Cred AI Review: Are You Really Better Than Your Bank? 

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Cred.ai review

One of my students came across Cred.ai when researching business credit cards, and the flashy website stopped us both in our tracks. And, the offer is buzzing right now, so I wanted to write about it…for fun. 

In short, Cred.ai is a fintech company that offers a premium, 100% mobile, fee-free credit card with a metal design, along with cutting-edge technology that helps you manage your finances, build credit, and protect against fraud. You can use it to spend like a debit card while building your credit score “like a pro.” With Cred.ai, you can also access your paycheck up to two days early, get cash from ATMs, make instant deposits and mobile check deposits at no fee, and all deposits are FDIC insured.

This all sounds exciting, but it leaves a lot of questions unanswered. 

So, let’s find out what this offer is really all about — the company, the card, and more. 

Here’s what’s in store: 

So, let’s go! 

What is Cred.ai? 

A couple of years ago, when they revealed their ai-powered credit card, Forbes called Cred.ai “the Tesla of Banking.” But, with all of the chatter, that still doesn’t tell you what the offer can do for you in comparison to other cards on the market. 

So basically, Cred.ai is a high-tech and premium everyday spending experience that offers a free metal card — They guarantee that you’ll never pay fees or interest and never overspend. Plus, they offer cutting-edge technology like Check Please™ and Flux Capacitor to help you optimize your credit utilization and even get your paycheck up to two days early. 

Cred.ai is touted to be “100% mobile” and offers 24/7 support, real-time control, and virtual Stealth Cards™ that activate instantly upon approval. The company offers exclusive features like High-Security Mode™ and a Friend & Foe List™ to keep users safe and protected. 

The metal card (this is why ‘100% mobile’ might not be the right word choice) is free and it’s heavier than those other fancy black cards, but you don’t have to pay a fee to get it. You can use it like a debit card and build your credit (“because it’s a real credit card,” according to their website). 

Cred.ai also offers original content through Crednews™ (where they produce documentaries about important topics like UBI and psilocybin…seriously). 

With Cred.ai, you can get the spending power of your paycheck and other automatic deposits up to two days before they hit your bank account. And, you can get cash at free ATMs within their network, make instant deposits, and mobile check deposits with no fees. All, as previously mentioned, deposits are FDIC-insured up to $250K. 

There are also some really cool features like Flux Capacitor, which gives you early access to future deposits and helps you budget for future charges before they happen. There’s also Stealth Card™ (virtual card), which is helpful for risky transactions like ordering tacos over the phone or signing up for free trials. You can regenerate your Stealth Card when you feel like you’re at risk or use it in High-Security Mode™ for ultimate protection. 

So, in summary, Cred.ai is a high-tech, mobile spending experience that offers a free metal card and exclusive features like Check Please™, Flux Capacitor, and Stealth Card™. Cred.ai guarantees you’ll never pay fees or interest and you’ll never overspend.

The Unicorn Card™ (Metal Credit Card)

How does Cred.ai card work?

Cred.ai’s Unicorn Card is not your typical credit card. With a sleek black metal design and a unicorn image, it’s definitely eye-catching. But the real magic happens when you start using it. 

Unlike traditional credit cards, you need to deposit cash upfront, similar to a secured card. But don’t worry, your money isn’t just sitting there as a hostage to your good behavior. Instead, cred.ai uses your deposit to pay off your monthly statement balance as you make purchases, effectively extending your credit without requiring cash on hand to cover each transaction.

WSFS Bank — a member of the FDIC — provides the Deposit Account for cred.ai. Additionally, WSFS Bank has issued the Unicorn Card credit card under the license from Visa® U.S.A. Inc. The credit card can be used wherever Visa® credit cards are accepted.

Fee-Free ATM Network

Cred.ai has a cool feature where you can find free ATMs using their mobile app. 

When you withdraw cash from an ATM, it’s considered a cash advance against your Unicorn Card credit card. But the good news is, you won’t have to pay any interest on those cash advances as long as you enable the Cred.ai service to manage your Unicorn Card payments automatically in the background. 

Plus, they have a huge network of over 55K ATMs, so you’ll have plenty of options to choose from.

Early Access to Paychecks

If you’re a Cred.ai user and have set up direct deposit, there’s a way to access those funds earlier than your scheduled payment date — Cred.ai allows you to access the spending power of your direct deposit funds as soon as they receive the deposit file from your payer! 

This could be up to two days before your scheduled payment date, depending on when your payer submits the deposit. Just keep in mind that the timing and schedule of your direct deposit depend on the payer, so it’s always a good idea to check with them first.

Minimum Deposit, Credit Limit, & Fees

So here’s the deal with Cred.ai: it’s kind of like a secured card, so you’ll need to put some cash onto the card to start using it. The smallest amount you can deposit is $100, and unfortunately, you can’t add any authorized users to the account. 

Here’s the cool part though — Cred.ai reports to credit bureaus each cycle with a $1.5K credit limit and a 2-3% credit utilization rate (0% if you have a $0 balance), which can help boost your credit score. Plus, they have an auto-reload function to make sure you have enough funds to cover your transactions. 

Now, while they say they have “no fees,” there is an APR and interest rate of 17.76% on spending and 24.99% on cash advances. But don’t worry, they won’t charge you unless you turn off their automated system. 

Some folks suggest using the card more as an emergency fund, and instead using a secured credit card from a credit union for regular spending. But hey, everyone’s financial situation is different, so it’s up to you to figure out what’s best for you!

How Does Cred.ai Help You Build Credit?

First of all, Cred.ai reports to the three main credit reporting agencies, showing a $1500 revolving line of credit and your utilization every month. The best part? It doesn’t require a hard credit pull or an initial credit score, making it accessible to a wide range of consumers.

Let’s say you have one credit card with an $800 limit and you’re using 80% of that limit ($640). That’s not so great for your credit score because it looks like you’re relying too much on credit. But if you get the cred.ai card and deposit, say, $1.5K onto it — now you have a total credit limit of $2.3K and only use 27% of it. That’s a big improvement! 

When you apply for credit in the future, having a higher credit limit and lower usage percentage looks really good to lenders. It shows them that you’re responsible with credit and can handle having more available to you. Plus, since the cred.ai card doesn’t require a hard credit check, applying for it won’t hurt your credit score.

Furthermore, the AI technology behind the card also learns your spending patterns and helps prevent you from overspending. If you try to make a purchase that would leave you overdrawn, the card will decline the transaction, acting like a protective parent. 

How does Cred.ai build credit?

Think of the cred.ai card as a helpful friend who gives you some money to use, but keeps an eye on you so you don’t overspend and get into trouble. You can only use the money that you deposit onto the card, but it still helps your credit score because it looks like a regular credit card to the credit bureaus. 

On the contrary, if you turn off this feature, you can charge up to your cash limit and even beyond, though there’s a somewhat high APR for unpaid balances (17.76%+ on cash purchases).

So, what if your deposits are unpredictable? 

If you get paid in cash, or you don’t use Cred.ai’s deposit account as your main cash flow account, the system will still attempt to predict your income, likely unsuccessfully — in which case you will essentially be able to use it like a debit card and spend your deposits, dollar-for-dollar. You would still be able to use it as a credit card, though (you won’t have to walk inside to pay for gas at stations where only credit cards are accepted at the pump). 

The bottom line is that it always reports to credit bureaus as a $1,500 line of credit. 

Recommended: Credit Secrets Book Review: Can You Erase Bad Credit History? 

The Stealth Card™ (Virtual Card)

Is Cred.ai secured credit card?

One neat feature of the Unicorn Card is the virtual card number for risk mitigation — Cred.ai just calls theirs a Stealth Card™. If you’re hesitant to make a purchase on a sketchy website, or you don’t want to commit to recurring monthly charges, you can use a virtual card number that won’t work for anything else, minimizing the risk of fraud.

In general terms, a virtual card is a digital version of a physical credit or debit card that is used for a single transaction or for a limited period of time. It typically consists of a randomly generated number, expiration date, and security code, which can be used for online or phone purchases where the actual card is not present.

The idea behind virtual cards is to provide an additional layer of security for online transactions, as the virtual number is typically different from the actual card number and can be easily deactivated if compromised. This makes it less risky to use your credit or debit card for online shopping or on unfamiliar websites, as your actual card number is not shared and the virtual card can be easily canceled if there is any suspicious activity.

Several banks and credit card issuers also offer virtual cards as a separate feature that can be generated and managed through their mobile apps or online banking portals.

Recommended: In-Depth Divvy Credit Card Review: Read This Before You Apply 

What is High-Security™  Mode?

Cred.ai’s High-Security mode is a feature that adds an extra layer of security to your transactions. By enabling High-Security mode, the authorization window for each transaction becomes very small, usually only a few seconds, and expires automatically — This means that even if someone were to gain access to your card information, they would not be able to use it for fraudulent transactions because the authorization window would have expired by the time they tried to make a purchase. 

Essentially, this feature is controlled by you and minimizes the risk of unauthorized transactions on your Cred.ai card. It is available for both physical and virtual Stealth cards.

Is Cred.ai Good for Businesses? 

Cred.ai’s features are mainly geared towards individual consumers, such as access to early direct deposit, free ATM network, and virtual card capabilities. While businesses may be able to use the service, there are no specific features or benefits designed for business use. 

Additionally, Cred.ai is not currently set up to handle business accounts or multiple authorized users, so it may not be the most practical option for businesses. Therefore, it may be better for businesses to look into alternative banking solutions that offer features specifically tailored to their needs.

Business owners who are curious about Cred.ai might want to look into a (more relevant) corporate offer like Brex or Divvy.

Recommended: Brex Card Review: Is This Corporate Card Offer Too Good to be True? 

Cred.ai vs Chime

Cred.ai is most often compared to Chime, but these are two very different offers — let’s see how they stack up side by side: 

What is similar to Cred.ai?

*Please note that this information is subject to change, and you should always refer to the official websites of Cred.ai and Chime for the latest and most accurate information.

Frequently Asked Questions

What credit score is required for Cred.ai?

According to the information available on the Cred.ai website, there is no minimum credit score required to apply for an account. However, they may perform a soft credit check during the application process to verify your identity and determine your initial credit limit.

