Taking the time to choose the right business cash advance provider can be tough–especially if your business needs cash immediately. Don’t make the mistake of rushing into a cash advance transaction with the first company you’re approved by–shopping around can give you bargaining power and allow you to compare rates, fees and terms.

Where to Look for Providers
You can turn to a large company or a small business to obtain cash advance or factoring services. A good place to begin your search is with businesses you already work with–your current credit card processor or bank, for example, might offer a cash advance or factoring service in addition to providing business loans or merchant account services. You’ll usually be able to negotiate a better rate with a business you already work with or a company that is already familiar with your business history. Online searches can also yield numerous results. If you’re not familiar with a particular company, make sure you ask for references, and contact current and past customers before signing a service agreement.

Industry Experience
Make sure you compare providers that have worked with businesses in your industry and have served companies similar to yours in size. In some industries, statutory regulations or state and local laws can restrict factoring or cash advance transactions (think law firms, medical billing companies, etc.). If your business accepts customer retainer payments for future services, you may be restricted in how you can use a cash advance transaction. Choosing a company with industry experience ensures you comply with applicable rules and standards.

Customer Service
Your relationship with the provider doesn’t end after your application is approved. You’ll also be communicating regularly during the repayment process. Make sure you choose a provider that is accessible, able to negotiate new terms if necessary and assist you during the process of obtaining an advance. Reputable providers thoroughly explain the application and repayment process, help you set up your credit card processing system for repayment and are available to answer any questions during the cash advance repayment process.

Make sure the provider is concerned with what is best for your business. Stay away from companies that try to steer you toward a too-high advance amount or those that propose unrealistic repayment terms. Processing or administrative fees are not generally attached to merchant advances–you should be skeptical of any provider who attempts to charge such amounts. Providers also should not require that you use their company for merchant processing or other services.

No matter which type of provider you choose, make sure you evaluate all of your options before making a decision. Comparing rates and terms from several different providers is the best way to determine if you are getting the best deal available for your business.

Resource Nation is your source for small business success providing how-to purchasing guides from business cash advance to factoring. Resource Nation also helps businesses select and choose vendors in over 100 categories.

By Ken & Daria Dolan
Dolans.com

Good financial records are very important … especially come tax time. But if you keep every snippet of paper forever, you'll need to put an addition onto your house! Let's do some maintenance and get rid of the paperwork that's cluttering your life.

Before we talk about what you can throw out, let's look at papers you should stash away in your permanent file. Keep the following documents forever:

• Records that relate to your home (mortgage, deeds, capital improvements, etc.)

• Documents showing non-deductible and deductible IRA contributions

• Tax returns and checks used to pay taxes or to substantiate deductions.

Once those papers are safely tucked away, grab your trash bag because here we go!

• Accident reports/claims – 7 years

• Back-up tax paperwork – 10 years

• Bank reconciliations – 1 year rolling

• Bank statements – 3 years

• Brokerage statements – Year end only

• Contracts, notes and leases (expired) – 7 years

• Credit card statements – 1 year rolling

• Insurance policies (expired) – 3 years

• Mutual fund statements (after sold) – 10 years

• Paycheck stubs: normal – 1 year

Now maybe your home will be big enough for you, your family and your financial records!

By Ken & Daria Dolan
Dolans.com

Running a business out of your home has many advantages: no commute, you can dress how you want (well, most of the time), easy access to your kids, etc. One extra advantage of a sideline home-based business is that you often qualify for extra tax breaks.

When you use part of your home for business, you're allowed to deduct a "pro-rata" share of expenses such as rent or mortgage payments, real estate taxes, security system, home insurance premiums, heat, water, electricity, air conditioning and depreciation.  If your office space covers 500 square feet and your home is 2,000 square feet, 25% of your home expenses qualify. You can also deduct the pro-rata portion of any repairs or maintenance of your home that "benefit" your home office. Cosmetic upkeep -- aluminum siding and landscaping, for example -- are trickier.

Be aware that these deductions send up a red flag to the IRS. Don't be scared off, just be prepared to justify, justify, justify the deductible portion of the cost. For added protection, file IRS Form 8829 with your tax return to explain why you need your home office and how it is used.

The amount you can deduct for home office expenses can't be more than your business's net income, after you've deducted your business expenses, such as supplies, travel expenses and phone charges. For example, if you have $4,000 in deductions, you can deduct the entire amount, as long as your business had at least $4,000 in net profit. Home office expenses that exceed your net income can be carried over to succeeding years as a loss.

To qualify for these tax breaks, your home office must be the main place where your goods and services are provided to customers and your revenues are generated. You can maximize your tax breaks, and keep more of what you earn if you:

• Use your home office exclusively for business. The IRS won't let you take a deduction for your kitchen, just because you use the kitchen table as your desk. You must have a separate room or partitioned area that's devoted to business use.

• List your home address as your principal place of business, even if part of your business, like a warehouse, is outside your home. Make sure you have a desk, filing cabinet and separate phone line for your business.

• Store your merchandise or supplies on your property -- in a detached shed, spare closet or your garage -- instead of renting a warehouse. You'll save on rental costs and get a tax break for the space you use.

Consumers increasingly are turning to plastic over paper when they open their wallets. Credit and debit card spending exceeded $1 trillion in 1998, making it a necessary payment option for most businesses.

Yet many small businesses still don't accept credit cards. If you're one of the laggards, the entire transaction may retain the aura of a mystic ritual—swipe a card, input some numbers, and money magically appears in the bank. In reality, though, credit card transactions involve coordination between multiple high-speed computer networks.

How the Process Works

When a merchant makes a sale and swipes a customer's credit card, the card number, the amount, and the merchant ID travel over the credit card processor's computer network. The credit card processor can either be a bank or a company that does nothing but provide credit card processing services.

From the processor's network the transaction goes to a credit card computer network. If the customer is using Visa, for example, the transaction will go to Visa's network. In turn, the electronic transaction goes to the bank that actually issued the card. The bank then checks the account and verifies the customer has adequate credit to cover the purchase. The bank then sends the merchant an authorization over the network. Now the sale is complete, but the transaction is not—no money has changed hands yet.

At the end of the business day, the merchant sends that day's charges, in a batch, to the credit card network for processing. The transactions travel via the merchant's credit card processor. Individual transactions are then stripped out and sent back to the individual cardholders' banks. Banks then debit cardholders' accounts and make appropriate payments to the merchant's credit card processor through the Federal Reserve Bank's Automated Clearing House.

The credit card processor then credits the merchant's bank account for the transaction amount, minus its fees for the transaction. Those fees also go toward paying transaction fees to the issuing bank and the credit card network. Despite the use of computers, it can take two business days before the merchant's account is credited.

Opening a Merchant Account

In order to accept credit cards, you must open a merchant account with a bank. However, many banks have gotten out of the credit card processing business, and those that remain are often skittish about servicing small businesses, particularly ones with limited operating histories.

Many small businesses must therefore go through a specialized credit card processor or an independent sales organization, commonly referred to as an "ISO." Whether you use a bank or a credit card processor, you need a merchant account to receive credit card payments.

Though businesses can contact credit card processors directly, banks unable or unwilling to process credit transactions often refer customers to an ISO to help them find a credit card processor and get the necessary equipment and training to begin accepting credit cards.

Find more business tips and advice covering credit card processing and merchant accounts, e-commerce and other topics related to business accounting at AllBusiness.com.
Copyright 2006 AllBusiness, Inc.