What Is Cash App for Business?
A Cash App business account is convenient for sending and receiving money. It can also meet or supplement your payment processing needs. The Federal Deposit Insurance Corporation (FDIC) ensures Cash App account balances.
The Cash App business account allows you to:
- Accept payments for goods or services.
- Receive Bitcoin payments.
- Send or receive business payments.
- Use unique payment links or QR codes to initiate a transaction.
- Accept credit card payments from Visa, MasterCard, American Express, and Discover.
- Accept payments directly in Cash App (same as the personal account).
- Send payments for business transactions.
- Transfer money from your Cash App business account to your bank account.
Additionally, Cash App offers investing services through Cash App Investing LLC, which provides brokerage services and allows users to buy, sell, and trade assets like stocks and bitcoin.
Small businesses can use Cash App as a light Point-of-Sale (POS) solution, or it could give your customers another option to pay you if you already have a POS. Funds appear in your Cash App balance within a few minutes once a customer pays you. You should know that it has many limitations, though. A more traditional POS will better suit your needs if you anticipate high sales volume.
What’s the Difference Between Personal and Business Cash App Accounts?
Let’s start with some background on Cash App and how it works. Cash App (formerly Square Cash) is owned by Square, a popular name in Point-of-Sale (POS) solutions. A standard Square Cash App personal account is used to send money to other Cash App users. As of 2023, Cash App had a user base of 45.5 million users in the US. Now, let’s explore the differences between personal and business accounts.
It’s simple. Users can connect their Cash App account to their bank, debit, or credit cards. For personal accounts, you need the other user’s name, email, or phone number to find them in the app and send money. Cash App limits personal accounts to sending or receiving up to $250 in a seven-day period. Once a Cash App personal account is verified, the user can send $7,500 daily.
Using a business account simplifies income tax reporting for Cash App users. Although Cash App does not charge taxes directly, it reports certain transactions to the IRS.
Square Cash App also allows some light Bitcoin trading with Cash App Wallet. Cash App personal accounts incur no fees on transactions. Users as young as 13 with parental permission can create Cash App personal accounts.
In 2015, the app was updated to allow business accounts. It operates similarly to a standard Cash App account but gives businesses more options. Cash App for business is a mobile payment service that enables businesses to accept customer payments. Users can create a unique username called a $Cashtag for their Cash App account. Unverified business accounts can only send $1,000 monthly. Verified business accounts can send up to $17,500 weekly. The maximum sending limit for verified business accounts is $25,000 monthly.
Personal and business Cash App accounts allow users to send and receive money. The main difference is that users can only send money to other users with a standard Cash App account. With a Cash App business account, anyone can send you money. You can also send a payment link or QR to request payments and accept credit card payments.
When you switch to the business account, Cash App charges a 2.75% fee for each transaction. This is shown in the app when you switch the Cash for Business setting. While the fee might seem steep, it’s competitive with other online payment services.
How Do Cash App Business Accounts Work?
When creating a Cash App business account, you get a unique identifier called a CashTag. You should choose a CashTag that includes your business or brand name so your customers will recognize you. Some companies make their CashTag the same as their social media handle for consistency. You will also receive a dedicated URL to process payments, which is formatted as cash.me/YourCashTag.
You can post the payment link for customers on your website. Cash App customers can also find you in the app using your cashtag, phone number, or email. Non-cash app users can still use your CashTag URL to make payments. You can include your CashTag on business cards, your website, and marketing offers – anywhere you might drive sales. Businesses using Cash App can track real-time transactions and monitor cash flow.
Business accounts don’t have a limit on how much you can receive. However, there are spending limits on Cash App business accounts.
There are two types of business accounts: verified and unverified. Verified account limits:
- $7,500 spending limit per week
- $17,500 spending limit per month
- $25,000 limit on deposits
- No limit on transactions you receive
You don’t have to provide additional information for an unverified account, but there are significant limits on what you can receive and spend:
- Limited to $250 in transactions per day.
- Limited to $1,000 in transactions per 30-day period.
Cash App business account fees include:
- 2.75% transaction fee.
- 1.25% fee for instant transfers.
- No fee for standard deposits.
Any business that processes 200 transactions totaling over $20,000 annually will receive a 1099-K IRS form from Cash App.
How to Set Up a Cash App Business Account:
Setting up a Cash App business account is simple. To set up a Cash for Business account, you must first create a personal Cash App account and link the Cash App account to your phone number, email, and debit card or bank information.
Cash App requires each account to be associated with a different phone number. You need a different email address or phone number to create a Cash App business account if you have a personal account. You should provide your full name, photo ID, zip code, and the last four digits of your Social Security number to verify your account.
Once you have the standard account, open Cash App and follow these steps:
- Tap the upper right-hand corner of the profile icon (looks like a person)
- Tap on the submenu heading Personal
- Scroll down until you see Change Account Type
- Change to a Business account (will say Cash for Business)
- Confirm the change. After switching to a business account, a green building icon appears next to the user’s profile information in the app.
You can verify your account before or after you switch to Cash App for business. Follow the in-app prompts to verify your account. Verified accounts require your full name, providing ID, and the last four digits of your Social Security number.
You can easily switch back from a business to a personal account by contacting Cash App support.
What are the Benefits of Using Cash App for Business?
