Does your business accept payments through PayPal and Venmo? These peer-to-peer (P2P) payment systems are a convenient way for individuals to transfer money and a simple way for your customers to pay you, but there are some important things you need to keep in mind. Accepting money from a friend to split a bill is not taxable, but if you are accepting business payments through these P2P systems, you’re responsible for reporting this income on your tax return. P2P payment platforms, like Venmo and Stripe, provide information to the IRS when you receive payments for the sale of goods and services through those platforms. If you receive amounts over a certain threshold you will receive a tax form from the P2P provider but, even if you don’t receive a form 1099-K, you’re still required to report any taxable income you receive through these platforms on your income tax return. Keep detailed records of your total income earned from all sources during the year. We recommend setting up a separate bank account where all of your business income will be deposited; this will help determine your total gross receipts when it comes time to prepare your returns. Likewise, if you use one of these services to pay business expenses be aware that the IRS considers this equivalent to a cash payment and additional documentation would be required to substantiate this expense. Take a look at this Intuit article for more details and let us know how we can help you properly report your business income and expenses.
Accepting payments through PayPal and Venmo? Here is what you need to know.