Does Cred.ai do a hard pull?

No. Cred.ai does not do a hard pull to approve your account. 

Is Cred.ai a secured credit card?

Sort of… you do have to deposit money to use a Cred.ai card, but your money isn’t subject to the same terms as traditional secured credit card accounts. 

How does Cred.ai affect your credit score?

The cred.ai card requires you to deposit money before you can use it. Your spending on the card is reported to credit agencies as a credit card with a $1500 limit and 3% usage. This increases your available credit and decreases your overall credit usage, which can improve your credit score. 

For example, if you previously had one credit card with high usage, adding the cred.ai card would increase your available credit to $1800 with a 30% usage rate, which looks better to lenders.

Conclusion: Are You Better Than Your Bank? 

Yeah, you are better than your bank, but that doesn’t mean you need to apply for a Cred.ai card. The tech is certainly cool for a certain demographic. If you need to improve your consumer credit utilization ratio, this might do the trick — The offer is fun and users seem to like it. 

If you’re a business owner, however, you might want to look into a credit card designed specifically for business operations. 

If you want to learn how to get up to $100K in business credit in as few as 30 days, join Business Credit Workshop today.

Sole Proprietorship VS LLC: How to Choose Your Entity Wisely

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Sole proprietorship vs LLC

Here, we teach people how to build business credit. And, establishing your entity is a super important step in the process — early on, the two most common choices are sole proprietor or LLC. 

If you’re running a business as a sole proprietor, and considering an upgrade to LLC,  you might already know that you can get some business credit even without registering as an LLC or corporation…But if you’re looking to take your business to the next level and secure larger no-doc business lines of credit (think 25k, 50k, 100k), you might find it challenging without a registered corporate entity.

Banks and lenders tend to prefer working with LLCs or corporations because they offer more protection and credibility. So, I highly recommend considering forming an LLC over a sole proprietorship if you’re serious about obtaining substantial business credit.

Don’t get me wrong — you can still apply for business credit cards as a sole proprietor. But, a registered LLC or corporation can make it easier to secure other types of financing and help you build a stronger credit profile for your business. 

In this article, we’ll dive deeper into the differences between sole proprietorship and LLC, and explore their pros and cons, especially when it comes to business credit and financing options.

Here’s what we’ll cover: 

Now, let’s get going! 

Are You Sure You Only Want to Look at Two Options? 

Before we get too deep into the pros and cons of LLCs vs sole proprietorships, let’s take a quick look at some more entity types — I want to cover it all and give you everything you need to know. After all, it’s crucial to choose the right structure for your needs. 

Sole Proprietorship

A sole proprietorship is the simplest type of business structure and is owned by one person. The owner has complete control over the business and is personally liable for its debts and legal issues. Sole proprietorships are not taxed as separate entities from the owner, meaning that the owner reports the business income on their individual tax returns.

Limited Liability Company (LLC)

A limited liability company (LLC) is a type of business entity that gives the owners (“members”) “limited liability protection.” This is a swanky way to say that the member’s personal assets are separate from the company’s assets, and their personal liability is limited to the amount of money they’ve invested in the company. 

LLCs can have one (“single-member”) or more (“multi-member”) members, and they can be taxed as either a sole proprietorship, partnership, S corporation, or C corporation, depending on how the members choose to be taxed.

S Corporation

An S corporation is another type of entity that you may want to consider — it’s a type of corporation that is taxed differently than a traditional corporation (C corporation). An S corporation’s profits and losses are “passed through” to its shareholders, who report the income on their individual tax returns. 

This means that S corporations avoid double taxation. To qualify as an S corporation, a business must meet certain requirements set by the IRS.

C Corporation

Next, you have a C corporation — a traditional corporation that is taxed as a separate entity from its owners (“shareholders”); this means that the corporation pays taxes on its profits, and the shareholders pay taxes on the dividends they receive from the corporation. 

C corporations offer limited liability protection for their shareholders, but they are subject to double taxation.

Partnership Options

At this stage, it’s also important to look at the two types of partnerships: 

General partnerships are a type of business entity where two or more people share the management and ownership and management of the company. The partners share the profits and losses of the business and are personally liable for any debts or legal issues that the business incurs.

A general partnership is typically not taxed as a separate entity from the partners, meaning that the partners report the business income on their individual tax returns.

Limited partnerships are similar to general partnerships but with two types of partners: general and limited partners. General partners have control over the day-to-day business operations and are personally liable for any business debts and legal issues. Limited partners, on the other hand, have limited liability and are not involved in the management of the business.

Limited partnerships are typically taxed as pass-through entities.

Sole Proprietorship vs Single-Member LLC

A single-member LLC is not the same as a sole proprietorship. In terms of liability protection, taxation, ease of formation and maintenance, and flexibility in management, there are considerable differences between sole proprietorships and limited liability companies (LLCs):

First of all, sole proprietorships provide no liability protection for their owners — basically, he owner’s personal assets are at risk if the business is sued or incurs debt. In contrast, LLCs offer “limited liability protection” to their owners (their personal assets are generally protected from the company’s debts and legal judgments).

Next, sole proprietorships are typically taxed as pass-through entities, which means that the business’s profits and losses are reported on the owner’s personal tax return. LLCs can also be taxed as pass-through entities, but they provide the option to be taxed as a corporation (this can be advantageous for LLCs that want to cash in on lower corporate tax rates or retain earnings in the business without paying personal income taxes on them).

And, sole proprietorships are the easiest and cheapest business entities to set up…in most states, they require no formal paperwork or registration. Now, while LLCs require more paperwork and filing fees to establish, they offer formal structure and protection. Both types of businesses require ongoing maintenance, such as keeping accurate financial records and filing tax returns, but LLCs typically have more stringent compliance requirements.

Finally, sole proprietors have complete control over the management of their businesses…but (big but), this also means that they have full responsibility for all aspects of the business. LLCs are more flexible in terms of management structure — they can be managed either by the members or by outside “managers.” LLCs can also have varying degrees of ownership and voting rights among members, which allows for more customized ownership structures.

While both sole proprietorships and LLCs offer benefits and drawbacks, LLCs typically offer more liability protection, tax flexibility, and management structure options, but require more paperwork and ongoing maintenance. 

Here’s How Sole Proprietorships & LLCs Pay Taxes

Sole proprietors report their business income and expenses on their personal tax returns using Schedule C (Form 1040). The net income from the business is then subject to self-employment taxes, which include Social Security and Medicare taxes. Self-employment taxes are calculated on Schedule SE (Form 1040) and are owed in addition to income tax. 

→ Sole proprietors are also responsible for paying estimated taxes quarterly throughout the year.

LLCs have more flexibility in how they pay taxes — by default, single-member LLCs are taxed as sole proprietorships and report their business income and expenses on the same Schedule C as a sole proprietor (Form 1040). 

Multi-member LLCs are taxed as partnerships and file Form 1065 to report their business income and expenses annually. But, LLCs can also choose to be taxed as S corporations or C corporations by filing Form 8832 or Form 2553, respectively.

Comparison of Tax Rates & Deductions

Sole proprietors and LLCs taxed as sole proprietorships pay income tax at their individual tax rates, which range from 10% to 37% depending on their taxable income. They are also subject to self-employment tax, which is currently 15.3%.

LLCs taxed as partnerships, S corporations, or C corporations are not subject to self-employment tax — Instead, the owners or shareholders pay income tax only on their share of the profits. 

Both LLCs and sole proprietors can deduct typical business expenses, such as rent, supplies, and equipment, to reduce their taxable income. 

Can an LLC Be Used to Reduce Taxes?

You can use an LLC to reduce taxes in a couple of ways: 

  1. Elect to be taxed as an S corporation — this allows the owners to pay themselves a reasonable salary and take the remaining profits as distributions. This can reduce self-employment tax, as only the salary is subject to Social Security and Medicare taxes.
  2. Take advantage of deductions and credits — LLCs can deduct business expenses, such as rent, supplies, and equipment, as well as contributions to retirement plans and health insurance premiums. They may also be eligible for tax credits, such as the Research Tax Credit or the Small Business Health Care Tax Credit.

Note that sole proprietorships are eligible for many of the same write-offs and credits as LLCs. So, how can you choose between them? 

How to Choose Between a Sole Proprietorship and an LLC

Here are some factors to consider when deciding whether to choose a sole proprietorship or an LLC:

Sole Proprietorship:

  • Simple to set up and maintain — A sole proprietorship requires minimal paperwork and legal formalities, making it easy and affordable to start and operate. 
  • Complete control — As a sole proprietor, you have complete control over your business decisions and operations.
  • Tax benefits — As a sole proprietor, you report your business income and expenses on your personal tax return, which can simplify tax preparation and potentially lower your tax burden.

Limited Liability Company (LLC):

  • Limited liability protection — An LLC provides limited liability protection to its owners, meaning that the owners are not personally responsible for the company’s debts and liabilities. 
  • Credibility and professionalism — An LLC is often seen as a more credible and professional business entity than a sole proprietorship, which can be an advantage when dealing with customers, vendors, and investors. 
  • Flexibility in taxation — LLCs have the option to be taxed as a partnership, an S corporation, or a C corporation, providing flexibility in tax planning and potentially reducing overall tax liability. 

In general, if you’re a small business owner with low risk and relatively simple operations, a sole proprietorship can be a decent choice. However, if you are concerned about personal liability or are looking to grow your business and establish credibility, an LLC may be a better option. It’s always a good idea to consult with a lawyer or accountant to determine the best business structure for your specific needs and circumstances.

With that said, I know that you can get business credit with a sole prop but you can get serious no-doc business lines of credit (25k, 50k, 100k) without a real entity. so I recommend getting an LLC. You can get business credit cards but banks want to see an LLC or corporation to extend business lines of credit.

How to Register Your Business 

How to Register as a Sole Proprietor

Here are the basic steps to file the necessary paperwork for forming an LLC and registering as a sole proprietor.

