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Do I Need a Business Bank Account For a Sole Proprietorship?

Young man presenting about the need for business bank account for sole proprietorship

Although you are allowed to use a personal bank account for your business, creating a sole proprietorship account is highly recommended. A dedicated business bank account offers tax incentives, accurate recordkeeping, and improved business credibility. This guide covers why you should never mingle your personal and business funds together.

What is a Sole Proprietorship Bank Account? 

If you’re a freelancer or a small business owner with a sole proprietorship, it’s not legally required for you to create a business bank account. Thus, you can legally use your personal bank account to run your business.  

However, using your personal bank account is risky and inefficient. Even for sole proprietors, the IRS recommends creating separate personal and business bank accounts. 

A sole proprietorship bank account is a separate bank account used to manage your business’s finances. It’s used to pay your suppliers and employees as well as receive payments from your customers. It also allows you to apply for small business loans.

Even if your business is completely new and doesn’t have any sales yet, it’s a good idea to create a dedicated business bank account immediately. 

Unless you’re willing to keep meticulous records of your business transactions within your personal bank account, you need a sole proprietorship bank account. In fact, it’s suggested that you should open a business bank account even if your sole proprietorship is a side hustle or hobby. 

Business Checking vs Personal Checking Account: What’s the Difference?

Personal and business bank accounts offer features such as debit cards and check writing. However, business checking accounts include an additional set of features to empower your business for future growth.

These tools help your business operate more efficiently. Let’s take a closer look at the key differences.

Features

Business Bank Account

Personal Bank Account

Check writing

Debit cards

Debit cards for employees

Payroll processing services

Bookkeeping integrations

Financial advisory services

Accurate expense and revenue tracking

Why is it Important to Create a Sole Proprietorship Bank Account? 

After creating a sole proprietorship, your first task is to open a business checking account. If you combine your business and personal finances into one bank account, keeping accurate records would be challenging. 

So let’s take a closer look into why you need a sole proprietorship bank account.

Tax Benefits

Separate personal and business bank accounts help with sorting out your expenses when tax season rolls around. It’s crucial to create a clear distinction between personal expenses and business-related ones to avoid tax penalties from the IRS.

A sole proprietorship bank account sets an unmistakable line between your business and personal finances. When it’s time to pay taxes, you’ll be able to see a comprehensive record of your business expenses. However, if your business expenses are mixed with your personal expenses, it will be a major inconvenience if you get audited by the IRS.

Tax penalties are a significant headache for anyone, and a dedicated sole proprietorship bank account ensures accurate tax keeping. 

Accurate Bookkeeping & Analytics

Using a sole proprietorship bank account ensures accurate bookkeeping. By keeping your personal and business finances separate, you can easily identify your business’s performance. Therefore, a business bank account allows a better financial understanding of your sole proprietorship to empower future growth initiatives and optimizations. 

Having a clear view of your business’s revenue and expenses is essential as you’re trying to expand your sole proprietorship. As your business continues to grow, the complexity and volume of your business dealings will also grow.

Keeping track of your books will become nearly impossible if you combine and use your personal bank account for your sole proprietorship. 

Business Credibility

Creating a sole proprietorship bank account also boosts your business credibility. Rather than charging payments to a bank account labeled with your name, you can use your company’s name after opening a business bank account.

Image and branding are vital in the modern competitive digital age, and business bank accounts improve the legitimacy of your sole proprietorship. Additionally, a business bank account allows you to affordably accept credit card payments from your customers.

You can’t accept such payments through your personal bank account unless you use a payment service provider. This is suboptimal because payment service providers take a hefty pay cut as a transaction fee. On the other hand, being able to accept all forms of payment increases your chances of getting sales and appearing more professional. 

Best Banks for Sole Proprietorship Bank Account

Most banks offer business checking accounts for sole proprietors. To find the best one for your business, you need to consider a few factors.

