What’s that, you say? You don’t like Venmo?
What’s not to like, you say?
Allow me to illuminate.
Pontificate.
Okay, to hell with it.
To rant.
But I’ll be nice first.
I like to think niceness is my default nature, but nobody’s perfect.
Not even Chrissie Hynde’s proverbial perfect stranger.
On the nice side, Venmo is awesome for young people, particularly college students, paying each other back for halfsies on a pizza.
A nice friendly way to fork over small amounts of cash without soiling your fingers with all that filthy currency paper.
Remember paper money? That medium of exchange most notably located in the g-strings of female (and male) groins, waistlines, and buttcracks throughout the land.
Ewww. Yuck. Probably crawling with somebody’s nasty COVID cooties, too
Venmo is just better for settling up a Doordash with a friend, and it’s as convenient as sending a text.
Heck, Venmo even has a very nice social gradient to it. You can see what your friends are up to, and what they’re paying each other for.
Fun, right?
When I first signed up for it some years ago, I got a smile on my face every time my nephew in California scored himself some munchies at UC Santa Cruz.
The memo lines and emojis allow for a lot of creativity and personal expression, too.
I liked it then myself because my first client of any size, in late 2017 through early 2018 liked to pay people that way, and hey, no complaints!
Because…no merchant fees.
How long did you think we were going to get away with that, anyway?
Venmo is already a child organization of PayPal, they of the ugly merchant fees when you forget to check the friends and family box.
So, they know when they’re missing out on revenue. Oh yes, they do.
I figured out very early in the game that it was going to be a fairly unprofessional way to ask people for money, and I’ll tell you two other huge reasons why.
One: because it is obviously getting abused as a form of e-commerce (read: taxable income) exchange that the lack of company, vendor, or other transactional analysis information other than some person’s username was going to create monster headaches for bookkeepers such as poor lil’ ole me.
Believe me, I deal with this all the time, no matter how much I try to educate clients.
Two, and this is the real biggie: a lack of confidentiality. I had a client pay me shortly before I “got religion,” and found a real legitimate merchant option, and ask me a few days later why her transaction was visible to all of my friends.
Whoops.
No bueno, señors y señoritas.
I figured out how to conceal that exchange from public view, but it wasn’t the default (at least then).
Meaning that you have to take an extra step to do so.
This is not a proper way to do business, even if you’re not a bookkeeper, accountant, doctor, or lawyer.
Now I’m going to tell you my “big why” I’ve been hating on it for the past couple of years, first.
Then…
…I’m going to tell you another, even better reason.
New clients come to me in an effort to understand their tax situation, and in the process, they need to understand their books first.
It just makes sense. How do you know how you’re doing if you can’t see your revenues vs. expenses periodically?
Just looking at your bank balance and seeing you still have money is no way to run a railroad, my friend.
A lot of these fine people have Venmo transactions in their bank records, and here’s the bad part:
No usable memorandum information.
If I see a credit card charge for $5-ish at a convenience store, and my client is a young man that works physically for a living, I have a good idea he bought a small snack to shove into his face-hole disinterestedly in the course of a work day.
No time to think or plan, just grab a nasty rotisserie hot dog, a bag of chips, a pint of chocolate milk, rock and roll.
I know. That’s was (a much younger) me, for many many years.
At least, though, the damned charge will at least have the name of the station it was purchased from.
Clues. What we accountants call transactional analysis is quite often just simple logic.
But a Venmo transaction on a checking account line leaves no clues, mind you, none.
That sucks. That means that, every single time, I have to ask the client, and wait for them to enlighten me and my staff as to the nature of this purchase.
I bitch good-naturedly about it with them every time I get a chance, but I inwardly sigh and roll my eyes.
Again.
I use the old “time-is-money” logic – if I have to ask, and make you answer, it’s slowing you down a little, too.
So anyway, that’s my long rant.
But wait.
I might actually be getting a little sideways backhanded help, from my old pal Uncle Sam.
AKA the Ultimate Sugar Daddy.
You see, they’re now, beginning with this year, going to require people that make sales of over $600 through Venmo and other similar services (not $20,000 as before) to report them to the IRS.
Ha! That’ll teach us!
Wait…
That’s not a good thing, right?
Well, it is and it isn’t.
If you’ve been pulling one over and not reporting gross revenue that you’re now going to have a harder time concealing it’s not so great, but neither is not forking it over, the way the majority of people that are more honest do.
Sorry/not sorry.
I think it has the potential to reveal a silver lining because of my belief that at least a few more people are going to become more motivated to find better vehicles of business commerce.
You should have the following tools at your fiscal disposal as a small business, anyway:
1) A Business Operating Checking Account
2) A Business-only dedicated Credit Card with the name of the business on it. (Preferably with a good rewards program).
3) A dedicated personal tax savings account. Yup, I said personal, because 1040 taxes are an individual, and not a business expense. I know, I know, the money you pay in Estimated Taxes arise from business earnings, but they need to be drawn out of the business as personal.
As a successful businessperson you set aside that percentage of net income because of your increased discipline of self-withholding. Do this monthly.
4) Some kind of accounting software. Most preferably the kind that you can attach business account bank and credit card feeds to. It’s the 21st century, and it’s the thing to do.
5) A way to track Key Performance Indicators. We’ll talk about that in the near future!
6) A comprehensive business AND personal tax strategy.
Venmo is just a lousy way to do commerce, because, excuse my French, it’s a pain in the ass to track.
So now, with Uncle Sugar scrutinizing this form of payment and deposit maybe I’ll see a little more sanity in the business world.
From my lips to God’s ear, one would hope.
Thank you for listening, and let us know if you need help “kicking the habit.”
Cold turkey is always a bummer, but it’s better to go through it with a friend.
Let me know if you could use a friend.
Okay?