my Merchant Account and have discovered with all the extra fees on my merchant account the other two are very close if not better in the long run. With Square and Paypal clients would sign on the iPad or iPhone and have the receipts again emailed or texted to them so that would eliminate the paper. The big advantage is not having all those credit slips, scares me having to store them! Also make record keeping easier.

I ended up going with Paypal Here for a few reasons.

1. I already use paypal for online orders and have been with them for years with no real issues. Dont really want ANOTHER payment system to keep track of.
2. Ive read lots of bad reviews on Square. Especially on them withholding funds for 30days without notice. If that happened to me it would kill me.
3. I like Paypal’s reader better. Squares is a cute little square and I have read that people have had problems swiping cards, having it swivel while doing so. Paypal’s is a little bigger so gives you more base to slide the the card, and has a little tab the folds down to prevent swiveling.
4. The rate is better, if only by a little but a little adds up.
5. You can deposit checks, for FREE. No fees just snap a picture of both sides.
6. Money is in your account within minutes, available for your use! This is the big one for me, I swipe a card and I get an email within minutes that I have new money in my account. Yes if I then transfer it to my bank account it takes a couple days but I can use the money right away for paypal payments (which many of my vendors take) or use my hand Paypal Debit card (can pull out $400 cash a day if you need to).

So now I use my iPad or iPhone to take payments in the studio (or anywhere) and do a bank transfer twice a month. I keep my merchant account as a back up since I don’t pay monthly fees on it, only when used. Id rather do that then pay the keyed in rates.

Next Step

My next steps are finding a cloud accounting system. I currently use quickbooks but would like an easier system and one I can access anywhere. Im currently playing with a few and will do another post on them. Also playing with a few cloud studio management systems as well and again thats a topic for another post.

What about you, what ways are you improving your business workflow or going paperless?

So Im a Professional Photographer. I still find it hard to call my self that at times, part self confidence part always learning. But its more than my skills and knowledge that make me a professional (although thats a big part) its also how I conduct my business, the parts that have nothing to do with photography. Like what goes into pricing your service  and behind the scenes.

I often get asked by people why do you charge $30 for a print when I can get it at costco for.15, or $120 for a session while sears is free. We will set aside service and quality arguments aside for another day. Today we will talk about the real costs of doing a business and therefore why my fees are higher. There are many costs that go into running a business and these costs need to be covered in the various products and services you have.

We can start with a photographer that works out of their home. Most would state that they really don’t have any overhead but there are a lot of items that they just don’t think about or care to cover.

Working From Home

Insurance If you are running a business of any sort you should have business insurance. Not to just cover the obvious equipment losses but the biggie, liability! If you are doing a wedding or a location portrait session and someone trips over your equipment and is injured… you better be covered.

Sales Tax No mater what you do if you take money for a service and/or product you had better be collecting Sales Tax, unless of course your state dosent have sales tax (be hard to explain that to your client). I believe there is a dollar amount that if you are under it is still consider a hobby but that number is not that high. A lot of photographers dont know that here in California your session fee’s are also taxable. You wouldn’t think so since in my mind its just labor but the state sees it differently, so be sure to check with your states tax board to find out what you should be collecting taxes for.

Licenses and Fees Yes if you are taking money for that service you are expected to have a business license. In some areas and depending on how you operate you may have to have more than one. When I worked as a service technician the company had to have a business license for each city that I worked in (San Diego is made up of lots of neighboring cites in the county). Not sure about photographers, such as wedding photographers but would I wouldn’t put it past the cites in these times.

Equipment Well as a photographer we have our cameras and lenses as a minimum but we also have ou computers for processing. Besides the initial layout for the gear you have to take inconsideration upgrades, repairs and replacement. Part of your income should be set aside to handle these situations. As a photographer I also have back ups for almost everything, incase something goes wrong during a session. I was not able to get everything at once so a portion or my income was set aside to buy the back up equipment as I was able to.

Retirement If this business is now your source of income (and you should treat it that way even if its not) you have to be thinking of yourself when you retire. No company to provide a matching funds retirement account, that is now YOU. So be sure you are setting aside money in a SEP IRA or a IRA. Dont just take what ever is left over on a good month, plan for it in your pricing.