Of course! Here are some more conversational explanations of the steps to form an LLC and register as a sole proprietor:

How to form an LLC:

  1. Pick a name for your LLC that’s not already taken in your state and meets your state’s requirements.
  2. File an Articles of Organization form with your state’s Secretary of State office. This form typically asks for basic information about your LLC, like its name, address, and the name and address of your registered agent.
  3. Draft an operating agreement for your LLC. This outlines how your LLC is run and who owns it. Some states don’t require an operating agreement, but it’s still a good idea to have one.
  4. Get any necessary licenses and permits for your business. Depending on where you live and what you do, you might need specific licenses or permits to operate your LLC.
  5. Apply for an EIN from the IRS if you plan on hiring employees or opening a bank account for your LLC.

How to register as a sole proprietor:

  1. Decide on a name for your business, whether it’s your own name or something else.
  2. Get any licenses or permits you need to legally run your business in your area.
  3. File a “Doing Business As” (DBA) form with your state’s business registration office to register your business name.
  4. Apply for an EIN from the IRS if you plan on hiring employees or opening a business bank account.

Remember, the specific rules and requirements for forming an LLC or registering as a sole proprietor vary by state and local municipality, so be sure to do your research and follow the guidelines for your location. For example, in Oregon, you can legally run a business after filing an “Assumed Business Name” alone, but may still need local business licenses. 

Recommended: Secretary of State Offices Directory | Where to File a Business License

Frequently Asked Questions

What are the disadvantages of an LLC vs a sole proprietorship?

LLCs can be more costly and require more paperwork than sole proprietorships, but they offer greater personal liability protection. Sole proprietorships are generally easier and cheaper to set up, but leave you personally responsible for any business debts or legal issues.

What is more risky, a sole proprietorship or an LLC? Why?

A sole proprietorship is generally riskier than an LLC, as sole proprietors are personally liable for any business debts or legal issues. Forming an LLC can offer greater personal liability protection, which can help shield the owner’s personal assets from business-related risks.

How do business owners pay themselves?

Business owners can pay themselves in different ways, including salary, dividends, or draws/distributions from business profits, depending on the business structure and personal financial needs. And, some companies pay the owner’s salary with a business credit card. It’s important to consult with a financial advisor or accountant to ensure compliance with legal and tax requirements.

Conclusion: Which Structure is Best for You?

Whether you should choose a sole proprietorship or an LLC is based on a number of factors. Do you want more ease or more protection? Do you have specific tax needs? By now, you should have an idea which is best for your operations. 

However, if you want substantial lines of business credit, there is a clear choice: form an LLC…You can certainly obtain business credit cards as a sole proprietor, but to get those larger lines of credit in the tens and hundreds of thousands range, most banks will want to see a more formal business entity like an LLC or corporation.

To learn how to obtain up to $100K in business credit in as little as 30 days, join Business Credit Workshop today.

Is it Illegal to Use a Business Credit Card for Personal Use? +More Answers

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Have you ever wondered whether you can use your business credit card for personal expenses? 

It’s a common question among business owners, but the answer can be a bit tricky. 

While we can’t give legal advice (if you need that, please talk to your attorney and your CPA), we’re here to provide you with helpful information that can guide you in making informed decisions for your business — One interesting thing we found out is that using your business credit card to pay yourself a salary as an employee of your own business can be considered a legitimate expense. 

Pretty cool, huh? 

We’ll delve into this and other commonly asked questions about business credit card use in this article, so keep reading to find out more!

Here’s what’s in store: 

Let’s rock and roll!

Scenario: Employee Uses Company Credit Card for Personal Use

While most of our content is targeted at business owners, you might be reading this because you’re wondering if you can add a pair of shoes to your business order, and still pay with your company’s corporate card. Here’s what I can tell you. 

When an employee uses a company credit card for personal expenses, it can cause a lot of problems. 

First off, it’s usually against company policy, which means the employee could face some serious consequences like getting in trouble with the boss or even losing their job. From a legal standpoint, this is risky for all parties because if the expenses are shady or illegal, both the employee and the company could face a run-in with the law. 

Next, staff members that use a company’s card for non-business expenditures can complicate finances because it’s hard to keep track of personal expenses and separate them from business expenses — it could cause some major issues with taxes and budgets down the road. 

Lastly, if personal spending exceeds the credit limit on the card, it can result in fees or penalties, which will hurt the company’s bottom line.

Can you use business credit card for personal use Reddit

Image source: Reddit

So, if you accidentally used a company credit card when you didn’t intend to, or if you notice that an employee used your business credit card for something questionable, it’s best to act fast. 

How to Prevent Personal Spending on Company Credit Cards

Q: Why does our Amazon business report show an order for a gold-plated toilet seat? 

A: Someone wanted to feel like a VIP on the company’s dime. 

In all seriousness, it’s crucial to make sure that employees use company credit cards responsibly and only for legitimate business expenses. Otherwise, the company could end up footing the bill for some pretty outrageous purchases!

Here are some actions you can take to avoid personal employee spending on your business credit cards:

  • Create clear policies — Make sure everyone knows the rules when it comes to using company credit cards. This means setting out clear policies on what expenses are allowed and what expenses are not allowed.
  • Set spending limits — Give your employees some guardrails by setting limits on how much they can spend with the company credit card. You can also set daily or weekly limits to help control spending.
  • Monitor transactions — Keep a close eye on credit card transactions to make sure there are no unauthorized or personal expenses. This means setting up alerts to notify you of any unusual transactions or spending patterns.
  • Require receipts — Make sure your employees know that they need to submit receipts for all credit card expenses. This helps ensure that all expenses are legitimate and for business purposes.
  • Provide training — Never assume that everyone just knows how to use a company credit card. Provide training that covers your company’s spending policies, guidelines, and best practices for managing credit card expenses.

By doing these things, you can help prevent personal employee spending on company credit cards…. and ensure that all credit card expenses are legitimate and for business purposes only.

General Rules for Business Credit Cards

First and foremost, you need to understand that business credit cards are intended for business expenses…legit ones! This means that you should only use the card to pay for things that are related to your business, like office supplies, travel expenses, and other business-related costs.

Next, it’s vital to keep your personal and business expenses separate (i.e. you should never use your business credit card to pay for personal expenses, like groceries, clothing, or personal entertainment). 

On a similar note, you need to keep track of your spending. You should monitor your credit card statement regularly to ensure that all charges are legitimate and for business purposes. When issuing business credit cards or corporate cards, it’s also a good idea to set spending limits for yourself and your employees to prevent overspending.

Lastly, be sure to pay your credit card bill on time and in full every month — Late payments can devastate your business credit score and result in hefty late fees and interest charges (remember, you should credit card funds to invest in assets, not squander on liabilities).

Note, that business credit card policies vary between credit card companies and businesses have a right to set unique spending policies within legal guidelines in their jurisdiction. 

Amex business card for personal use

By following these general rules, you can use your business credit card responsibly and avoid any potential issues down the road.

What Can You Use Business Credit For?

In a word, you need to use your business credit for business expenses. 

However, in some industries, expenses that seem frivolous can be completely above board — for example, stylists in the beauty business need to look nice, so they can buy makeup, clothing, and haircare products. And, for businesses with dress codes, you might have a green light on that Armani suit you’ve been eyeballing. 

So, what constitutes a business expense? 

A business expense is any cost incurred as part of running your business, most commonly: 

  • Rent for your office space
  • Equipment purchases
  • Employee salaries
  • Marketing expenses
  • Travel costs.

In addition to these more obvious expenses, there are also many other items that can be considered legitimate business expenses, depending on your industry and specific needs. For example, as previously mentioned, in certain industries, expenses like clothing, makeup, and hair care products can be considered legitimate business expenses.

Other examples might include: 

  • Home office expenses
  • Professional development courses or certifications
  • Certain meals and entertainment expenses (if they are related to business activities)

It’s important to note, however, that not all expenses will be considered legitimate business expenses. Any personal expenses, such as vacations or personal entertainment, should never be charged to your business credit card.

In general, it’s always a good idea to consult with a financial professional, like an accountant or tax advisor, to ensure that you are using your business credit card appropriately (and taking advantage of all eligible tax deductions).

Paying Yourself With Credit When You Own a Business

As a business owner, there are a few different ways you can pay yourself. One common method is to pay yourself a salary, which you can do using a number of different payment methods including checks, direct deposit, or even a credit card. 

Yes, you read that right – you can pay yourself a salary with a credit card!

Now, before you go swiping that plastic, it’s important to understand the pros and cons of each payment method. 

For example, paying yourself with a credit card may be convenient, but it can also come with high interest rates and fees if you don’t pay off the balance each month…while other payment methods like checks and direct deposit may be more traditional, they might also require more effort and may not be as flexible. 

Regardless of which payment method you choose, it’s important to manage your business finances wisely: 

  • Create a budget
  • Keep track of expenses
  • Set aside money for taxes and emergencies.

By taking these steps, you can ensure that you are paying yourself in a sustainable way that supports both your personal and business financial goals.

So, is It Illegal to Use Business Funds for Personal Use?

In general, it can be illegal to use business funds for personal use, especially for employees whose companies prohibit it; this includes paying personal expenses and withdrawing cash from a business account to spend on personal items. 

Is using a company credit card for personal use embezzlement?

How often people get caught doing this, I can’t begin to guess. And, the penalties would surely vary depending on the severity of the crime — which is why you should consult with an attorney or CPA to ensure legal compliance. 

Using business funds for personal expenses can sometimes be considered embezzlement or fraud, and can result in serious legal consequences…It can also damage your business’s financial stability and reputation.

That being said, in my experience, there are some exceptions to this (like a business owner paying their own salary). 

How Business Credit Affects Personal Credit

As a business owner, you need to understand the relationship between your personal and business credit. While they are technically separate, your personal credit can still impact your LLC in a few different ways. 

If you have a poor personal credit score, it may be harder to get approved for business loans or credit cards…On the other hand, a strong personal credit score can make it easier to access funding and other resources for your business.

To manage both your personal and business credit effectively, there are a few key tips to keep in mind: 

First, make sure to keep your personal and business finances separate as much as possible: open separate bank accounts and credit cards for your business and avoid using your personal credit to cover business expenses.

Next, be sure to monitor your credit scores regularly and address any errors or issues that arise promptly.

And, you need to maintain a good credit utilization ratio – that is, the amount of credit you are using compared to the amount you have available…Both personal and business credit scores are impacted by this ratio, so it’s important to keep your balances low and avoid maxing out your credit cards.