These factors include:

  • Cash deposit limits: Your bank might limit the amount of cash you are allowed to deposit into your business bank account for free each statement cycle. If your business primarily deals in cash, we recommend finding a bank account with a high cash deposit limit.
  • Transaction limits: Your bank may also limit the number of transactions you can process for free each billing cycle. These transactions include ATM deposits, teller deposits, checks, and electronic debits and credits. The standard limit for most sole proprietorship bank accounts is 200 transactions. However, it varies from bank to bank.
  • Fees: Business bank accounts typically have monthly maintenance fees. However, some banks waive the monthly fees if you meet certain requirements like a minimum account balance.
  • Interest: Some business checking accounts pay interest on your balance, allowing you to earn more money each month. 

Here are the best bank accounts for small businesses and sole proprietorships:

BlueVine logo

BlueVine

Visit

BlueVine Review

BlueVine is a digital banking solution that offers no monthly fees, no minimum balances, and unlimited transactions. In theory, this is the perfect sole proprietorship bank account. The main drawback is that there are no brick-and-mortar locations. However, you can still deposit cash and checks and Green Dot locations.

There are no minimum deposits with BlueVine, and you can earn up to 1.5% APY on balances up to $100,000.

Novo logo

Novo

Visit

Novo Review

Novo is another simple but robust business checking account provider. Similar to BlueVine, Novo is a digital banking solution that offers a simple online application process, no hidden fees, and free ACH transfers, mailed checks, and incoming wires.

Furthermore, Novo offers FDIC insurance through Middlesex Federal Savings and refunds on all ATM fees. You also get a virtual card immediately, which you can use for secure spending. However, where Novo truly thrives is through its comprehensive mobile app. You can pay bills, transfer money, and request invoices within seconds in the mobile app.

Axos logo

Axos

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Axos Review

Axos is another virtual bank that offers business loans, checking accounts, and savings accounts. There are two small business checking accounts you can choose from, Basic Business Checking or Business Interest Checking. The Business Interest Checking account offers 1.01% APY on account balances up to $50,000.

The Basic Business Checking account does not have an initial deposit requirement, minimum balance requirement, or monthly maintenance fees. You also get your first set of 50 checks for free and unlimited domestic ATM fee reimbursements.

Getting a Loan as a Sole Proprietorship

If you’re interested in receiving a business loan or financing in the future, you’ll likely need a business bank account. Lenders require your sole proprietorship to have a business bank account to verify your business’s cash flow. If they can’t verify your business’s financials, you won’t be eligible to receive a loan. 

The main goal of a lender is to ensure you have the needed cash flow or growth projections to pay back the loan. 

The best small business loans are provided by:

These lenders offer high credit limits, low-interest rates, and variable repayment periods. Furthermore, these lenders have a fast and easy online application process in which you can get approved the same day. 

However, small business loan lenders may require some qualities on your end. For example, to apply for a BlueVine small business loan, you need a FICO score of at least 600, be in business for at least six months, and have a minimum of $10,000 in monthly revenue. 

How to Get a Sole Proprietorship Bank Account

It’s easy for sole proprietors to open a business bank account. Many banks allow you to apply online. All you need to provide is the proper documentation. However, requirements vary from bank to bank. So, we recommend contacting your bank to see what information you need to provide. 

Generally, you’ll need to provide:

  • Social Security Number (SSN) or Tax ID Number
  • Driver’s license or passport
  • Business address
  • Type of business you own
  • When the business was established

Sole proprietorship bank accounts don’t always require formal documentation since your business isn’t incorporated. If you operate your business under your own name, an SSN or Tax ID may be sufficient. You may also need to provide your driver’s license or passport, depending on the bank.

Your Employer Identification Number (EIN) is your SSN as a sole proprietor. As such, you can Open a Business Bank Account With EIN Only for your sole proprietorship using your SSN. 

Suppose your sole proprietorship is operating under a DBA. In that case, the bank will ask for additional documents containing your name in relation to the business name and your Trade Certificate Name or Assumed Name Certification. 

Frequently Asked Questions (FAQs) for Sole Proprietorship Bank Account

If you want to learn more about sole proprietorship bank accounts, here are a few common questions and answers.

Bottom Line on Sole Proprietorship Bank Account

While you aren’t legally required to create a business bank account for a sole proprietorship, we highly recommend it. Creating a sole proprietorship bank account lets you separate your business and personal finances. Therefore, it’s easier to keep your books clean and pay the correct amount of taxes.

