We all know Venmo is a revolutionary ways of taking and sending money between FRIENDS. It might be tempting to use this tool in your business, but there are rules you should follow in order to keep things nice and tidy!

Below, we’ll share some thoughts and lessons learned about why you should (or shouldn’t) use these $$$$$ apps.

Here’s an example of how using Venmo can go wrong:

YOU SELL A HANDMADE MUG:
+$50
(Venmo Balance: $50)

YOU VENMO A FRIEND $10 FOR NON-BUSINESS TACOS:
-$10
(Venmo Balance: $40)

THEN YOU MOVE REMAINING $40 TO YOUR BUSINESS CHECKING AS INCOME.
(Venmo Balance: $0)

Do you know what you did there?
Essentially, tax fraud.

Yeeeaahhh. You are not claiming $10 of taxable income.

If you are going to use Venmo for business . . .
️MAKE A VENMO BUSINESS ACCOUNT AND KEEP IT SEPARATE FROM YOUR PERSONAL ACCOUNT.

Yeah, there’s a fee but at least it’s a tax deduction!

Pro-tip: if you sell products, you’ll need to set up sales tax in venmo.
️

IF YOU INSIST ON USING YOUR PERSONAL ACCOUNT: KEEP A ZERO BALANCE IN VENMO
     ️MOVE BUSINESS TRANSACTIONS TO YOUR BUSINESS CHECKING IMMEDIATELY
     ️MOVE PERSONAL TRANSACTIONS TO PERSONAL CHECKING ASAP.

Final Thoughts:

It’s okay in the beginning and a super helpful way to accept funds while building your customer base. But keep that momentum going and make plans for a better system in the future!
Don’t try to fool the IRS!!! Venmo transactions have been largely flying under their radar for the better part of a decade, but nothing gold can stay.
If you sell products, use Shopify.
If you are Service-Based, use Quickbooks.
Shopify/Quickbooks, etc. make it easier to track sales, easier to calculate sales tax, and easier to keep your books in order.

If you need more help, book a call. Really. If your numbers are keeping you up at night book a call and we can talk about and you can ask me anything! BOOK HERE