Recommended: Credit Secrets: Can You Erase Bad Credit History? 

Is it Better to Use Business Credit Card Points for Personal Things? 

While I wouldn’t encourage you to spend business credit on personal items, rewards redemption is another story. 

Using your business credit card points for personal things can be a tempting proposition, especially if you’ve been racking up rewards points with your business purchases. 

I’ve redeemed my Marriott Bonvoy rewards on more than one family vacation. 

However, whether it’s better to use those points for personal use ultimately depends on your business’s financial situation and your personal financial goals.

Here are some things to consider:

  • If your business has a cash flow problem and you’re relying on credit card rewards to make ends meet, it’s probably not a good idea to use those points for personal purchases. Instead, you should focus on using your rewards to offset your business expenses.
  • On the other hand, if your business is doing well and you have plenty of cash on hand, using your rewards for personal purchases can be a great way to enjoy some extra perks. Just be sure to keep careful track of your expenses and make sure you’re not putting your business at risk by overspending.
  • If you have a specific personal financial goal, such as saving up for a down payment on a home or a car, using your business credit card rewards to help achieve that goal can be a smart move. Just be sure to weigh the potential benefits of using your rewards against any fees or interest charges associated with cashing them in.

The bottom line is that you should consider the financial health of your business and your personal financial goals before making a decision.

Conclusion: Is it Illegal?

I’ve already said this a few times, but I would rather sound like a broken record than steer you down the wrong path: when in doubt about business credit spending, consult an attorney or CPA. 

The short answer is that business credit spending for personal use can be risky and it’s likely to complicate your business budget. Yet, there are plenty of totally above-water business credit spending categories you might not have considered (paying yourself a salary) — I tried to cover them here. 

If you want to learn how to obtain up to $100K in business credit in as few as 30 days, join Business Credit Workshop today.

Ty Crandall’s Story: A Quick Look at the Mind Behind CreditSuite 

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Ty Crandall

When it comes to building business credit, Ty Crandall’s name stands out. As the founder of Credit Suite, Ty has helped thousands of entrepreneurs obtain business credit that’s not linked to their personal social security numbers.

With nearly two decades of experience in the financial services industry, Ty has become an authority in business credit building, scoring, and financing…plus he’s been featured in publications like Forbes, Entrepreneur, and Inc. 

So, are you curious about how Ty became the go-to guy for business credit or whether or not you can trust him? Keep reading to learn more about his story, his net worth, and his approach to business credit.

Here’s what’s in store: 

Now, let’s get to it! 

Ty’s Career Story

Ty Crandall, a Tampa-based entrepreneur, founded Credit Suite (a company that helps entrepreneurs get business credit and financing) over 12 years ago. He is a business credit-building and business loan specialist and fundability expert. Before Credit Suite, Ty founded Elite Credit Inc. (a credit repair offer) and worked as a CEO for TLC Jumbo Mortgage Services for 7 years. 

Ty Crandall Net Worth

He served in the US Air Force for four years, from 1994 to 1998 before he studied Psychology at the University of South Florida. At this point, Ty has helped over 100,000 entrepreneurs build business credit and access financing with his extensive knowledge of the industry. 

Ty’s experience, education, and dedication to helping entrepreneurs expand their business credit options show me that he’s legit. 

Ty’s Approach to Business Credit

If you want to learn more about Ty’s approach to business credit, the best place to start is his content — he’s created a myriad of resources worth checking out. 

Website: TyCrandall.com 

Ty Crandall Website & Coaching

TyCrandall.com is where Ty promotes his most up-to-date speaking, coaching, and retail offers (books).  Here, you can get his up-to-date Multiple Uses Model for free, which is a marketing guide that spells out how you can create up to 20 brand assets from one piece of content. 

He also promotes a coaching offer — for a very small group of elite entrepreneurs — where he guides business owners to scale their companies to $10K+ in revenue. 

CreditSuite YouTube Channel

Ty Crandall on YouTube

CreditSuite’s YouTube channel offers solutions for small businesses looking to improve their fundability, build business credit, and obtain loans and credit lines. 

The channel emphasizes the importance of meeting lending guidelines and building credit in the business name with an EIN to avoid personal guaranteeing of finances. Credit Suite aims to give businesses the competitive advantage and capital they need to succeed and grow with confidence.

The Business Credit and Financing Show (Podcast)

Ty Crandall Podcast

A few years ago, I actually had the opportunity to meet Ty when he reached out and invited me to speak on his Podcast, The Business Credit & Financing Show — he was super knowledgeable (we could have chatted about this stuff all day). If you want to hear how that went, you can access the full episode here. 

The Business Credit and Financing Show covers a wide range of topics related to obtaining business credit and financing for starting and expanding your business. We feature insightful discussions with prominent influencers and industry experts on marketing and growth strategies, aimed at assisting you in establishing and growing a successful business.

Consumer & Business Credit Books

Ty Crandall Books

Ty has written two bestselling books on consumer credit — Perfect Credit and Business Credit Decoded. And, he’s attributed to seven books, most recently business credit titles like Business Credit: The Complete Step-By-Step Guide (most popular) and Business Credit Decoded (newest). 

Most of Ty’s books get rave reviews, though some of them didn’t get a ton of traction…all are available in paperback and most in Kindle formats. 

Business Credit Course on Udemy

Ty Crandall Business Credit Course

Ty’s Udemy course — How to Get Credit for Your EIN That’s Not Linked to Your SSN — aims to help students set up their business in a credible way to meet lender and credit issuer guidelines. 

By the end of the course, students will be able to navigate their business credit reports, build initial business credit reports using vendor accounts, and obtain high-limit revolving store and fleet credit cards. 

The course includes 1.5 hours of on-demand video, 1 downloadable resource, and a certificate of completion. 

While the course content was good, it hasn’t been updated since 2016, and I can safely tell you that a lot has changed in the industry since then. 

Media Appearances/Guest Contributions

Ty Crandall on Inc.com

You’ll find Ty’s contributions around the web on various business, finance, and even legal publications. For example, at one point, he was a regular contributor to Inc. Masters. His advice has been mentioned in Entrepreneur as well as Forbes. 

And, if you do a quick search for articles by Ty Crandall, you’ll see that he’s been hard at work, over the years, making his rounds with hundreds of blogs and business websites. 

Final Takeaway

And there you have it! That’s a quick look at the man behind CreditSuite, Ty Crandall. From his early career in finance to his success as an entrepreneur, Ty’s story is truly inspiring. His approach to business credit has helped countless entrepreneurs build and grow their businesses, and his legacy is one of innovation and success.

If you’re interested in learning more about Ty and his work, be sure to check out TyCrandall.com and the CreditSuite YouTube channel. You can also tune in to The Business Credit and Financing Show podcast or read any of Ty’s consumer and business credit books.

If there’s one thing to take away from Ty’s story, it’s that with hard work, determination, and the right tools and knowledge, you can achieve success. So, go out there, build your business, and make your mark on the world!

If you’re interested in learning how to get up to $100K in business credit in as few as 30 days, join Business Credit Workshop today.

What is a Virtual Address for Business? (+Do You Need One?)

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What is a virtual address for business?

If you’re on the hunt for a virtual address, you probably have a business that you either run remotely on the go or from a home office — you know it can provide you with the option to register your business in a different location without the need to rent additional office space and may give you a way to access your mail remotely (when virtual mail is part of the package). 

But, what is a virtual address…exactly? Here, I lay it all out: 

Let’s go! 

What is a Virtual Address & How Does it Actually Work?

If you’re a small business owner or freelancer who works from home, a virtual address can be a great solution to receive mail and packages. A virtual address is a service that gives you a physical mailing address that is not located at your actual physical location.

When you sign up for a virtual address service, you’re given a physical street address in a location that’s usually known as a commercial zone. After your account is established, the virtual address staff will receive and sort your mail and packages at that location before they are distributed to you. 

There are a few options to retrieve your mail from a virtual address: 

  1. Have your mail forwarded to your actual physical location 
  2. Pick your mail up at the “virtual” address location 
  3. Access your mail remotely through virtual services (not available with all providers)

*Some virtual address providers can even receive and deposit checks on your company’s behalf. 

Virtual addresses can help you maintain a professional image by providing a separate mailing address for your business — this is especially useful if you work from home and don’t want to use your home address as your business address.

Moreover, virtual addresses can be great for remote businesses and those with staff members who work from different locations because you can streamline mail handling and reduce the need for each person to have their own mailbox.

Can I use one virtual address for multiple LLCs? 

Whether or not you can use a single virtual address for multiple LLCs depends mostly on the service provider and their policies. Some virtual address providers allow you to use a single virtual address for multiple LLCs or companies, while others may require a separate virtual address for each legal business entity.

While using a single address for more than one business is okay in general, you’ll need to check with the virtual address service provider before signing up to ensure that their policies align with your business needs. And, you should expect additional fees for each LLC or entity that you want to use the virtual address for.

Also, keep in mind that using a single virtual address for multiple LLCs may not be ideal from a legal and compliance standpoint. Each LLC should ideally have a unique business address that is used for official correspondence. 

But, don’t fret! While you should always check with an attorney before establishing multiple businesses at one address, the fix might be super simple. 

A solution that I often see for multiple home-based businesses at a single location (and this may or may not be in compliance with all virtual address providers) is to append a distinct apartment or suite number for each business. 

In practical application, it usually looks something like this: 

Action Consulting LLCAction Management LLCAction Limited LLC
123 Jerry Drive, Suite A123 Jerry Drive, Suite B123 Jerry Drive, Suite C
Smalltown, NebraskaSmalltown, NebraskaSmalltown, Nebraska

And, you don’t have to build multiple suites to append a suite number to an address, so there’s no construction involved with this solution. You will have to check with your virtual address provider to see how they can work with you.  

What’s the difference between a virtual office and a virtual address? 

Now, a virtual address and a virtual office are two different services that can help businesses operate more efficiently, but they offer different levels of support.

A virtual address provides businesses with a physical mailing address that is not located at their actual physical location. 

