In previous podcasts, blogs, and posts, I’ve told you that as a small business owner, you should NOT be using Venmo to run your business. Venmo’s website even stated not to use their website for business transactions. I’ve given you lists of reasons why, and today I’m going to change course a bit and tell you one instance where you actually CAN use Venmo to help run your small business. It’s the newVenmo Business Profile, and I’m here to help break it down for you.
Who Can Have a Business Profile?
The Venmo Business Profile is only available to you through an invitation from Venmo itself. If you’re invited, you will know within the app and have likely gotten a message. In order to create a business profile, you’ll need an existing personal Venmo account to build off of. These business profiles are available for individuals (also called sole proprietors) as well as registered businesses to link to their individual profiles and expand their ability to take payments. That means if you run a small team, or are running solo, the Venmo Business Profile is still an available option.
Venmo uses a national database to make sure that you are actually a business entity when you are creating your Business Profile, but sometimes the information in the database doesn’t match up if you have moved or changed your name. If that happens, Venmo will ask you for some verification documents, which you should have on hand just in case. These documents include:
Proof of Business Identity: Some sort of document that confirms your business’ Employer Identification Number (EIN). It is important to note that the business name on this documentmust match the full business name on your Venmo account. Examples of documents that you can use to fulfill this requirement include copies of IRS letters that assigned your EIN, a previous year’s business tax return that was prepared and signed by a third party, a current bank statement within the last 12 months displaying your truncated EIN, or a current credit card statement within the last 12 months displaying your truncated EIN. Youcannot use self-completed applications or self-completed tax documents to fulfill this requirement.
Proof of Address: This document confirms your business entity’s mailing address. Venmo can ONLY verify physical addresses -- PO boxes won’t work on this one. All documents used for this requirement must be from within the past 12 months. Examples of documents that you can use to fulfill this requirement include a current phone or utility bill, insurance or tax statements, a certificate of good standing, a current bank statement displaying your business’s full name, or a current credit card statement displaying your business’s full name. Youcannot use envelopes, receipts, invoices, or any expired documents to fulfill this requirement.
- Proof of Business Existence: This may seem like the same thing as Proof of Business Identity, but I promise you it’s not. This requirement is some sort of document that is issued by the Secretary of State or other similar agency that shows that your business has complied with the laws of the state, remains in good standing, and is authorized to transact business. Examples of documents you can use for this requirement include LLC Articles of Incorporation, a government-issued license or permit, a certificate of good standing, or another document filed with the Secretary of State, such as a partnership agreement.
What Are the Perks of a Business Profile?
The Venmo Business Profile allows you to:
- Create a separate account and process and accept separate payments for goods and services exchanged through your business.
- Set up a payment method and attach your business bank account directly to it, so that any payments from customers go directly into your business’ bank account, not your personal bank account. What that means is that the Business Profile keeps everything separate from your personal Venmo transactions, and that legally protects not only you, but your consumers!
Another perk of the Business Profile is that right now, there are no additional fees for transactions conducted through a Business Profile, but on Venmo’s website, they are saying that as of April 1, 2021, they will be charging a Business Profile a per-transaction fee of 1.9% plus $0.10 on every payment that is made to the profile. Venmo’s website says that it will notify users when this charge will go into effect.
[Note: this transaction fee is still significantly less than other online payment platforms, so a Venmo Business Profile is still a great option when this goes into effect.]
A small downside is that so far, you are not able to get a Venmo Debit Card that you can link to your Business Profile. Thus, make sure you’re solely receiving incoming funds on your Venmo Business Profile and transferring them straight from Venmo into your BUSINESS BANK ACCOUNT (not your personal one! And then using your bank issued business debit card for other business-related charges.)
What if I’ve Already Been Using Venmo to Take Payments?
If you’ve gone against my previous advice and been using Venmo to take payments from your customers, that’s okay! The transition from your personal account to a Business Profile should be pretty seamless and easy for both you and your customers. Instead of directing customers to your personal Venmo account, now all you have to do is direct them to your Business Profile.
Your Business Profile will give you the option to create a new, unique username for it, so make sure that when you are directing your customers to your new Business Profile that you give them the correct information. If you give your customers the email address or phone number that is associated with your Venmo account, the payment willautomatically be deposited into your personal account.
Keep in mind that if you use your personal account to take payments from customers, you may be in violation of Venmo’s policies and your account may be restricted. So if you have the ability to set up a Business Profile, it is a great way to make sure that you are staying legally legit in the way you take payments from your customers.
What if I Decide That a Business Profile Isn’t For Me?
If you create a Business Profile and later decide that this form of payment interface just isn’t for you, you retain the ability to close your Business Profile while still keeping your personal profile active. You can close your Business Profile by contacting Venmo and following the proper procedures. To remain compliant with certain tax procedures, you may be required to provide Venmo with total identity verification in order to close your Business Profile. I encourage you to really think long and hard about closing your Business Profile once you have created it though, because a Business Profile cannot be reactivated once it has been closed.
THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. EVERY SITUATION IS DIFFERENT & IS FACT-SPECIFIC. A proper legal analysis is necessary based on your location and contract. Consult an attorney in your home state for advice regarding your contract or specific legal situation.