New 1099-K Rules! Is ZELLE Now the Best Payment App for Business?

New 1099-K Rules! Is ZELLE Now the Best Payment App for Business?

payment apps like vimmo and cash app
have been under major scrutiny in the
past year or two in fact the IRS has
made some key changes to the rules for
these applications so if you’re a
business owner then you need to be aware
of this and if you use these payment
apps incorrectly you could face some
serious legal trouble so today I’m going
to explain why I strongly recommend that
business owners consider using zel
instead of venmo or cash app for
business payments this is one of those
videos that you’re not going to want to
miss without further Ado let’s Dive In
[Music]
all right guys now I have already
published a video explaining the new
rules for payment apps so if you haven’t
already watched that video I would
highly recommend you do so but as a
quick reminder the IRS is now requiring
payment app companies like vinmo and
cash app to file a form 1099 k for any
users who earn more than $5,000 through
their apps form 1099 K reports payment
app earnings to the IRS the $5,000
threshold is only for tax year 24 it is
set to drop even lower to $600 in 2025
so to understand how this works let’s
say that you are an artist and you’ve
been accepting payments for your
paintings and these payments have been
going through vinmo in 2024 as soon as
your earnings cross over $5,000 it will
trigger vinmo to send a form 1099 K to
the IRS once the IRS receives this form
it will be able to see all of the
business payments that you have received
through your vinmo account now there’s
been some reaction to these rules as you
can imagine many business owners were
upset about the new rules for these
payment apps that is part of the reason
why the IRS decided not to lower the
1099 K threshold to $600 for 2024 and
instead is waiting until 2025 to make
the threshold this low you see the main
reason why so many business owners were
upset with this rule change is because
the 1099 K used to only be triggered
when a business owner generated more
than $220,000 in payments and had over
200 transactions through a payment
application so now many people and I’d
say many a lot even casual sellers will
be under a much higher level of scrutiny
from the IRS so does the new 1099 K rule
change apply to zel in the last video I
published about payment apps many people
were asking me if the new rules apply to
zel well interestingly enough the answer
is no zel is not required to send form
299k to the IRS when you receive more
than $5,000 in earnings through the app
in 2024 or $600 in 2025 and Beyond the
reason why this is the case is because
zel never technically controls your
funds it simply facilitates the
transferring of funds from One bank
account to another zel is a payment
Network controlled by a Consortium of
Banks and it turns out that because zel
never controls funds this makes it
exempt from the new 1099 K rule for
payment apps so you might be asking do
you still have to report your earnings
to the IRS if you’re using zel instead
of vinmo I just want to make this very
clear for all of you watching this video
yes even if you use zel you are still
required to report your earnings to the
IRS the difference between using zel and
another payment app like vinmo or cash
app is that zel will not also be
reporting your earnings with a 1099 K so
which apps should you use you see many
payment apps like vinmo allow you to
have both a personal and a business
account but this doesn’t necessarily
mean that you should use the same
payment app for both business and
personal transactions in fact it can
make a lot of sense to use one app for
personal transactions and another for
business transactions the reason why
this is the case is because generally
speaking it is a good idea to keep your
personal transactions as far separate
from your business transactions as
possible if you fail to separate your
personal from your business transactions
and you could accidentally cingle or mix
business and personal funds which could
hypothetically result in a piercing of
your corporate veil if you accidentally
pierce your corporate veil which is the
legal barrier between you as an
individual in your business then it
could potentially result in a loss of
liability protection if you have an LLC
or another business entity with
liability protection this is definitely
not something that you want to deal with
because it could result in you having to
surrender personal assets like cash in
your bank account or your vehicle in the
event of a lawsuit against your business
to make things simpler I recommend that
my clients simply avoid using payment
apps for their businesses if possible
the lower your risk of accidentally
comingling funds is the better it is
however if you’re going to use one of
these apps for business I recommend that
you consider going with zel and here’s
why you see the advantages of zel are
pretty simple number one you have free
transactions zel doesn’t charge a fee
for transactions this means that it is
free to both send and to receive money
through the zel payment Network this is
extremely important especially if you
have a high volume business with a lot
of transactions or if the transactions
at your company tend to be on the higher
side a lot of other payment apps charge
fees for various types of transactions
and they’re often charged as a
percentage these fees range from. 5% to
3% for example VMO charges a 3% fee for
sending money using a linked credit card
over time these feeds add up and why pay
fees if there’s another option that lets
you avoid them number two is fast money
transfers money transfers with zel can
be completed within minutes however
money transfers with certain other
payment apps can take 1 to 3 days it can
be highly beneficial for business owners
to get access to funds quickly once the
funds hit your bank account you can
immediately reinvest those into your
business use them to pay for staff buy
inventory and do the things that are
needed for a business to grow as the old
saying goes time is money so the less
time you have to wait for your money
transferring over to your bank account
the better you are as a business owner
owner and number three privacy some
payment apps such as vinmo have
transactions set to public as a default
this means anyone can see your
transactions this creates potential
privacy concerns for businesses yes it
is possible to switch your transactions
to private but many people who use vinmo
either don’t know this or they simply
forget to do so privacy concerns can
vary from business to business and for
example an ice cream shop doing $10
transactions might not care about having
public transactions but a tech company
that has large transactions sizes and
stores a lot of customer information
might not want all of its transactions
to be public information transactions on
zel are always private there is no
middleman and the money simply moves
from One bank account to another they
are not published on a public social
media feed so if privacy is a concern
for your business then zel could be a
much better option than other payment
apps and you know I’m not saying don’t
ever use venmo and cash app what I’m
just saying is you might want to
consider only using them for personal
transactions and not for business
business transactions many payment apps
such as venmo were designed specifically
for personal transactions and can truly
make personal transactions easier and
even more fun thanks to features like
being able to add emojis payments it
really is a personal app but what is not
fun is making critical Financial
mistakes for your business that could
potentially cost you a lot of money if
you’re sued or expose your business to
Major privacy concerns now I know there
are a lot of passionate vinmo and cash
app supporters out there who won’t stop
using these apps for business no matter
what I say so if you fall into this
category then I consider doing business
transactions through one of the apps and
personal transactions through the other
this can provide you with a good layer
of protection against co-mingling what
other payment app methods can you use
besides vinmo and cash app andzel there
are many other payment methods that you
can use for your business that can
potentially help you reduce your
co-mingling risk for example you can use
wire transfers you can even send
invoices through QuickBooks and you can
send invoices through stripe you can
even do money transfers if you really
wanted to but if you’re someone who
hires a lot of contractors many
freelancing platforms such as upwork
also have their own built-in payment
systems and these payment systems allow
you to enter your business bank a card
information for making payments easier
once you integrate your business payment
information you can easily make payments
to Freelancers on the platform with zero
risk of accidentally comingling your
personal and business funds together
many businesses in the modern world rely
heavily on online Freelancers so these
approved thirdparty payment systems on
sites like upwork can be extremely
beneficial when it comes to payment apps
like venmo zel and cash app the bottom
line is that you need to make sure that
you do not commingle the funds if you’re
going to use one of these apps for
business then I personally believe that
zel is the best option for that case it
has faster transaction zero fees and
better privacy than Alternatives like
vinmo and also just so you know I’m not
affiliated with zel or sponsored by zel
in any way I just like this option for
the best okay that’s all I got for
today’s video thank you so much for
joining by the way if you want access to
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be sure to check it out as always don’t
forget to like comment and sub subscribe
I’ll see you all on the next video
cheers