On the other hand, a virtual office provides businesses with a physical address and a suite of services that go beyond just a place to send and receive mail. While all offers vary, most virtual offices provide a business phone number, live receptionist services, and access to shared office space or meeting rooms.

Think of a virtual address as a post office box, while a virtual office is like a full-service office…without the physical space. While both virtual addresses and virtual offices can help businesses streamline their operations, a virtual office typically offers more services at a higher cost than a virtual address service.

How to Get a Virtual Business Address 

If you’re looking to get a virtual business address, there are a few options available to you. 

  • Virtual office service provider
  • Coworking space add-on
  • Mailbox rental 

Your first option is to use a virtual office service provider. These providers typically offer a range of services, including a virtual business address, mail handling, and sometimes even access to meeting rooms and other office facilities. You can usually sign up for these services online, and they can be a great way to establish a professional business presence without the overhead costs of traditional office space.

Another option is to use a coworking space that offers virtual office services. Coworking spaces are shared office spaces where you can rent a desk or office on a flexible basis. Many coworking spaces also offer virtual business addresses and mail handling services, so you can use their address as your business address without having to physically be there.

Finally, you could also consider using a mailbox rental service. These services provide you with a physical mailbox at a commercial location, which you can use as your business address. They typically offer additional services like mail forwarding and package acceptance, which can be useful if you’re running a remote business.

Why do people use virtual addresses? 

So, using a virtual address has a ton of benefits for small business owners and entrepreneurs. 

First and foremost, it helps to establish a professional image. By having a separate physical mailing address, you can project a more professional image to your clients and customers. This can lead to increased credibility and more business opportunities.

Next, using a virtual address can help protect your privacy and reduce the risk of identity theft. By keeping your personal address or home address separate, you can keep your personal information private and avoid unwanted solicitations. This can give you peace of mind and help you focus on growing your business.

Then, a virtual address offers more flexibility than traditional office space. You can operate your business from anywhere and still maintain a physical mailing address for packages and mail. This means you can be more mobile and flexible while still keeping your business running smoothly.

Additionally, using a virtual address can save you time and increase convenience. You can receive and manage mail and packages more efficiently by having them forwarded to any location. This saves you time and the hassle of missed deliveries or long trips to the post office.

Last but not least, using a virtual address is a cost-effective alternative to renting a physical office space. It’s more affordable and doesn’t require long-term leases or maintenance costs. This can help you save money, especially if you’re just starting a business.

Can you build business credit with a virtual address? 

While a virtual address can provide a ton of benefits for small business owners and entrepreneurs for mailing purposes, it is not the best option when it comes to building business credit. This is because many banks and lenders prefer to see a physical address as the main business address, as it provides a greater sense of permanence and legitimacy.

In fact, using a virtual address as the main business address could actually hurt your chances of building business credit, as it may raise red flags with lenders and other financial institutions. Many virtual addresses are flagged due to concerns around legitimacy and credibility, which can make it harder to secure loans or credit lines.

That being said, it’s not impossible to build business credit using a virtual address, but it’s important to make sure that you have a physical address that can be used as the main business address (even if you also have a virtual address for mailing purposes). 

A physical address can help to establish greater credibility and legitimacy with lenders and other financial institutions.

Recommended: This is How to Build Business Credit Fast [Step-by-Step Guide] 

Does IRS accept virtual addresses? 

How will the IRS know my address?

While the Internal Revenue Service (IRS) encourages taxpayers to use more digital self-help tools (they’re becoming more and more tech-friendly), the short answer is “no” — the IRS still requires taxpayers to provide a physical mailing address on their tax return, which is different from a virtual address. 

So, while you can use a virtual address as your mailing address for other purposes, it cannot be used as a substitute for a physical mailing address on your tax return. 

If you try to use a virtual business address instead of a physical address when filing your taxes or communicating with the IRS, there is a possibility that the IRS may flag your tax return or request more information. They may compare the address you provided with other information in their database, such as your Social Security number (SSN), employer identification number (EIN), and other identifying information. 

At this, the IRS may also request additional documentation or proof of your address, such as utility bills or rental agreements, to verify the accuracy of the information you provided.

Moreover, if the IRS needs to send you any physical correspondence, such as a notice or audit letter, and the virtual address you provided is not recognized as a valid mailing address, it may delay the delivery of important information.

And, intentionally providing false or inaccurate information to the IRS, including your address, can result in penalties and fines. 

Frequently Asked Questions

What address should I use for my EIN?

You should use your physical business address for your legal business entity registration and when applying for an EIN. If you run your business from home, consider appending a suite number to your business registration to avoid confusion. 

How do I get a US address without living there?

To keep an operative address in the United States while living abroad, use a virtual address service that you can activate online. Be sure that the service provider offers mail forwarding or remote access to your important documents. 

Final Thoughts

To sum up, a virtual address is a game-changer for small business owners who want a professional image, privacy, flexibility, and efficiency without the need for a physical office. It’s important to choose a reliable provider and consider compliance implications before using a single virtual address for multiple businesses. 

Remember, while using a virtual address can help streamline your operations, a physical address is crucial for building business credit and keeping the IRS happy. So, choose wisely and take your business to the next level!

Do you want to learn how to get up to $100K in business credit in as few as 30 days…without showing financials? If so, join Business Credit Workshop today.

A Credit Stacking Breakdown: What it is & How it Works

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Credit stacking is one of the latest catchphrases in the credit card realm. Naturally, as a business credit coach and expert, I had to check it out. I did a ton of research into the system (everything shy of hopping on a strategy call and joining the community) to see what I could find out. 

As usual, I want to share what I’ve learned with you. 

At first glance, credit stacking seemed a lot like what we teach at Business Credit Workshop…but it’s not — there are some fundamental differences. I’ll summarize the most glaring distinctions before I wrap up. 

If you’re thinking about hopping on a call with the Credit Stacking team to become a member, read this first. 

Here’s what’s in store: 

Now, let’s hop to it! 

What is Credit Stacking, Exactly? 

When I first heard the expression, I thought credit stacking might be akin to credit piggybacking, but I was wrong. 

Credit stacking is a popular buzz phrase (pretty catchy, really!) coined by Jack McColl — it refers to building multiple lines of credit in an alleged specific order to obtain large lines of credit. Essentially, it is a framework to apply for multiple cards at once with the least negative impact on your credit. 

With credit stacking, you can get up to hundreds of thousands of dollars in funding by applying for multiple credit cards and taking advantage of business credit (which is separate from personal credit). 

credit stacking course

McColl teaches about the system through a credit stacking course, online membership, and a Facebook group. Through these channels, members allegedly learn how to maximize their credit limits to grow businesses from the ground up with tens of thousands of dollars in credit. 

credit stacking login

The application process to join is simple and seems to help gauge where potential members are on their credit journey — which is helpful for a customized strategy. 

🚩 The company doesn’t display the cost of membership anywhere on its website and some sources say that it costs $4,500 or more to join. 

What is the Credit Card Stacking Strategy? 

credit stacking reddit

With the Credit Stacking system, essentially, you want to apply for cards in a specific order that might improve your odds of successful funding…this requires that you aren’t over-leveraged in the way that you have too many inquiries showing on your credit profile. 

To do this, you need to know which banks pull your info from which credit bureaus, and apply in such an order that all of your inquiries hit your report with minimal negative impact on your score. 

And, since Chase Bank is more strict about how many credit inquiries you can have to qualify, you should apply for credit with them first. 

Frequently Asked Questions

Why is credit stacking effective?

Credit card “stacking” is effective because it ideally maximizes the amount of credit you’re able to obtain by minimizing the impact of inquiries on your consumer credit report. 

What is the credit stacking analogy?

Think of credit stacking as building a tower out of blocks. You start with a solid foundation, like a base of small credit lines, and then add more blocks (larger lines of credit) on top in a specific order. This way, you can build a strong and stable tower of credit that allows you to access more funding opportunities over time. It’s like playing Jenga, but instead of removing blocks, you’re carefully adding them to build something bigger and better!

What are the effects of credit stacking?

Credit stacking can help you spread out your balances, increase your credit limits, and minimize the negative impact of too many inquiries. However, this can lead to high interest charges if you can’t keep up with payments, so it’s important to be mindful when using this technique.

The Credit Stacking Book by Jack McColl

I already told you that I didn’t hop on a strategy call or join the Credit Stacking group…what I did is read Jack McColl’s book, Credit Stacking: Accelerate Financial Freedom With Business Credit. 

I’ll tell you that it seems to be self-published. It could have used an editor to help condense some of the information (which is absolutely valuable nonetheless). 

And, while I can’t shame the hustle, the book was pretty promo-heavy, leading readers into the Credit Stacking program by teasing some of the resources that are exclusive to members. 

credit stacking reviews

With that said, I was taking notes the entire time, and here’s what I got from it. 

 → If you don’t want to read the entire synopsis, you can skip to the final takeaway. 

Chapter 1: Where Do You Want to Go? 

The first chapter of the book is all about mindset and vision — this is probably my favorite chapter because it’s so interactive. Before you implement the steps to stack credit and build your dream business, you need a vision. 

McColl leads into the book with questions such as, “Where do you want to live?” “What relationship do you want to have?” and “What career do you want?” He recommends you get a clear vision by answering all of the questions in his sequence before you move forward. 

Next, he shares his framework for daily journaling, recommending that you do something similar. Every day, you should write about the following:  

  1. What you’re grateful for
  2. Affirmations for yourself
  3. A recent win
  4. Desires for yourself
  5. A power list of needle-moving tasks you can accomplish today

With a clear vision and daily check-ins with yourself, you can take an honest look at your discipline, resilience, and environment to determine what you need to do to make your business strategies work.  

Before wrapping up, the first chapter looks at good debt vs bad debt. In a nutshell, good debt is invested in assets that generate cash flow or equity and bad debt is costing you money… think of it as assets = good debt, liabilities = bad debt. 

Chapter 2: Personal Credit 

The second chapter is all about consumer credit. Good personal credit gives you access to rewards cards as well as low-interest auto and home loans. And, according to McColl, better access to 0% interest business capital.

This is where the book starts to talk about the technical aspects of credit stacking like awareness of the three consumer credit bureaus, VantageScore vs FICO, credit score factors, and credit repair.  