Medical Insurance Like above you no longer have an employer to provide you with a medical insurance plan as part of you compensation. You are your own employer now and as such have to provide your own insurance. Just like your old employeer these costs are figured in the cost to do business and is part of your pricing plan

Taxes Uncle Sam, your State and your local agencies all want part of your income. Dont make the mistake of waiting till April 15th and discovering you actually owe taxes on that money you were given for taking pictures. Set a portion aside each week into another account for income taxes and when you are figuring out your pricing figure 25% at least is going to go towards taxes so adjust accordingly. Also remember you are now responsible for your own payroll taxes (Social Security and Medicare). Before your employeer paid half and the other half was deducted from your check, you are now liable for the whole amount.

Salary When all is said and done you are in business to make money, yet this is the one item that is often overlooked. PAY YOURSELF A SALARY. Set an amount that you would like to earn each week or month (to cover your personal bills and then some). This along with all the above and other overhead items need to be taken into account for your final pricing. All that together plus cost of goods (for your products) and a 10% profit should get you to your final pricing.

I didnt really mention things such as marketing, advertising, professional fees, cost of goods, educations, office supplies but these are also items you need to consider and we will touch upon in other posts.

Retail Location

In a retail location you have a few more items to consider. Increased overhead means a decreased profit margin but it can also mean more income in general.

Insurance Yep you’ll be increasing the insurance coverage to cover your landlord as well. Also if you do work from home and a retail location like I do be sure you list BOTH addresses on the insurance as covered locations. I had an issue with a hard drive failure and because it was and the home office it wasn’t covered

Utilities When you work from home you really dont think to much about these as they are part of your home bill. In a retail location they are now separate and you need to cover the costs in your pricing. Electricity, Alarms, Water, Internet and phone are just a few.

Taxes When you operate out of a retail space you get a whole new set of taxes to deal with, Business Property Use Tax. Now I wont get into how totally unfair this tax is, Ive blog about it before, but for every physical item you have in your business you have to pay an annual use tax. Yes I know you already paid a sales tax on it when you bought it but you still have to pay 1% annually on its value. All furniture and equipment as well as supplies. ALso any improvements you made to your space is taxed as well.

Last but not Least

All the above is just some of the items, there are many more but there is one other that is the most over looked item. YOUR TIME! Yes your time is worth something and is often overlooked by everyone, your clients and yourself. As a photographer when you price out your print most stop at the overhead items above and the cost of the print when figuring out the cost but what about your time it took to create the print. Photography time, downloading, backing up, editing, sending to the lab, unpacking, and packaging for client. That adds up to a chunk of labor that you should be charging for in your pricing. If you weren’t doing it you would be paying someone to do it so cover the cost as if you are an employee of your own business.

My examples are of course from my experience as a photographer but you can translate it to what every you want to do. Be sure all your costs are covered as well as your own salary and a profit (these should be separate items) when you start pricing out your services or products

If you are in Business for your self, either part time or full time, you most likely accept credit cards as a form of payment. It cost a little more than taking cash but its worth it making it convenient for your clients to pay you easily. Even if you don’t take credit cards directly many of us use third party services such as Paypal to take payment for services or products we have to offer.

Well a new section to 6050W of the IRS code will have credit card service providers (your merchant account) to report all your transactions to the IRS. This also applies to third party processors such as Paypal, although if I read it correctly this will only apply to those that collect more than $20,000 a year with those such as Paypal. The are doing this to hopefully catch those that under report their earnings and collect more taxes. There are some other concenquenses to this section that you should be aware of even if you do report your income properly.

Increased fees

Everything the government passes ends up costing you something. This new requirement will be no exception! This increase reporting burden on the merchant providers will cost them a good chunk of change. Some Providers have all ready reported that the have already had to create all new reporting systems/software. Also means new employees and departments… You think they are going to just eat the costs? Again some have already said their monthly fees will be increased to cover the costs. Don’t know how Paypal will do it as they don’t charge a monthly fee currently, will have to wait and see on that one.