Chapters:
0:00 Intro
0:33 New Rules for Payment Apps
1:26 Why Are Business Owners Upset?
2:08 Do the New 1099-K Rules Apply to Zelle?
2:54 Do You Still Have to Report Your Earnings from Zelle to the IRS?
3:19 The Best App for Business Payments
4:45 Advantages of Zelle
6:50 Should You Ever Use Venmo and Cash App?
7:42 What Other Payment Methods Can You Use?
8:38 The Bottom Line
9:04 Outro

The IRS recently changed reporting requirements for payments like Venmo, Cash App, and more. Now, in 2024, these app companies are required to file form 1099-K for any business owner who earns more than $5,000 in revenue through the app. In 2025, the threshold drops down to just $600.

What this means is that the IRS will be scrutinizing the earnings that small businesses generate through these apps much more thoroughly. Therefore, it is now a lot more important for small business owners to choose which payment apps, and how they use these payments a lot more carefully. Mistakes like commingling funds or failing to accurately report earnings can be costly.

In this video, tax expert Karlton Dennis explains the new rules for payment apps and also articulates why he thinks that business owners who are going to use payment apps should use Zelle instead of Venmo or Cash App. Considering the fact that millions of people use these apps, this video is highly relevant for many business owners.

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*Disclaimer: I am not a financial advisor nor am I an attorney. This information is for entertainment purposes only. It is highly recommended that you speak with a tax professional or tax attorney before performing any of the strategies mentioned in this video. Thank you.

#zelle #1099k #paymentapp