When speaking on the three major credit bureaus, McColl mentions a specific template that Credit Stacking members use to analyze their credit profiles but doesn’t offer the template in the book. 

Vantage scores are more readily available for free (via Credit Karma, for example), but lenders typically pull FICO scores. McColl recommends myscoreiq.com, which costs $35.99 per month, to monitor your FICO score.  There’s a gray area between scores of 500 to 700, but below 500 typically means that a borrower is high-risk, and above 700 usually signals that a borrower is low-risk. 

Naturally, lenders like higher credit scores. 

But, if you have a low score, don’t let it discourage you, because, as McColl states, this can always be fixed. 

This chapter also breaks down the factors of a credit score and what you might do to maintain or improve each factor — this information is typically available with any credit monitoring system, but it’s good for beginners to understand: 

Payment history and amount of debt have the highest impact while credit mix and new credit are important too. After explaining each factor in more detail, this chapter goes on to share a few case examples of individuals who used the credit stacking strategy. 

One Credit Stacking member was able to obtain a $50K line of business credit from Chase Bank. McColl claims that this was 0% interest capital. In the case of this borrower, they had a strong personal credit profile, and their business entity was established properly…they also had a checking account and a connection with the relationship manager at the bank where they applied for the loan. 

credit stacking companies

Here, McColl mentions an important fact: You don’t necessarily have to have a large, established business to obtain large lines of credit. Small, new businesses can obtain credit too. 

Many business owners who started out with poor credit were able to obtain large lines of credit after implementing a credit repair system. McColl mentions that this process starts by disputing anything negative that might be holding your score down. He mentions that the Fair Credit Reporting Act (FCRA) has laws in place that protect consumers and enables them to dispute anything that is unfair or inaccurate and that the burden of proof is on the creditors.

McColl mentions a credit repair partner that Credit Stacking members can be connected with and cites some happy endings after working with these programs.  

⚠️ I do not ever recommend unethical exploitation of laws or institutions that are in place to protect you. I do recommend educating yourself on the regulations and strategies to repair your consumer credit profile. 

Recommended: Credit Secrets Book Review: Can You Erase Bad Credit History?  

Chapter 3: Credit Cards and Calculated Risk

The third chapter of the book starts with a pretty long intro to the story of Amazon. Then, it talks about why you should use credit cards instead of other types of capital to fund a business: protection, rewards, card benefits, and relationship building. 

Here, the book fails to mention freedom (this is why I like business credit over other funding types). Traditionally, when a company gets funding, it might have to rely on personal capital or investors who want control — with business credit, the business owner maintains control and freedom to make their own choices for their company. 

Recommended: How Business Credit Can Transform Your Life (Really)

Next, McColl recommends some credit cards you should apply for, and ones that you shouldn’t. He says that he doesn’t recommend that anyone apply with Capital One because they pull from all three bureaus, creating a ding on all three consumer credit reports. This is true, but he doesn’t mention that these “dings” last two years — they’re temporary. 

Then, McColl recommends some questions to ask yourself when applying, such as, “Do you have a travel card yet?” and, “Which bank are you looking to build a relationship with?”

Before he moves on, he covers when to apply, how to apply, and how to request reconsideration on a failed application. 

Chapter 4: Using Business Credit to Gain Momentum

According to McColl, the key to business success is momentum — the value of your company has a direct impact on momentum. 

The fourth and most extensive chapter covers the different ways you can fund your business to create momentum: 

  1. Your own cash (personal capital) — with this, you’ll foot 100% of the risk
  2. Business loan — lofty interest rates on a non-transferable lump sum of debt
  3. Get a partner — you’ll have to share control of business decisions
  4. 0% interest business credit card — if you keep your relationship with the bank in good standing, you’ll keep yourself “just one application away” from more business credit 

Note: McColl doesn’t mention all of the ways to fund a business like Y Combinator, seed funding, MCAs, nor the many, many others. 

Next, he explains that business credit won’t impact your FICO score, which is mostly true…if you apply for the business credit cards that are reported to D&B and not the three consumer credit bureaus. 

He then shares the process for setting your business up for business credit. 

This section discusses business SIC codes, and the fact that some are considered higher risk than others — General businesses such as “consulting” and “management” are best and may get better business credit results than “credit coach” or “real estate agent.” 

In a nutshell, you need a NAICS code that fits your business narrative in a low-risk category. 

McColl recommends that you look up your business on D&B to see if you have a DUNS number. If you don’t, create a profile with D&B…and make sure your NAICS code is the same with your bank, D&B, and your state business registry. 

Recommended: Everything You Need to Know About a DUNS Number

McColl strongly recommends that you use Chase Bank for your business checking, as he’s seen the most business credit success with Chase, however, he cites other major banks like BoA and US Bank and claims that you should have similar results. 

Basically, he says that you should only build a relationship with a bank that offers 0% interest business credit cards. And, he shares his framework for building your business credit: 

  1. Open a business checking account with the main (big) bank
  2. Open a business checking account with a regional bank or credit union
  3. If you already have an account with a regional bank, move some of your capital to a big bank
  4. Get your FICO score above 780
    1. No derogatory marks
    2. No more than one late payment
    3. 4-5 accounts that are at least three months old

The framework we teach at Business Credit Workshop is quite a bit different. 

Recommended: This is How to Build Business Credit Fast [Step-by-Step Guide] 

Next, McColl covers each of the four funding types from the beginning of the chapter (personal capital, business loan, equity partner, and business credit) in detail before he starts elaborating on business credit. 

Business credit is a way for you to finance business ops by borrowing from banks using your EIN rather than your SSN. McColl says you should have an LLC or a Corporation rather than a sole proprietorship, and I agree… 💯 

After this, he lists a handful of the benefits of business credit, such as the fact that business credit bureaus don’t include opening dates on their reports and you can go through rounds of applications (“credit stacks”) without harming your credit score.  

Then, McColl lists some ideas for ways to use business credit to grow your business (invest in equipment, rent office space, hire a mentor, etc.) and lists new business ideas for entrepreneurs: 

He mentions that there are ways to liquidate credit cards into cash, but doesn’t mention what they are. 

Recommended Resources: 

This chapter also mentions business credit requirements such as on-time payment history on your personal credit profile, a variety of accounts, and sizable limits on your consumer cards. Here, it starts to feel like the book exerts excessive information about consumer credit. 

McColl shares the difference between revolving credit cards — with and without interest — and charge cards (Capital on Tap, Divvy, and Amex) are discussed… he recommends that you max out your Amex cards and pay them off in full to get your limit increased. 

There are companies that will apply for business credit for you, but McColl recommends DIY credit applications. The companies that offer services like this aren’t always thinking in your best interest where high card limits and the number of hard inquiries are concerned. Plus, you have to pay fees for these services. 

The book then mentions that 0% interest credit cards aren’t necessarily easy to find (there was no database that houses all of the banks’ current promotions, so McColl built one…though, it’s only available for Credit Stacking members). 

In place of a database of cards with 0% introductory rates, you can use McColl’s recommended searches: 

“[your state] 0% interest business credit cards”

credit stacking jack mccoll reddit

As he wraps up, McColl summarizes inquiry stacking. “Stacking” credit inquiries can allow you to maximize your business credit. When you know which banks pull from which bureau, not all of your inquiries will show up when you apply for multiple cards. 

And, Chase is stricter about maximum credit inquiries, so McColl recommends you apply for any Chase business credit cards first. 

Tip: If you submit your applications in the branch, your applications won’t be flagged for technical issues like invalid IP, flagged VPN, or grammar mistakes. McColl suggests that you submit your application through a relationship manager for the best results (they work directly with the underwriting team, so they know what you need to get credit and can help you with your applications). 

The book then states that it is difficult to find a bank’s relationship manager to submit your applications and that Credit Stacking members are introduced to relationship managers as part of their membership. 

Finally, McColl shares his advice for filling out credit applications accurately. 

Chapter 5: Money

In the fifth chapter, wealth accumulation and money are covered. 

The first principle of wealth that McColl covers is compound interest. For example, you have $100 growing at 10%, and you earn $10 the first year. So, the next year, you have $110, and your earnings are $11. As this continues, your annual growth grows. 

And, if you have $250K to invest initially, with a 10% growth rate, you would have $11M after 40 years. 

There is a lot more information in this section about investing — buying low and selling high, dollar cost averages, etc — including examples of billionaires who invested wisely. 

The key takeaway is that you need to invest wisely in facets of your business that produce income and wealth. 

McColl then covers the importance of educating yourself — both about money and about your industry. Essentially, if you learn specific skills from experts in a niche, you save yourself the time and heartache of learning through trial and error. 

Likewise, it’s important to join networks of successful people who you can piggyback from their knowledge. McColl recommends in-person mastermind events in particular. 

Next, he covers Roth IRAs and the “infinite banking” concept. 

Roth IRAs allow you to invest, tax-free, if you keep your money in the account until you’re 59.5 years old and at a 10% fee if you withdraw sooner. The maximum you can invest in a Roth IRA is $6K per year. There are also exceptions to the 10% fee, such as withdrawing $10K to put down on your first home. 

This is an excellent investment opportunity, especially for young people looking to the future, especially since these accounts compound *see above.* 

The infinite banking concept is essentially the idea of an Indexed Whole Life Insurance Policy (not all life insurance policies are equal). With this type of life insurance, you get most of the benefits of building your net worth without triggering an MEC through the IRS…in a nutshell, it maximizes the cash value of your policy without negating the tax benefits. 

Credit stacking course download

Plus, nobody can come after money in an Indexed Whole Life Insurance Policy — not the courts, ex business partners, or spouses…nobody. And, all the while, it will accrue interest of about 5.5% while any loan repayment to the account will cost about 5%.

The rest of this chapter covers the fundamentals of cryptocurrency, centralized exchanges, and crypto hedge funds; these are pretty extensive explanations and I recommend you read the book if you’re interested to learn more. 

Chapter 6: Traveling on Credit

The sixth chapter covers how travel creates work-life harmony and how this can be achieved with business credit. 

If you opt to travel while working, you need to be sure you can have a consistent, reliable WiFi connection — a fast one — anywhere you go (this is especially true if you opt to travel full time). McColl also recommends that you make sure you’re close to a gym, beach, or hiking trails to stay in shape. 

