Virtual Banking
- eCommerce
Conducting
business online today takes some specialized banking solutions.
eCommerce has become a way of life now, and finding everything
you need is much easier than in the past. You will need
to establish a regular bank account, if you are accepting
money online, you will need an eCommerced enabled site,
and the merchant's account.
Banking,
ll Merchant Account || Secure Site
Banking
Have
you wondered whether or not you need a separate bank account
for your business? The answer is a resounding "YES"! Are
you using your personal bank account, even occasionally,
to make purchases or pay bills for the company? If you
are, then the word we have for you is "STOP"!
First,
let's look at some of the reasons why it is so important
to separate your personal and business bank accounts:
* Most
of your business transactions will involve the payment
or receipt of cash. Combining your personal and business
transactions makes it more difficult to keep track of
business activity. Its too easy to forget to record something
if you don't keep separate accounts.
* Consider
a partnership where two partners routinely make payments
out of their personal funds (without first making a deposit
into the company account). Imagine the trouble you'd have
keeping up with their books!
* You'll
never know exactly where you stand with the business if
you use the same bank accounts for both personal and business
activity (or with your personal assets for that matter).
* A
paid check serves as proof of payment, just like a receipt.
Combined accounts might raise the question about whether
or not the expenditure was for business or personal reasons.
Your
Responsibility
When you open an account, you have agreed to pay the fees
for services associated with the account. Make sure you
understand the "fine print" so that you won't be surprised
by any of the charges.
Another
responsibility is to prudently manage your bank account
and keep up with your balance. Don't write a check if
you don't have funds in the bank (unless you have overdraft
protection, although this is an expensive way to "borrow"
money).
Keep
good records and reconcile your account each and every
month.
Types
of checking accounts.
The type of accounts available to a small business owner
will vary from bank to bank. But basically, there are
two main types of checking accounts: Non-Interest Bearing
and Interest Bearing.
Non-Interest
Bearing
This is the most common type of checking account. There
is no interest earned on money deposited in the account.
Interest
Bearing
These accounts have many of the same advantages of a regular
checking account and they pay interest on the balance.
Generally there is a minimum balance required in order
to earn interest and there may be a restriction on the
number of checks or withdrawals during a given time period
for these accounts. Talk with your Banker for more information
on checking and other types of deposit accounts.
Choosing
a Bank for Your Business
How should a small business owner choose a bank or financial
institution? The answer to this question is very similar
to the steps for selecting any professional to be a part
of your business advisory team, such as your accountant
or your legal advisor.
Unfortunately
most business owners don't thoroughly consider their needs
when selecting a financial institution. Although there
are laws and regulations that govern the activities of
banks, savings and loans, credit unions and investment
firms - not all financial institutions are the same! So
do your homework. Each
institution establishes its own policies for: types of
products and services that are offered, criteria for qualifying
for a loan, minimum balances for accounts, interest rates
and charges for account services. So while one bank may
specialize in home loans, or auto loans another may focus
on commercial loans for businesses. Some banks may only
offer basic deposit accounts while others have lock box
services, and sweep accounts. That's why we stress the
importance of evaluating your business needs before you
select your banker. So
compare financial institutions to find the one that will
serve your business's needs and will also provide support
and assistance during the infancy stage of your business.
Consider
some of the things your banker will help you with. :
*
Assist you with the cash management needs of your business.
* Offer investment products of varying maturity's: overnight
to long-term certificates of deposit.
* Offer investment products of varying risks (and thus
returns): treasury securities and insured deposits to
other stocks and mutual funds.
* Provide advice regarding what it will take to qualify
for the loan that best meets your needs.
* Provide special loan programs for small businesses,
including SBA loan programs and other government-guaranteed
or agency loans.
* Assist you with finding financial information on your
industry (such as RMA Annual Statement Studies, Dun
and Bradstreet reports, etc.)