Best Business Bank Accounts by State

Below you will find an interactive U.S map that can help you locate and compare different banks and financial institutions that offer business accounts in your area.

AL AK AZ AR CA CO CT DE FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY DC
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Developing & Managing Volunteer Programs

Follow These Volunteer Management Practices Employing all, or even a few, of these strategies can help you run a successful volunteer program and retain volunteers:

Nearly 78 million Americans volunteered their time for an organization in 2019—that’s about 30% of the population—according to AmeriCorps. Nonprofit organizations and other companies that rely on volunteers should be developing and managing volunteer programs that benefit the organization and volunteers. It all starts with a well-designed plan.

Developing & Managing Volunteer Programs Statistics

This Library topic is called “Developing & Managing Volunteer Programs” to emphasize that, for the organization and its volunteers to benefit the most from each other, volunteers should

be managed as part of an overall, systematic program, somewhat similar to the systematic approach that should be used to managing employees. Certainly, there are differences between how employees and volunteers are managed, but the differences are probably much less than most people realize.

The following links are to sections in this overall topic and the sections are organized in the order in which they might be needed in an organization that is starting a volunteer management

program—the order of the links themselves suggest the systematic nature of a well-designed volunteer management program. Organizations that already have established programs can use this overall topic by going directly to the sections that are relevant to current priorities in their current program. The links below present a wide variety of perspectives and materials about volunteer management programs or systems.

Sections of This Topic Include

Planning Your Volunteer Program

Operating Your Volunteer Program

Additional Information

Also consider

Learn More in the Library’s Blogs Related to Volunteers and Volunteer Programs

In addition to the articles on this current page, also see the following blogs that have posts related to Volunteers and Volunteer Programs. Scan down the blog’s page to see various posts. Also, see the section “Recent Blog Posts” in the sidebar of the blog or click on “next” near the bottom of a post in the blog. The blog also links to numerous free related resources.

Planning Your Volunteer Program

Designing & Operating Your Volunteer Management System

Considerations in Establishing or Modifying Volunteer Management Systems

Any organization that develops a volunteer program should first identify the difference between a volunteer and an employee and then create appropriate boundaries. A company should also take into consideration what a volunteer wants or needs out of their experience. According to a study by Sterling Volunteers, 83% of volunteers want to make a positive impact on their community, but volunteers can get even more from their time and effort. 

Recruiting volunteers is also a crucial part of developing and managing a volunteer system. There are plenty of online resources that can help you find micro-volunteering individuals or long-term volunteers. In fact, 80% of volunteers plan to give their time again to an organization they believe in, according to an NCVO survey.

Note that the extent to which an organization develops and implements a volunteer management system depends on the nature of the activities to be conducted by the volunteers. For example, an organization that uses many volunteers, some of whom directly serve people, will probably use a very comprehensive system. In contrast, an organization that occasionally uses volunteers to stuff envelopes might do a brief solicitation to recruit any volunteers that the organization can get and then do a very brief training, afterward leaving the volunteers alone to perform their task.

Online Tutorial about Volunteer Management

Role of Volunteer Managers

The primary role of the volunteer manager is to establish and operate the volunteer management system. This leader is also responsible for mediating and advocating for volunteers when necessary. Susan Ellis was one of the strongest advocates for volunteer programs and, specifically, volunteer managers. Learn more about the role of volunteer managers in her content below.

Staffing Analysis (Deciding Whether Volunteers Are Needed)

Staffing analysis - deciding whether you need volunteers

Also consider the topic for employees: Workforce planning (including succession planning)

Developing & Managing Volunteer Programs legal risks and considerations

There are a variety of types of legal and risk considerations when using volunteers in an organization, e.g., what insurance is needed, what rights volunteers have in the workplace, what employment laws also apply to volunteers, and how can you ensure that volunteers act ethically, etc. The reader will get a more clear understanding of legal and risk considerations by reading the topics in the following section about management policies and procedures.