Basically, you can travel on credit by maximizing the use of your credit card travel rewards and points. 

The final section of this chapter covers credit card points accumulation and redemption strategies, how to gain status with hotels (Hilton and Marriott), and credit card travel benefits. 

Chapter 7: The Road to Independence

The seventh chapter wraps up the book — it starts with some motivational ideas about maintaining freedom and reaching goals, with the thought that independence, once earned, is hard to keep. 

McColl concludes by inviting readers to take advantage of a free “strategy session” with the Credit Stacking team, followed by lots of testimonials and case examples of what members have achieved. 

The Takeaway — Is Credit Stacking Legit? 

In a word, yes, Credit Stacking is a legitimate technique and sort of mastermind group that has helped people obtain substantial lines of credit…tens of thousands of dollars, in fact.

I don’t believe they’re going to steal your money if you sign up — these guys seem to be for real and their members are getting some great results. 

With that said, I have a few conflicting ideals with the Credit Stacking system: 

  • First of all, at Business Credit Workshop, we don’t teach members to give big banks precedence over smaller community banks and credit unions. 
  • Next, we share a lot more information upfront about the steps to obtain business credit, including establishing the right number of reporting tradelines to achieve a perfect business credit score. 
  • Finally, my focus is on helping people learn how to build their business credit fast and have a long term strategy working with local banks to get funding…not just applying for as many credit cards from big banks as they can.  

If you’re looking to obtain $100K in business credit in as few as 30 days (even if you have a new business), join Business Credit Workshop today.

Real-Time Payments: A Business Owner’s Guide to Current Tech

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Real-Time Payments

Recently, we’ve been reviewing popular online banks, and I noticed a trending issue: Many business banking offers are incompatible with Zelle — it’s hanging people up. But, there’s a promising technology that might give Zelle and other P2P payment platforms a run for their money: Real-Time Payments. 

Here, I break down what I know about this tech and how real-time payments could revolutionize small business banking. 

Here’s what’s in store:

Now, let’s roll! 

What are Real-Time Payments? 

RTP® is a new, mobile-ready, instantaneous payment platform from The Clearing House. The platform has been available to its Real-Time Payments Network (participating banks and credit unions) for five years. 

Recently The Clearing House announced some exciting changes: 

  • Higher volume capabilities
  • Expanded technical access
  • Enhanced fraud prevention
  • Improved invoicing functionality 
  • New banks onboarding weekly  
Real-Time Payments wiki

The platform has grown from 2 participating banks at the onset of 2017 to 62 in October of 2020, and engagement has since exploded — As of November 2022, 285 banks have signed on to offer RTP to their account holders.

The Clearing House Company Overview

The Clearing House Payments Company, LLC, also known as THC, is a New York-based payments company, established in 1853 — it’s the oldest banking association and payments company in America. TCH is owned by the largest commercial banks, responsible for more than half of the country’s deposits. 

The company provides payment, clearing, and settlement services to its banks and third-party financial institutions. THC is responsible for almost half of all funds-transfer and check-image payments in the United States, which total nearly $2 trillion daily. 

TCH employs 479 LinkedIn members, led by the current CEO, James Aramanda. This is an established, well-trusted company with a highly-impressive track record. 

How Do Real-Time Payments Work? 

How does RTP payments work?

On the user end, RTP enables consumers and businesses to receive funds almost instantly through their banking platform. With RTP, the time between a payment request and settlement takes seconds. 

We’re not talking about ACH or same-day payments here — RTP is lightning-fast. 

As a business owner, this feature can give you instant access to cash flow, which changes the game entirely: no more waiting 24-72 hours or longer to receive your funds. 

Traditional payment communication is a one-way street in the way that transaction information is sent from the sender to the receiver. Now, RTP provides a gateway for two-way, inter-institution data (and funds) transfer in one transaction…instantly. 

This not only gives you “real-time” access to money, but helps enhance trust, improve cash flow, and increase your level of financial control.    

Real-Time Payments Features

There are a few standout features of RTP worth noting. 

→ Transactions are final — RTP transactions can’t be reversed. This can be a risk for the sender, so there are some use cases for which RTP isn’t a good fit (this isn’t to say that any billable goods or services can’t be refunded at the discretion of the receiver).  

→ Account numbers are protected — Secure Token Exchange via DDA tokenization now issues tokens that represent real account numbers when the RTP system sends or receives payments. So, there’s less risk of potential fraud within the system. 

→ Internal communication is an option — PDF and XML documents are newly-available assets within the RTP platform; users can now send bills, invoices, and remittances as part of real-time payment requests or follow-up messages. 

Where are Real-Time Payments Available? 

Real-Time Payments Countries

75% of banks in the United States with demand deposit accounts (DDAs) have access to the RTP network, and 60% of them are taking advantage of the offer currently (see which banks offer RTP below). TCH’s payment platform is currently only available within its own network, hence available only in the U.S. 

Keep in mind, however, TCH’s RTP is not the only real-time payments solution. In fact, there are several similar systems emerging worldwide. 

First, Zelle is a household name that offers instant payments between banks. Again, many business bank accounts aren’t Zelle-enabled, which can be frustrating. 

Next, the Federal Reserve is working on FedNow, a lightning-fast payment solution that will be available for select institutions soon. Note that the speed at which banks are signing on makes it appear that RTP’s reach might continue to surpass the Federal Reserve’s upcoming real-time payments system. 

Furthermore, according to ACI, India is the global leader in real-time payment options. So, there are comparable systems available globally — maybe 50 or so across the world, with varying capabilities. 

What is the Difference Between ACH and RTP? 

Real-Time Payments vs ACH

ACH and RTP are not one in the same. While both of these systems offer a way to complete a transaction quickly, that’s where the similarities end. 

≠ Between the two systems, there are differences in speed. 

ACH can take several hours or days, and that’s if the sender chooses “same-day ACH” at the time of the transaction. 

RTP, on the other hand, processes payments instantly; this means that the recipient receives the funds within a few seconds after they are sent. 

≠ RTP is “alwasy on.”

ACH payments are completed at the discretion of the institution. Hence, they’re subject to unavailability outside business hours, on weekends and holidays, and based on batch cutoff times. 

On the contrary, RTP payments can be made at any time — 24 hours a day, 7 days a week, 365 days of the year. Any time a payment is sent, it will be received right away. 

≠ The type of available payments vary with ACH and RTP. 

Debit and credit transactions can be processed via ACH. So, funds can be transferred via either type of process. 

With RTP, however, all transactions are processed as credit. Note that many merchants process all payments as credit — this doesn’t mean you can’t use a debit card to send real-time payments.  

≠ RTP enables institutions to send more remittance data. 

With ACH transactions, the remittance data sent with the payment is limited to 80 characters. Both institutions will have access to a very short amount of text to explain the transfer. 

And, with RTP transactions, up to 140 characters of remittance data is allowed. Institutions can share a bit more data about the funds being sent and received with RTP than with ACH. 

Which Banks Offer Real-Time Payments? 

All of the federally-insured depository institutions are eligible to participate in RTP, and 285+ institutions currently take advantage of the system. Some names include big banks like Wells Fargo, US Bank, Bancorp, and BMO along with less-known companies like Regions, Bank of the West, and Security Financial. 

With this, I know at least one online “neobank,” NorthOne, takes part via their servicer, Bancorp Bank. There are countless smaller institutions and financial offers that partner with more established institutions to provide both consumer and business financial solutions. So, there’s no telling for sure how many accounts are RTP-enabled.     

With that said, these numbers are likely to grow, as the Real-Time Payments technology has only been around for about five years, and was recently launched. 

Do All Banks Accept RTP? 

Real-Time Payment received

We’ve just highlighted some of the banks that participate in RTP, which leaves us with another question: If your bank offers RTP, will the receiving bank be able to accept an instant payment, even if they’re not in the Real-Time Payments network? 

The short answer is “no.” As with Zelle and other real-time payment processing solutions, both institutions — the sender and the receiver — must have the system enabled for RTP transactions to be completed instantly.

When the receiving bank is not RTP-ready, and an RTP payment is sent, the recipient will get their funds within the next available ACH deposit window. 

Fortunately, a large percentage of banks in the U.S. are now RTP-enabled.  

Frequently Asked Questions

Is RTP a direct deposit?

Real-Time Payments are technically a type of credit transaction, not an ACH direct deposit. However, employers and others sending funds can use RTP in many of the same use cases as a direct deposit has traditionally been used. 

Do banks charge for RTP?

Banks are charged by The Clearinghouse (about 5 cents per transaction), so they may choose to charge account holders to take advantage of this service, yes. 

Will RTP replace ACH?

As more institutions sign up and get acquainted with the RTP system, it could replace ACH as a method to send funds, maybe. But, since RTP cannot be used to collect funds, it is not likely to replace ACH altogether. 

Is RTP cheaper than ACH?

RTP costs banks less than 5 cents per transaction, which might be less than the costs for processing ACH. However, fees are charged at the discretion of the institution and banks may charge more for their account holders to use RTP than they charge for ACH. 

Is RTP a wire transfer?

In a word, no. RTP is not a wire transfer — by definition, Real-Time Payments are credit transactions. 

Is Zelle Real-Time Payments?

Zelle offers a solution to process payments in real time. However, Zelle and the Clearinghouse’s RTP are separate systems. Just because an institution offers RTP does not mean that it offers Zelle and vice versa. 

Is Venmo an RTP?

Venmo is a peer-to-peer payment solution that offers instant access to cash, but it is not part of the Real-Time Payments network. 

Summary

Who needs Zelle when you’ve got Real-Time Payments? While the system is still in the early stages, RTP offers institutions and their account holders an opportunity to send payments that can be received instantly. 

Check with your institution to see if they’re part of the real-time payments network and find out how you can take advantage of the system to pay your employees, square up with suppliers, and take care of your bills. Are you a business owner interested in learning more about the best banks to work with, and ways to grow your company? You might be interested in learning how to obtain up to $100K in business credit in as few as 30 days. If so, join Business Credit Workshop today.