28% Withholding Penalty

The biggie is if something docent seem right, like your information with your merchant provider doesn’t match up exactly with the IRS records, the provider will be required to withhold 28% of you income until the information is corrected! Think you will get that money back as soon as you do? Try again, you will not get the money back until the following tax year and only as a tax credit. Now if you are like me and use a merchant account AND Paypal just think if this happened and they both had to withhold. Thats a big chunk of your income tied up for a year, that could break some businesses!

What to do

This was supposed to take effect on Jan 1st but the IRS has extend the start till Jan 1, 2013. So this next year check with your merchant account and Paypal (or any other payment processor you may use) and be sure all the information is correct. Business name, EIN and SSN, make sure they match with what you use to file your taxes. If your provider asks for information this next year to update their records, don’t hesitate and take care of it right away!

Personally I feel the penalty is a little draconian and needs to be changed so maybe we can write our congress people and see about getting a little adjustment done here. I mean at the very least the penalty money should be released by the processor once everything is correct. Holding it for up to a year and only releasing as a tax credit is just wrong. The way the government needs money they may ‘find’ lots of things ‘incorrect’

Do you take credit cards? what do you think of the changes?

If you are running your own business you need to set a salary for yourself, not to just draw from the business as needed. It may be hard when first starting out but you need to set a pay level for yourself and stick to it. Its all part of the business. You should have your cost of goods, overhead, SALARY, and profit. To many think that the profit is where your money should be coming from. I was one of those, lets start off how I have been doing it (I cringe as I write it)

a long time ago, in a galaxy…

well ok not that old, but since I started doing photography full time in Jan of 2010 I really havent kept things too separate. I do have a business account separate form my personal but didnt really differentiate the money from business to personal. I figured since it is all lumped together (sole proprietor) for the IRS then its fine for me. I would just use the company debit card to buy groceries, gas or whatver. At the end of the month I would transfer some money to the personal account to take care of the mortgage, car and other auto payments. As you can guess this made it quite difficult to track items when it came time for tax purposes and the biggest headache was if I didnt transfer money in time I would often become over drafted and face fees.

Another big issue is all this money sits in a non interest bearing account. You see I had this weird thing going that I liked to see large amounts of money in the business account, made me feel successful. I would once in awhile look at it and decide that I could move a bit over to my money market but I didnt like seeing the account below 15 or 20k.

I also was not worrying about taxes until they were due, which if have done that you know how much of a sticker shock it is when that time comes. This includes sales tax which is due quarterly.

In this manner I was only paying myself the scraps left over from the business and not putting the money to work for me efficiently. This would cause late fees that work against me and money just sitting around. Something had to change.

The New Style

So here is how I do things as of Oct 1st.

[div class=”approved” class2=”typo-icon”] Each Friday I transfer from the business to personal checking $950. This is a bit over what is needed to cover the personal side of my budget. This may change upward a bit in the near future as I refine the budget. From this I transfer the following to sub savings accounts:

• $25 into Property Tax account (wife also contributes $100 a month)
• $100 into Income Tax account
• $35 into a Medical account
• $25 into a Pre-Investment account
• $25 Cash Savings/emergency account
• $25 House Improvement account (wife also contributes $100 a month)

[/div]
[div class=”approved” class2=”typo-icon”] Each Friday I also transfer all sales tax collected that week from the business checking into the business savings.[/div]
[div class=”approved” class2=”typo-icon”] All bills have been placed on auto payment to eliminate late fees.[/div]
[div class=”approved” class2=”typo-icon”] At the end of the month I will evaluate how the business did, making sure all its bills and budgets are covered (creating virtual buckets for capital expenses, props, etc) and any left over money will be distributed between back into the business, savings, investments and accelerated debt pay off.[/div]
[div class=”approved” class2=”typo-icon”] All income from secondary sources will be diveded 25% into income tax account, 25% accelerated debt and 50% pre-investment[/div]

Once I get my Simple IRA moved to a brokerage that I can once again add to it easily I will also add $96 a week to it. This will max out my $5k contribution by law to my IRA.

Thats it! I hope this will provide for easier tracking of where the money goes as well as budgeting and being better prepared for how it needs to be spent.

If the current amount falls short I’ll just ask the boss for a raise 😉

Are you self employed? If so do you pay yourself (a real salary)?