Business Accounts

You'll need bank accounts dedicated to your business. They should be in your business's name. You'll need at least a checking account and eventually, hopefully, you'll want a savings account to earn interest on your profit. Do not mix your business and personal bank accounts or use a personal account because of tax, accounting, legal, and business reasons.

In order to get a bank account in your business name, you'll have to have a business license. The Patriot Act of 2003 requires all banks to positively indentify all individuals and businesses that open a bank account. This means you have to provide valid proof that you are a legitimate business, which we did in The Plan stage.

You will use your bank accounts to write checks for your bills, to receive money from and deduct money for your credit card merchant account, to receive wire transfers if you choose to accept that form of payment, deposit checks if you choose to accept that form of payment, and to refund customers.

Merchant Account

To accept credit cards online you'll need a merchant account and a payment gateway.

The merchant account is needed to accept credit card payments. In particular, to accept credit cards online you need a merchant account that accepts non-card present charges, which are charges made without the merchant physically seeing the credit card. Most major merchant account providers do. A merchant account is a little like credit in that they release the money into your bank account before they technically receive it, so like banks, they will need positive proof that you are a legitimate business.

When getting a merchant account, make sure you shop around. There are different types of fees charged by various providers. They also charge different amounts for certain fees. Comparison shop for the best deal. Unfortunately, picking a merchant account provider is a lot like buying a mattress. Different providers call the fees different things and charge different amounts, so it can be difficult to really compare them. Make sure before you apply, you get a complete list of charges and fees.

You'll also need a payment gateway. The payment gateway is the link between your shopping cart and the processor. For a low monthly fee, around $20, they provide the bridge between the shopping cart on your web host and the merchant account that authorizes the transaction. They also provide basic fraud protections, or for an additional fee, more extensive fraud protection before forwarding the transaction for authorization and then returning the results to you. Authorize.net is one of the biggest and most popular gateways.

PayPal offers an all in one solution for taking payment. They have their PayPal instant payment, and also provide a credit card merchant account with a gateway. Consensus is mixed as to how merchants feel about PayPal. They don't have the best customer service, are quick to freeze your account with no recourse for you, and there are many sites online dedicated to people who have had problems with losing their money. You can use PayPal for accepting payments through PayPal and have a separate merchant account for accepting credit cards directly.