Policies

Developing & Managing Volunteer Programs Policies and Procedures for Volunteers

Policies are general guidelines that personnel can reference in order to make decisions and get guidance on how to act in certain situations, e.g., a policy about dress codes. Procedures are specific step-by-step directions regarding the completion of a specific task, e.g., powering up a computer. Policies help ensure that volunteers are supervised and that they act according to a legal, ethical and organizationally-preferred manner in the workplace. 

Policies are often in regard to, e.g., the definition of volunteer, rights and responsibilities, confidentiality, background checks, safety, record-keeping, conflict-of-interest, dress codes, orientation, training, supervision, evaluations, corrective actions, etc. 

The astute reader will recognize that the policies in regard to volunteers are very similar in nature to the policies for employees.

Volunteer Job/Task Descriptions

You should be clear about what you expect from each of your volunteers. Volunteers deserve to know what you expect from them, as well. To recruit volunteers for a specific role or job, you will need a clear job description from which to develop the advertisements and to show them to any potential candidates. Therefore, each volunteer should have a job, or task, description. 

How to create a volunteer job description

The description should specify at least whom the volunteer reports to, any general duties and responsibilities, and any specific tasks to perform. Job descriptions might include additional information, e.g., level of expertise and education needed for the job, minimum requirements of expertise, etc.

Also consider the topic for employees: Specifying Jobs and Roles (analysis, description, and competencies)

Also consider the topic for employees: Job Descriptions

Operating Your Volunteer Program

Volunteer Recruitment

Recruitment usually involves identifying the most likely sources of suitable candidates for volunteer positions, how to approach those sources, and then approaching each source. Sources might include, eg, advertisements in the newspaper, word-of-mouth of employees, recommendations from clients, online (or virtual) sources, professional placement advisors (“headhunters”), volunteer fairs (events in which many organizations that need volunteers attend to recruit volunteers), etc. 

Candidates who are interested in certain positions often complete an application form, including providing a resume.

Different ways to recruit employees

General Guidelines

Advertising

Online Recruitment

Screening Volunteers

Each potential candidate for a volunteer position is usually screened. The extent of screening for each position depends on the nature of the tasks to be performed by the volunteer, e.g.,

whether the volunteer will be working directly with people in a health facility, etc. Screening often involves carefully examining each application, conducting background checks (e.g., to verify

information in the resume, identify any legal problems, etc.), and interviewing the most suitable candidates.

How to screen volunteers

General Guidelines

Also consider the topic for employees: Screening Applicants

Application forms

Background Checks

Interviewing

Also consider the topic for employees: Interviews

Selecting (“Hiring”) Volunteers

After candidates have been screened, ideally there is one candidate that seems to be the most suitable for each unfilled volunteer position. Each suitable candidate should be formally (or officially) approached with an offer letter that describes the terms that the organization is offering and the activities that the organization wants the volunteer to conduct. The offer might include any benefits, e.g., free training, use of facilities for private use, etc.

What to do when selecting volunteers

Also consider the topic for employees: Selecting (Hiring) New Employees

Orienting & Training Volunteers

Best ways to train volunteers

If the nature of the volunteer’s work is very basic and routine, then a volunteer might require only a very basic and general introduction to the organization and the task they are to complete. In contrast, if the nature of the volunteer’s work is rather complex, e.g., supervising patients in a particular setting in a health facility, then the volunteer will likely require a complex orientation to the organization and also training about, e.g., policies and procedures, how to respond to particular situations, when to ask for help, how to use certain facilities, etc.

If it’s a simple orientation, consider creating a volunteer training program online. Volunteers can complete the orientation in their own time at home, and then they’ll be prepared to get to work with your organization when they show up for their first day. 

Also consider the topic for employees: Employee Orientation Programs

Also consider the topic for employees: Training Basics for Supervisors and Learners

Supervising Volunteers (Retaining, Feedback and Motivation, Evaluating, Rewarding, and Firing Volunteers)

Supervision includes a variety of activities, e.g., establishing goals with the volunteer, observing the volunteer’s activities to achieve the goals, and providing guidance so the volunteer achieves

the goals effectively and efficiently (i.e., has strong “performance”), evaluate the volunteer’s performance, reward strong performance, address any performance issues, and fire the volunteer, if necessary. Some supervisors are also closely involved in staffing analysis, development of job descriptions, recruiting, selecting, orienting, and training, as well. 