A Cash App business account could be a good option for new businesses or ones that don’t handle many sales. Cash App allows businesses to send invoices, issue refunds, and set up recurring payments. Using your Cash App business account as a basic POS system is possible. Payment processing is almost instantaneous. Cash for Business also gives merchants access to a suite of extended features. Just keep in mind that your business might need a full-scale POS system, depending on your sales volume or growth.
Cash App is primarily for mobile payments, so it works well for customers buying from their phones. As online sales increase, more are purchasing from mobile, and the Cash App could be an effective solution to leverage this growing purchasing segment. Cash App balances are insured through partner banks by the Federal Deposit Insurance Corporation (FDIC).
Cash App limits personal account users to sending a maximum of $250 in a seven-day period and $1,000 in a 30-day period. Once a personal account is verified, the sending limit increases to $7,500 daily with a maximum of $25,000 monthly. Instant transfer fees for personal accounts range from 0.5% to 1.75% with a minimum fee of $0.25.
Sending payments is also super easy with Cash App business accounts. Cash App can pay vendors or merchants, order supplies and equipment, or even send payroll. You can process all payments from your phone. There are spending limits, though. You will need another payment method if your overhead exceeds the weekly or monthly thresholds.
Cash App for business makes it easy for customers to find you. Any customer with the app can use your email, phone, or CashTag to find you and send money. You can also send your payment link to Cash App users. Non-Cash App users can still use your cash.me/YourCashTag to process payments with credit or debit cards.
Another advantage of the Cash App for businesses is that it requires no additional equipment. Everything is done on the app, so there is no need for a payment processor or card reader. The app allows users to create payment links for customers to send payments.
Security is paramount when handling business transactions. Cash App employs various security features, including encryption and two-factor authentication, to enhance safety. Cash App takes the security and protection of its business accounts seriously, using a range of measures to ensure the safety of your data and transactions.
What are the Downsides to Cash App for Business?
The Cash App business account comes with some setbacks. The more common ones are:
Even with a verified account, you cannot exceed $7,500 weekly or $17,500 monthly spending. This could be a setback for businesses, especially as they grow and need additional services.
The Cash App for business charges a 2.75% fee on each transaction, while the personal account does not have any fees. The Cash App business account accepts payments from outside the app, such as a non-Cash App customer using a credit card to pay to your CashTag.
As of 2022, the IRS requires services like Cash App and Venmo to report any commercial transaction over $600. Cash App business accounts require users to report over $600 in commercial payments annually to the IRS. The IRS might also increase scrutiny of transactions in the future.
A standard transfer for personal payments, known as a cash-out, is free. But if you need to instantly transfer your Cash App funds to your linked bank account, expect a 1.25% or $0.25 instant transfer fee (whichever is higher). Personal Cash App accounts are eligible for a free debit card, but business accounts are not.
Cash App customer service is only available by email or social media. It does not have a call center or dedicated customer service, which can make resolving issues difficult, especially if they are urgent. No one wants to be in a situation where they can’t access funds and cannot get someone on the phone to resolve the issue.
Cash App for business is currently unable to accept or send money outside the US. If Cash App deems necessary, it can hold your funds or terminate your account. Cash App business accounts cannot deposit more than $25,000. Even with the best systems in place, issues can sometimes arise.
Cash App Pros & Cons
Pros:
- An easy way to accept and process payments from customers.
- Works great for purchases from a mobile device.
- Allows you to send payments.
- It makes it easy for customers to find you.
- No additional equipment.
Cons:
- Limits to weekly and monthly spending.
- Transaction fees.
- Businesses can’t use the Cash App Card.
- Limited customer service.
- Can’t send or receive overseas payments.
Frequently Asked Questions
Is Cash App Good for Small Businesses?
Cash App could be an excellent solution for businesses with a low transaction volume. However, its limitations would be problematic for companies with a higher transaction volume.
What are the Limits on Cash App for Business?
There are no limits to how much a verified account can receive. There are, however, spending and deposit limits you should know. Cash App business accounts do not charge any instant transfer fees to linked bank accounts.
You can only spend $7,500 daily and can’t exceed $17,500 in a month. If your overhead exceeds these amounts, you will need another option to pay for services.
Can You Have Two Cash App Business Accounts?
Technically, yes, but each account requires a separate email and phone number.
Does Cash App Charge for Business Accounts?
There is no service fee for a Cash App business account. However, the app does charge business account holders a transaction fee. For each transaction processed on the app, you are charged a 2.75% fee. There are no transaction fees for personal accounts.
You can make standard deposits from your Cash App business account to your bank account for free. If you need the money instantly, say to cover a bill, you are charged a 1.25% or $0.25 transfer fee (whichever is higher).
Cash App for Business – Final Thoughts
The bottom line is that Cash App for Business can help small business owners with low-volume online sales. Newer companies, in particular, could benefit from a Cash App payment page when they are not ready to invest in a complete POS. However, as those businesses grow and scale up, they will likely need a more robust POS option.
Businesses with high sales volume could add Cash App as a supplemental payment method for customers. Giving your customers an additional way to pay you can’t hurt. Just be aware of the transaction and instant transfer fees to avoid unnecessary expenses.
Contact us if you have more questions about payment processing or if you want to apply for a small business loan. Our alternative financing experts can help you find the best business loan for your needs.
