5 Reasons Why I Don't Suggest Being A Cash Only BusinessOct 11, 2022
5 Reasons’s why I don’t suggest being a cash only business
- Cash makes you a target for the IRS.
The Balance Money states that cash businesses are more likely to be audited by the IRS and have a particular problem when audited because it is difficult to verify income received in cash.
Honestly, think about whether there have been times that you haven’t deposited all of the cash that you received in a day or a week.
It is much harder to qualify for things like loans or to buy a house, especially as things tighten up.
The reason that it is so hard to qualify for things like loans, is because it is so hard to prove that the cash you received was income.
Shabana Motors states that some ways to prove that cash is income is:
- Tax statements
- Letters from those who pay you
- Duplicate receipt ledger (give one copy to every customer and keep one for your records)
Do you see how many different paper trails you will need as opposed to if you accepted credit/debit cards?
- Cash only means you have less tips statistically.
This is also because you can set the suggested tip amounts, such as 15%, 20% and 25% for example.
Part of the reason that people generally tip more when using debit/credit cards as opposed to cash are as follows:
- Cash hits the pain center in the brain when you spend it.
So when you charge more or go up in prices, clients who pay cash feel pain. Clients paying with cards or online do not feel the same pain centers light up, so they tend to tip more generously, and if you charge a no call no show fee they are less upset.
Imagine holding in your hands the money you pay in taxes and you had to physically hand it to a tax collector. Or if you had to pay all your restaurant checks in cash. It still hurts to fork over money online or via card but it’s just not the same.
- It’s harder to charge for no call no shows.
Think about it. It’s going to be so hard to charge for no call no shows, because you will be relying on cash only, and won’t have people’s credit cards on file so that you can automatically charge the card.
You’re going to have to hope that people will either come down to your shop and pay for the no call no show, or pay it when they come for their next appointment, which a lot of the time is unlikely.
- People view you as less professional.
How many places of business do you know that only accept cash? I bet it’s not many. That’s because many businesses are adjusting to the way of the times and have a credit card processor for the inconvenience.
Do you honestly carry around cash all the time? I know that I don’t.
By not accepting credit/debit cards I believe that you are significantly limiting your income potential through tips for one, and also for those no call no shows.
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