How to supervise volunteers in your program

The activities to establish goals and provide guidance are usually considered to be the activities

of delegation. If the goals are specifically assigned to the volunteer, with little or no involvement from the volunteer, and the supervisor closely watches the volunteer (rather than generally guides them) and provides specific directions, then those activities might more aptly be described as work directing, rather than delegating.

Supervision and Delegation

Also consider the topic for employees: Delegating

Also, consider the topic for employees: Establishing Performance Goals

Retaining Volunteers

Also, consider the topic for employees: Retaining Employees

Giving Feedback and Motivating

Also consider the topic for employees: Observation and Feedback

Also consider the topic for employees: Coaching

Also consider the topic for employees: Morale (Boosting)

Also consider the topic for employees: Motivating

12 Great Ways to Thanks Volunteers

Evaluating

Also consider the topic for employees: Evaluating Performance

Rewarding

Also consider the topic for employees: Rewarding Performance

Addressing Performance Issues

Also consider the topic for employees: Performance Plans

Also consider the topic for employees: Recognizing Performance Problems (“Performance Gaps”)

Also consider the topic for employees: Performance Improvement / Development Plans

Firing

How to fire a volunteer

Also consider the topic for employees: Firing Employees

Volunteer and Staff Relations

Sometimes employees and volunteers can perceive themselves to be so different from each other that they spend little time together, don’t communicate with each other, and eventually experience conflict between each other.

Assessing Volunteer Management Programs

To ensure that the volunteer management system remains high-quality, including that the organization and its volunteers are benefiting a great deal from their relationship, it’s necessary to regularly assess the quality of each activity (eg, developing job descriptions, recruiting, training, supervising, etc.) to conclude if the activity is being conducted effectively and efficiently. Results of this overall evaluation should be used to adjust activities. Thus, the cycle of the volunteer management system starts over again.

Follow These Volunteer Management Practices Employing all, or even a few, of these strategies can help you run a successful volunteer program and retain volunteers:

Virtual Volunteering

Virtual volunteering is when the volunteer provides their donated services entirely over the internet or from a home computer. Information about virtual volunteering can be about the entire range of activities in a volunteer management system.

General Resources

For the Category of Human Resources:

To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources. Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature.

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC.

Adapted from the Field Guide to Leadership and Supervision in Business

and Field Guide to Leadership and Supervision for Nonprofit Staff.

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What is an NFT? The Ultimate Guide to NFTs

An NFT collection

NFTs are taking the digital world by storm and appear to be growing in popularity with each passing day. What’s more, savvy investors are taking advantage and bringing in some serious profits. What is an NFT, and what makes them so special? This ultimate guide answers all your questions and more.

What is an NFT?

NFT stands for non-fungible token, a digital asset created by blockchain technology. Being digital, there’s no way to acquire this token in physical form. Each NFT is unique, with a specific blockchain address.

Because NFTs are non-fungible, they can’t be replaced by the same item if lost, traded, or sold. These non-interchangeable digital items are original creations, similar to an old masterpiece painted by one of the great artists of the time.

Digital tokens share the same realm as cryptocurrency, but each digital coin of the same type is no different from the next. Since NFTs are one of a kind, they introduce scarcity and offer a variety of uses.

How Did NFTs Come to Be?

An unknown person or group using the name Satoshi Nakamoto began minting cryptocurrency using blockchain back in 2008, calling the coins Bitcoin. The digital currency became open source in 2009 and increased drastically in value from there. Today, there are thousands of cryptocurrencies available for purchase.

NFTs came out of a desire for “colored coins.” These coins would be a way to mark items on the blockchain for a specific purpose, such as ownership of a real-world asset. Each coin would have to have a marker or image to make them stand out as unique.

It wasn’t until 2014 that digital artist Kevin McCoy created the first NFT, called Quantum. The token looks like an octagon that pulses through a series of colors. It sold in June 2021 for over $1.47 million.

