Venmo: An Option for Child Care Providers

Summary

For many years, cash or check has been the choices given to families as payment options for child care.  As technology continues to offer more efficient ways of payment for services, Venmo is one of the options that can be utilized to streamline child care payments from families to their child care providers.  

In a conversation with Kristina Mease, Regional Director of the Kansas Small Buisness Development Center at the University of Kansas, she shares three important areas to consider if a provider chooses Venmo as their option for child care payments.  

First, "If business owners are interested in accepting Venmo, they should set up a Business Venmo account that is separate from their personal Venmo account. In 2022 Venmo issued new reporting standards – basically if a person receives over a certain dollar amount, that is reported directly to the IRS as business income. There could be potentially a lot of back and forth with the IRS if personal and business transactions are intermingled. It is a good business practice overall to keep personal and business finances separate".

Second, "The Venmo business account or other electronic payment apps for the business should be connected to the business’s bank account. This will allow the income received from the electronic payment apps to link to their business bank account and from there they can transfer to their personal account as needed. The point is to have one space where all revenue is tracked".

Third, "...recording Venmo transactions for income tax purposes is important. Any revenue the business received using  Venmo or other electronic payment apps should be recorded on their federal income taxes. The IRS is cracking down on income received on electronic payment apps and these apps actually report directly to the IRS. If you are unsure how to properly report this on your taxes, seeking advice from an accountant would be a great step".

 

For an additional perspective on the use of electronic payment apps for childcare payments, Tom Copeland offers his expertise in this article link.  Tom Copeland has been the nation's leading trainer, author, and advocate for the business of family child care care since 1981.  

Click here to be sent to the Venmo website support page to learn about the steps to create an account.  If you are ready to set up a Venmo business account, click on this link to begin setting up your business profile.