Friday, February 26, 2010

Credit Cards

What About Credit Cards?

If you are just starting out as a business owner you might have begun thinking about the ways you accept payment for your art. We live in an age of plastic, even for a coffee and a muffin. Many people don’t carry cash or checks anymore so as a business owner it certainly makes sense to accept credit cards. A couple of other great reasons to accept credit cards are the convenience to both the buyer and seller and also for you to get the payment for your sale quickly deposited to your checking account. Yes, there is a percentage that you pay for processing but let's just say for example’s sake that you have a booth at an art fair and someone wants to make a purchase. If you can’t accept a credit card and the buyer doesn’t have checks or cash, you’ve lost the sale.

A question that often comes up is should I add a convenience fee to help offset my costs? When you are paying for a service or item how do you feel about paying extra when you want to use a card? I know I don’t like it and do my best to avoid knowingly paying extra. When you price your art a lot can go into your calculations and I won’t get into art pricing now but if you are including overhead costs in your price calculation the processing fees might just be included in your total.

Lastly, let’s say you accept credit cards, how do you record the transaction? What you don’t want to do is write in your cash receipts or sales journal the net amount of money from the sale. You should record the sale for the full sales price and then list the expense you incurred to process the card as an expense item. Cash received = Sale minus Fee. That’s the 2 sides of the accounting entry that you or your bookkeeper will make in recording your sale.

No comments:

Post a Comment