The launch of the Ethereum blockchain in 2015 made it easier than ever before to create NFTs. New blockchains put their hats into the ring, generating NFTs of their own and adding to the popularity. With the announcement of the metaverse in 2021, many people believe NFTs will be essential for future digital ownership.

How Do NFTs Work?

In a sense, NFTs have many similarities to a physical collector’s item. Individuals can buy, sell, or trade tokens, and each one varies in value depending on its perceived worth.

Most of these tokens reside on Ethereum’s blockchain, which keeps a careful record of each transaction. As an artist creates a new NFT, it is immediately timestamped and forever recorded into the blockchain’s ledger. Anyone can look up an NFT’s authenticity at any time.

What Types of NFTs Are There?

NFTs can appear in many different forms, as the definition of these tokens is still somewhat unclear. Here are some of the most common types of NFTs currently appearing in the blockchain.

Digital Drawings

By far the most common type of NFT, digital drawings offer artists a chance to showcase and sell their designs online. The most expensive NFT sale to date was a piece of digital art called “The Merge,” selling for over $91 million. With asset tracking capability, artists can even attach ownership of real-world creations to NFTs. Thanks to this income potential, a digital drawing is currently the best NFT to buy.

Sports Collectables

Some NFT companies rally around sports figures, capturing amazing stills or incredible moments in sports history. Through NFTs, it could be possible to own an iconic grand slam or hole in one shot from 200 feet away. Organizations are even looking to treat NFTs like unique sports cards that no one else can have.

Memes/Tweets

Memes paint the social media landscape and are now making appearances in NFTs. Subjects of these images can sell them on the blockchain, and some have reached prices in excess of $500,000. Similarly, it’s possible to buy single tweets for laughs or if a particular message has special meaning.

In-Game Items

NFTs can also appear as in-game items to help players set themselves apart. Through the use of these digital tokens, players can pick up a unique outfit or character that only they will own. If a gamer grows tired of a certain item, they can sell the NFT and move on to something new.

Games like Cryptokitties revolve around NFTs. Each character in the game is exclusive and belongs solely to the player purchasing it.

Music

Music is another area rising in popularity with NFTs. Musicians can record snippets onto an NFT and sell it for a profit. This allows fans of a particular genre or artist to own a piece of the space that no one else can listen to.

Who Can Create NFTs?

Anyone with the proper tools can mint a token of their own to sell with the right NFT ideas. You’ll need a digital asset that you’ve created or have sole ownership of to do so. Anything you can’t lay claim to can land you in hot water when you go to sell. This digital asset should be something people will want to buy.

With that asset in mind, you’ll need to decide which blockchain to sell it on. Ethereum is the most popular, but other blockchains are growing in stature.

You’ll need a digital wallet to hold the cryptocurrency to fund your NFT creation. Of course, you’ll also have to buy some cryptocurrency to fill the wallet or connect it with coins you already have.

NFT Marketplaces will take your design and mint it into an actual NFT for sale. These platforms charge in cryptocurrency and vary in pricing and application. Marketplaces can specialize in types of NFTs, such as sports or digital art.

How Much Does It Cost to Mint an NFT?

Minting an NFT can cost almost nothing to upwards of $1,000 to create. There may be fees associated with owning a crypto wallet, and NFT marketplaces will likely charge for using their services. Each wallet and marketplace has different rates, and the speed you choose to have something minted has an effect on cost as well.

Going the slow route, sometimes referred to as “lazy minting,” gives a marketplace permission to create your NFT as it has time. The cost will be low, but you may wait a long time before receiving your token. On the flip side, you’ll pay a pretty crypto coin to have an NFT minted quickly.

How Can I Acquire an NFT?

Purchasing an NFT is as easy as having crypto and knowing where to look. The NFT marketplaces mentioned earlier are the most popular locations for picking up digital assets to start or add to your collection. OpenSea is currently the largest and most successful, with over 80 million tokens to choose from.

Certain websites can help you zero in on a particular type of NFT you’re in the market for. Funko extended its line of products to the NFT space, offering collectors the chance to pick up unique items instead of mass-produced copies. Since everything passes through the blockchain, you can rest assured that all transactions are legitimate and protected.