Remember
you are selecting an institution that you can work with
as your business grows. Approach the decision as a long-term
investment. Ask your accountant or lawyer to introduce
you to bankers that they are familiar with. Check with
your local chamber of commerce to find out what banks
are active in the community. Attend their meetings or
other service organizations to meet bankers that are involved
and have interests similar to your own. Look for a complementary
personality, someone you can relate to. Introduce yourself
to the banking center manager. If you are looking for
a loan, ask to meet the loan officer that will be assigned
to you. Find out how long they have been in their current
position (bank managers and officers change locations
and get promoted). Tell them about your business and the
form of organization so they can tell you what special
products and services or restrictions might apply. It
is not likely that you will make a decision on pricing
alone, but do compare interest rates on deposit accounts
and basic consumer loans (most business loans are negotiated,
so the rates won't be posted at the banking center).
Also,
look carefully at the charges for services if your commercial
deposit account will billed on analysis. Remember, it
is a good idea to establish a relationship with a banker,
before you need money. The right banker will be someone
that understands the needs of emerging and growing businesses.
They will be interested in your business dreams and will
help you achieve them.
Opening an account
All of your operating
expenses will be paid out of your operating account. Call
ahead before opening your business account - each bank
requires different documents, for sure you'll need your
business license and personal identification. Most bank
officers are very helpful.
Checks: If you will be hand
writing checks, having a large area to record what the
check was spent on will help you record it properly. If
you are going to use an accounting program, then you need
to decide if you want a three portion check, where there
is the check, a copy of the information for your files,
and a copy for the vendor, or three on a page.. You
can buy business checks
almost anywhere now days. Double check the quality of
the paper and the printer before you order the cheapest
ones.
Payroll
account. If you are going to have employees, having a separate
payroll account is a
wise decision. Chances are your payroll taxes will be due
on a quarterly basis. If you transfer enough to cover all
the taxes to the payroll account when you pay your employees,
the money you need will be available when the taxes are
due.
E
Commerce
What is eCommerce? Electronic Commerce means buying
and selling products and services over the Internet. For
merchants, electronic commerce means making your products
and services easily available to the millions of potential
customers that shop online.
Merchants
account.
The means to accept credit cards and online checks, check
the credit card number to be sure the customer can charge
their purchase, and transfer the funds to your business
banking account. To make this work you will also need a
website with the proper programming - a shopping cart service
and a secure website and server.
Many businesses
arrange merchant accounts through their personal or business
banks, especially if they have a physical storefront. However,
many banks are not yet comfortable with Internet based commerce
and don't want to provide Internet merchant accounts. Your
own bank may refer you to another company that sets up merchant
accounts for mail order and other types of business that
the more conservative banking industry does not serve. Like
finding insurance, finding a merchant's account that will
accept you as the customer may take some shopping around.
Merchants account software is available where you get your
merchants account. PayPal is another option, they offer
merchant account services as well as other methods of capturing
payments.
Keeping
your customer privacy through eCommerce on your site
Setting up your e commerce system to be both accessible
and protected is tricky business, but it's getting easier.
Finding the right mix of hardware and software products
to adequately protect an e-commerce project is a task that
can challenge the abilities of almost any small business
owner. Most of the software is available from the company
that your get your account from. It's part of the package
deal. Be sure to check out this aspect of the programs when
you are comparing them.
Types of Security: SSL and
SET
What is SSL?
SSL, or Secure
Socket Layer, is a security technology that encrypts a Credit
Card member's information and purchase details, helping
to ensure that information will not be accessible to anyone
but the Credit Card company and you, the merchant, during
an electronic transaction.
What is SET?
SET, the Secure
Electronic Transaction Protocol, is the latest development
of the financial industry's efforts to develop a standard,
universal way of conducting electronic commerce that will
offer consumers and merchants an unprecedented level of
security and assurance. SET will provide the same high levels
of security as U.S. users of SSL enjoy today, with the added
benefit of digital signature certificates to help authenticate
the identity of all parties involved in a transaction. This
new level of security is intended to eliminate the possibility
of "spoofing" -- where unscrupulous individuals set up fake
"electronic storefronts" -- and will dramatically reduce
the potential for the use of stolen credit card numbers
on the Internet. As the SET protocol is implemented in the
coming months, it will mark the beginning of a new, safer
era of electronic commerce
In the meantime,
small business owners must remain vigilant to the ever-changing
nature of e-commerce security. "When it comes to security,
many small business owners make the mistake of believing
'once implemented, always implemented,'" says Poore. "But
that's only true if you have a static environment. In a
dynamic situation, such as with electronic commerce, assessing
and improving security safeguards is a never-ending process
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