Everything you need to know about using Cash App for your business

With Cash for Business your business can accept unlimited payments of any size using your email or phone number, your Cash App QR code or $Cashtag. Whether you’re selling products or services online, or sell products you make at a local market, using Cash App can add an additional payment option for your customers.

Cash App is a Block Inc. company (formerly Square Inc.) that offers services for both individuals and businesses. It is a cross between a financial platform and payment app. If you are considering using Cash App for your business, make sure you review its business account offerings and compare it to other payment processing services or merchant accounts.

Pros and cons of using Cash App for your business

As with any payment option for your business, there are pros and cons to using Cash for Business.

While the 2.75% transaction fee Cash App charges may seem high, it is worth noting that competitors such as Stripe, PayPal, Zelle, and others have transaction fees as well. The 2.75% fee is not outrageous for the space. In terms of an annual fee, there is no Cash App business account fee. (And if your business accepts personal and business credit cards, you’re used to paying merchant fees.)

Here’s the biggest risk of using Cash App for your business: scams and unauthorized charges. There is concern over security protections for small businesses (and consumers) who use the app. 

A customer may dispute transactions and get their money refunded from legitimate transactions. A scammer may compromise your account. Someone may pretend to be from Cash App and try to get account information to gain access to your account. 

Cash App has developed security measures to help reduce fraud. It recommends you take these two steps to help protect your account:

• Enable the Security Lock setting (which will require a PIN or touch ID). This should help ensure that every Cash App payment requires your passcode.
• Enable notification via text message or email so that you are notified after every Cash payment. You’ll find these in the profile section of your Cash App. Keep in mind you can’t ignore these alerts – you must respond very quickly to any fraudulent transactions. 
• If you have a Cash Card, hide your virtual card. You can also disable your card as needed.

As a general rule, you must be very careful when using this and other payment apps in your business. Avoid providing your account information to others, including employees. 

Using Cash App to get immediate funding for your business

Cash App doesn’t necessarily allow you to immediately get funding for your business. But what it does allow you to do is get a payment service set up quickly so you can start selling goods/services, and then use the funds for your business. 

All you need to set up your account is a bank account, email address, name, phone number, address, identification, and Social Security number (or EIN).

Once your account is set up and you have your unique cashtag you can set up payment links and start accepting Cash App payments.

Again, however, this is not without risk in terms of scams or unauthorized use so make sure you implement recommended security protections.

Cash App for business vs personal

If you are going to use Cash App to accept or send payments for your business you should use a Cash App for Business account. It is required by Cash App’s terms of service.  Cash App states: “You should only use personal Cash App accounts to process personal payments.”

There’s another reason why this is important. Payment platforms like Cash App must send 1099-K tax forms reporting certain transactions to the IRS.

Just like commingling personal and business bank accounts can create accounting headaches, using a personal Cash App account for personal purchases may create additional accounting headaches for your business. 

Set up Cash App for business

If you’re not sure whether you have a Cash App for Business or a personal account, log into the app and click on your profile. If you see a green building icon next to your profile then you already have a Cash App for Business account.

Setting up a new Cash App for Business account should be fairly easy, though it requires setting up a personal account first.

First, review the terms of service for Cash App for Business, and make sure you also review the list of prohibited industries. If your business operates in those industries you won’t be eligible to use Cash App.

You’ll start the set up process by opening a personal account. Download the app from the Apple App Store for iOS or the Google Play store for Android. The next steps are:

1. Create an account: enter your email address or phone number.
2. Look for the secret code sent to you by email or text and enter it to set up your account.
3. Enter your debit card information to link your bank account. 
4. Create a  $Cashtag – your unique user name you’ll use to send and receive money. 
5. Enter your zip code. 

At this point your account is set up. 

Once you’ve done this you can switch it to a business account using the steps below.

How to change a Cash App personal account to a business account

If you currently use Cash App as a personal account and want to switch over to a business account, you can click on your account icon in the upper right hand corner, click personal, then click to change account type.

However, instead of switching your Cash App account from a personal one to a business one— which could get really tricky in terms of taxes and keeping your finances separated— you may want to open a new account with an unique username and business email address, and link it to your business bank account. (See fraud warnings and tips below.)

Not only will this help you when tax season comes around, or if you get audited by the IRS, but it will also make sure you are clearly seeing what your business is bringing in. 

To switch to a Cash for Business account, open Cash App and complete these steps:

1. Tap the profile icon in the top-right of your homescreen
2. Tap Personal or Edit Profile, then tap Switch to a Business Account at the bottom of the page
3. Follow the prompts to complete the switch

You can also add your business bank account information by clicking on your profile, selecting linked banks, and then following the prompts once you’ve clicked on Link Bank. (You can also remove linked banks in the same area.) 

Once you’ve created your account you’ll want to make sure your tax information is correct. You can go to cash.app/tax-information to enter your business tax identification number such as your Employer Identification Number or EIN, which you can get for free from the IRS.

Once you’ve completed this switch you’ll see a green building icon next to your profile information.

Since you will use your Cash App Business account only for business transactions, you’ll need to set up a new personal account if you want to continue to also use it for personal transactions.

Not only will this help you when tax season comes around, or if you get audited by the IRS, but it will also make sure you are clearly seeing what your business is bringing in. 

Best alternatives to Cash App for your business

While CashApp definitely has some advantages it won’t be the right choice for all business owners. Small business owners may prefer a platform where there are no limits on receiving and spending money or they may feel better with a more traditional point-of-sale system. Luckily there are plenty of alternatives out there for businesses. 

Square

Square is a popular payment option among many small businesses and it’s also owned by Block Inc., as is Cash App. Square charges transaction fees between 2.6% + $0.10 to 3.5% + $0.15. There are no chargeback fees or refund fees, there is a 1% per ACH payment with a $1 minimum and no monthly fees. They also offer hardware that can be synched with their platform which may be very beneficial to retailers and those that need a physical payment device. Square also offers a lot of add ons including email marketing, invoicing, payroll, and more.

Venmo

Venmo is a popular alternative to CashApp. Business transactions carry a fee of 1.9% + $0.10 to 3.49% + $0.49. You can keep your personal and business account together with one username and password and just switch between the two. You are limited by Venmo’s other rules regarding sending and receiving payments. Similar to Cash App, it is not covered by federal regulations. 

PayPal

PayPal is another payment processing option for business owners. They allow business owners to connect to tools they already use, accept a wide range of payment options, have a payment plan option, and more. They charge anywhere from 1.9% + $0.10 to 3.49% + $0.49. They also offer tools to help with invoicing, reporting, analytics, and more. PayPal is global and also offers loans to businesses using their platform. PayPal is global and also offers small business loans to those using their platform.

Stripe

Another popular payment platform is Stripe. It allows companies to collect payments online and in person. Processing fees start at 2.9% + $0.30 and go up depending on if there is a currency exchange, international cards, additional payment method, etc. You can also get add ons to help with things like invoicing, taxes, billing, custom domain, and more.

Business bank account

Every business should have a business checking account. For some businesses, their business bank account will meet their needs without the use of other business payment apps.

Businesses that regularly accept card transactions in their business will likely want to consider a merchant account with a POS system (a terminal for swiping or tapping cards). In addition, apps like Cash App and the other providers listed above can provide customers with more payment options.

Either way, it can be a good idea to have money for your business deposited into your FDIC insured bank account so you’ll have a central place to track your business income. (Keep in mind FDIC insurance does have limits.) You then may want to have your Cash.app account access a sub account of your bank account in which you keep more limited funds so you’re not unnecessarily risking funds.