Gusto Review: Let’s Really Evaluate This Famed Payroll Platform

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Gusto Review

Gusto is the payroll platform we use at Business Credit Workshop, and we like it. I recommend you check it out, as long as it meets your needs. I want to explain why I chose them instead of the competition and raise every objection I can think of in this comprehensive Gusto review. 

First of all, Gusto is super easy to use, and the platform calculates payroll taxes for you, making it so much simpler to pay employees and contractors. Plus, I didn’t have to talk with a sales rep to get started (don’t you just hate that?). 

Now, let’s talk about Gusto’s pricing, features, and other details. 

Here’s what we’ll cover:  

Now, let’s begin! 

Briefly, What is Gusto? 

Gusto login

In essence, Gusto is a payroll, benefits, and hiring platform for businesses. It enables you to pay your team quickly, easily, and automatically no matter where they are. The software is designed for all-sized teams, both in-person and remote. 

While I usually talk about features before I get into pricing, the most common question I hear is “How much does Gusto cost, so let’s address this first. 

Gusto Pricing Breakdown

Gusto has four pricing tiers, designed for affordability based on varying operational needs, and plans range from $35 to $60+ per month plus $6 to $9 per person: 

  1. Contractor-only – Payroll only for $35 plus $6 per person per month with $0 monthly for 6 months
  2. Simple – Automatic payroll features and benefits integration for $40 plus $6 per person per month
  3. Plus – Comprehensive payroll, benefits, and HR for $60 plus $9 per person per month
  4. Premium – Scalable payroll, benefits, HR, and dedicated support with pricing based on your needs

The ‘Contractor-only’ plan is built for companies that only work with contractors, and have no active W2 employees. ‘Simple’ is best for those who want to integrate payroll with a benefits plan for employees. ‘Plus’ is designed for those who are actively hiring and could benefit from the HR tools in addition to benefits and payroll. And, the ‘Premium’ tier is for those who need dedicated HR support for hiring at scale.  

Gusto Company Overview

Here’s the million-dollar question: Is Gusto a legit company, or is it just a trending brand destined to fade in relevance? I can’t say for sure, but I can tell you everything I know, and share my insights.

So, who is Gusto? 

Gusto, aka ZenPayroll Inc, is a San Fransisco-based company that was founded in 2011 by Edward Kim, Joshua Reeves, and Tomer London. The company is considered a business “unicorn” and has received $746.1 million in funding since its launch. 

Prior to working on the Gusto project, Edward Kim helped launch a photo-sharing app for families called PicWing. It seems like the project may have originally been a Y Combinator startup, but it’s currently inactive. Picwing was launched after Kim left his position as a Senior Project Engineer for Volkswagen.  

Recommended: Y Combinator: Fast Track to Success or Waste of Time? 

Joshua Reeves is currently the Head of Gusto, and it appears that he started the project directly out of college. He has a bachelor’s degree in Electrical Engineering from Stanford University. 

Gusto’s Chief Product Officer, Tomer London, was also in Stanford’s Electrical Engineering program, and was a Ph.D. candidate. London worked for Intel and Bump for a while. Then, prior to Gusto, co-founded a company called Vizmo, a software development company based in Israel. 

All of Gusto’s co-founders have strong technical backgrounds, and the company has been going strong for over a decade. My opinion is that they’re likely to be around for the long haul (yes, they’re legitimate). 

Gusto Payroll Platform

Gusto pros and cons

First of all, the Gusto Payroll platform calculates and files payroll taxes for you, streamlining the process. Unlimited checks can be distributed to team members. Other platforms charge for this service, but with Gusto taxes are inbuilt. 

They also offer time-tracking with plus plans. So, your employees can track hours from the same platform you use to pay them if you elect to use this feature. 

Gusto plays nicely with Xero, Clover, Quickbooks, TSheets, Trainual, 7Shifts, and more. So, you can integrate the other tools and apps you use to manage financial accounts; operations are much easier when you can manage multiple tasks from a unified dashboard and automate information sharing. 

In the platform, you can store 1-9s, W-2s, and 1099s, register for state taxes in all 50 states, and track time including lunches and breaks. When onboarding, Gusto ensures that The system will even auto-file your payroll taxes for you, so compliance is a breeze. 

If employees want to request time off, they can do so easily through Gusto Wallet. 

And, guess what?… 

Later, if employees leave your company, they can opt to keep their cash accounts, and have their next employer direct deposit into an FDIC-insured Gusto account like they would a regular bank account. This feature might be an enticing incentive for some. 

On the other hand, if you’re looking to optimize retention, you may not want to mention it. Decide for yourself on this one. 

Gusto Wallet

gusto app

Gusto Wallet is a mobile app, available for iOS and Android, that teams can download to view and cash their paychecks, access their spending account, and manage and automate up to five savings goals. 

Savings accounts earn 1% APY with no account or overdraft fees. Staff members have the ability to alter their contribution to savings goals at any time, and can transfer to spending accounts instantly.

Wallet spending accounts come with a Visa debit card with free withdrawals at 37K ATMs across the country and direct deposit. They also enable budgeting for necessities like housing, food, and transportation. 

With the app, users can track their time, view and download paychecks and W2s, see transaction history, and split checks. Gusto Wallet is only available for first-time access if the employer uses the platform. 

Gusto Benefits Summary

How is Gusto different from ADP?

Gusto Benefits is the platform’s built-in way for you to offer affordable employee benefits. Here’s what it entails. 

  • Integrate your existing broker and eligible health plans
  • Manage employee health insurance plans
  • Access 9K+ available health insurance plans from 30+ carriers
  • Low-cost worker’s comp management, HSAs, and FSAs
  • Administer dental, vision, and commuter benefits
  • Handle renewals during open enrollment periods 

Essentially, you can sync your health benefits packages with your payroll framework using Gusto in a straightforward and easy-to-navigate dashboard. 

Plus, you can offer your staff multiple ways to save. Through their Gusto Wallet, employees can access cash accounts with all sorts of features. In addition, you can offer them the opportunity to add funds to 401(k) retirement, life & disability insurance, and 529 college savings plans. 

Gusto HR Features

All Gusto plans include access to hundreds of HR templates to help you onboard new staff. Get pre-written job descriptions & offer letters, termination requirements, labor law policies, and performance evaluations. And, you can take advantage of the Employee Handbook Builder. 

Gusto HR tools

If you’re interested in sampling the goods, Gusto shares a free guide, How to Create an Employee Handbook, with the public. 

Dedicated HR Support

If you have a premium Gusto plan or opt for the HR add-on with a Plus plan, you can access dedicated HR experts to help with your hiring and compliance. This grants you access to unlimited advice from SHRM and HRCI-certified experts to help you avoid costly lawsuits down the road. 

Here’s why this is a value-packed offer: 

  1. The starting ACA penalty per employee is $2,750. 
  2. For your first violation of the Americans with Disabilities Act, you can be fined up to $75K. 
  3. The average cost of an employee lawsuit is $160K.

Personal advice from experts mitigates your chances of running into inadvertent legal violations and protects your business. 

Customer Service

Gusto has two customer care teams, one for current users, and one dedicated to helping business owners get started (sales). You can reach out via the live chat on Gusto.com, or call 855-384-0612 during business hours (MST). 

When you first sign up, the sales team is fantastic.   

With that said, several account holders are unsatisfied with the user-facing customer service team, citing that it’s very difficult or takes a long time to get errors corrected. 

Gusto customer service

Not to downplay this concern, but the Gusto platform itself has a very user-friendly interface with a helpful set of robust features that might offset this drawback. I haven’t run into this problem myself, but I have no reason to discredit the anecdotes from other users. 

Gusto Alternatives

It wouldn’t be fair to tout on about the Gusto platform without at least letting you know that there are a ton of other options out there (you should always do your due diligence). 

So, who are Gusto’s competitors? Here are the three most popular: 

  • ADP – Pricing unknown
  • Paychex – Pricing unknown
  • Rippling – Starts at $8 per month per user
  • BambooHR – HR-only, pricing unknown

As far as I can tell, each of the above competitors requires that you work with a rep to get an account set up while Gusto enables you to sign up on your own. Rippling is the only one of the three that is upfront with their pricing. 

Definitely explore other offers (there are many) and make sure you choose a platform that meets all of your needs… before you invest your energy into onboarding everyone into a new system. 

Frequently Asked Questions

Does Gusto report to the IRS?

Yes. Gusto doesn’t file your taxes for you, but they provide a full-service package that includes paying payroll taxes automatically. 

Does Gusto send out W-2s?

If applicable, once per season, Gusto can send out W-2s and W-2Cs to your employees for $3 per person plus mailing fees. The costs are added to your monthly invoices.   

Does Gusto pay your payroll taxes for you?

Gusto does not foot the bill for your business taxes, but, yeah, they will automatically do the math and make accurate tax payments (debited from your account) on your behalf. 

How long do Gusto payments take?

When you begin running payroll through Gusto, your employees will be put on 2-day payment terms. So, they will be able to access their funds within a couple of days of when they are disbursed. 

Final Thoughts

I use Gusto to pay my staff and like it (a lot), mostly because it’s super easy to use and they calculate the taxes for you. Here’s a summary of the offer:

  • Sign up without a phone call with a sales rep or “scheduling a demo” 
  • Get your team fully onboarded in about two weeks 
  • Save an average of 5 hours per month on payroll and HR
  • Take advantage of an extremely user-friendly platform 
  • Integrate your payroll, benefits, and HR dashboards with your financial tools. 

Last time I checked, many moons ago, ADP needed you to talk to a salesperson to get signed up. As far as I know, this is still the case (the folks at ADP aren’t even transparent about their pricing). I like to do things quietly and online with the option to chat or call in when needed. I get all of this with Gusto. 

Some business owners have been unsatisfied with the amount of time it takes the Gusto team to correct mistakes, but I haven’t encountered this issue. There is no mobile app for payroll management, only an app for employees. And, the platform may not be best-suited for businesses with overseas staff, since they don’t offer global payroll.  

If Gusto sounds like a system you’d be into, then I encourage you to check them out — Signing up might save you time and money on payroll and hiring. Are you interested in learning how to obtain up to $100K in business credit in as few as 30 days? If so, join Business Credit Workshop today.

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