Q:What does it cost to take credit cards from customers to pay for cleaning? Should I take them? Is that a lot of trouble?

A:Just checked; we’re paying 2.4% on Visa/MC and 3.0% for AMX.

Plastic is a necessary evil in today’s economy. From the consumer’s viewpoint, it represents convenience:

1.  I don’t have to carry cash

2. accepted most places, especially helpful in emergencies

3. no pile of bills at the end of the month

4. recourse if the retailer or service firm tries to screw me

5. programmed payments if I’m short one month . . .

From the contractor’s viewpoint:

1. money ready for use immediately

2. no billing

3. far fewer write offs

4. when I switched to credit cards, my accounts receivables dropped like a rock, as did my losses on bad checks, disappearing customers, etc.

5. interestingly, so did customer complaints that usually got called in just after the 10th of each month - “know what I mean, Vern?”

Disadvantages of credit cards to cleaning contractor:

1. No cash to hide from the IRS, and with an extra 20-30% in illegal profits, I can undercut my competition until they haul me off to jail! (No, I didn’t fall off the cleaning truck yesterday, and no I don’t love to pay taxes, and yes, I can rationalize about an unconstitutional, immoral government as well as anyone, and yes, I understand that I’m paying higher taxes because many people don’t, and yes, it’s the way I live with myself.)

2. 3-5% off the top of each charge goes to the bank

3. if you deal with AMX, you have to guess what they are charging you for every month.

Bottom line, I consider plastic a necessity. Try to avoid American Express like the plague. They create constant problems, always have. Very few problems with VISA. While on the truck, I never owned an imprinter. Just fill out the form and have the customer sign.

Thanks for listening to my ranting!
  

Q:Do I need to incorporate my business? Seems like a lot of time and expense.

A:In the words of Janis Joplin on her incomparable rendition of Me and Bobby McGee (written by Kris Kristopherson, I think), “Freedom’s just another word for nothing left to lose.”

No reason to incorporate if you have nothing to lose. However, with companies being targeted for every form of creative lawsuit imaginable, when you have a little personal net worth - home, car, stock, savings - you need a little protection. Contrary to some comments I’ve seen posted, the veil of corporate protection has yet to be broken.

The advantage of a corporation, particularly if several employees are involved, is that liability for your or their acts is limited to the assets of the company. Generally, that means the limits of your liability insurance policy, since most plaintiffs aren’t interested in anything they can’t convert to cash in short order.

Problem is, with a corporation, its profits are taxed at a specified rate, and, if you want to take those profits out later, you get to pay taxes again. Double taxation. So many owners take the “Subchapter-S” election. In a Sub-S corporation, you limit liability to the assets of the company, however, all the profits each year are taxed at your personal rate, which generally is lower than taxes on a C-corp plus personal income tax. For most, that’s the best of both worlds.

Today, there’s also something called a Limited Liability Partnership or Corporation as well. That has possibilities as well.

Ultimately, you need to consult with an accountant and, preferably, a tax attorney who can look at your situation and advise you which way to go. Their advice is cheap in the long run, and it could protect you from financial disaster.