How Do You Sell or Trade NFTs?

When looking at how to flip NFTs, you need not go any further than an NFT marketplace. With several markets to choose from, it’s imperative to lock down whichever one best fits the NFT you want to sell or trade. You’ll want to spend time researching similar NFTs to determine a reasonable listing price.

Shoppers with similar interests will then come across your NFT on the marketplace and throw out a bid. Depending on your listing, you may receive a trade request for another NFT or an amount based on what the buyer thinks the NFT is worth. It’s up to you as the seller to accept, negotiate, or decline the offer.

Why Should Anyone Invest in an NFT?

Investing in NFTs can serve a few purposes. With any investment, it’s essential to do the research required to make an accurate assessment.

For Collecting

Most people have hobbies that involve collecting physical or digital objects, and NFTs are one more way to scratch that itch. Because NFTs offer a special timestamped one-of-a-kind item, they may appeal even more to collectors who want to stand out.

Making Money

Like any investment, the hope is that an asset will rise in value as time goes on. The very first NFT recently sold for over $1.47 million, and others have been purchased for way more. The right investment can reach incredible heights quickly, giving sellers access to the potential for huge gains.

Being linked to a blockchain also means there’s no risk involved when making a purchase. This isn’t some seedy black market dealing we’re talking about here. NFT transactions leave a very clear history on the blockchain they are associated with, so there’s never any guesswork about a purchase.

Market Predictions for NFTs

Sales and investments in 2021 split the NFT scene wide open, with a huge increase in the number of sales and overall players involved. As the concept becomes more mainstream, more companies recognize the benefits of owning and selling NFTs on the marketplace.

Sales are already catching up with 2021’s numbers, with 2023 looking to see double the amount of money from NFT purchases. Analysts are worried that NFT sales are slowing as 2022 moves on, leading to concerns of a plateau somewhere down the road.

Those looking to NFTs as the next big thing anticipate more new NFT companies than ever before making an appearance, and existing enterprises continuing to follow suit. As these digital tokens are not yet mainstream, only time will tell which direction they go.

Protecting Your NFTs

NFTs can be worth a lot of money, and it’s important to protect these assets. Consider the following to help ensure your investments don’t end up in the wrong hands.

Keep Your Digital Wallet Safe

Digital wallets are great places to store NFTs and cryptocurrency, but it’s unwise to leave that wallet around for anyone to find. In theory, anyone can access a wallet as long as it’s connected to the internet. The best NFT wallets have the means to keep your information safe.

A wallet should come with a seed phrase, similar to a password, that you need to access the contents within. Don’t store your seed anywhere attackers could ever access. Instead, leave it completely offline on a physical piece of paper. No one should ever ask you for this phrase, nor should you ever provide it to anyone.

If in doubt about your ability to keep an online wallet secure, consider using a hardware wallet that’s completely off the grid. Only you with this device can access your account through a sign-in process before you can buy or sell. If you lose your hardware wallet, no one will be able to access your information without your login information.

Watch out for Scammers

Scammers may attempt to create cheap knock-offs of original NFT art with minor modifications, as seen in many real-life scenarios. NFT marketplaces authenticate and verify all details of an NFT, including where they come from.

If you’re selling NFTs, be sure to check offers before agreeing to them. It’s not uncommon for individuals to lay down a bid in U.S. dollars instead of Ethereum in hopes of snagging an NFT for cheap.

Avoid Sketchy Information

If you’re around the NFT marketplace long enough, you’ll start receiving information about “secret deals” that you can’t find anywhere else. It’s best to disable private messages on Twitter or Discord to remove the temptation entirely.

Be wary about clicking on any email regarding NFTs, even if it appears to be from your NFT marketplace. Verify the sender before you open something that could send personal data straight to a hacker.

Pros and Cons of NFTs

NFTs have a lot of potential but also come with a list of concerns. Check out the pros and cons of dealing with non-fungible tokens.

Pros

  • Ownership: NFTs are unique and afford digital ownership to a single individual. The blockchain it’s listed on keeps careful track of each asset and ensures no one can alter or remove it.
  • Investment Gains: As an investment, NFTs offer the potential to generate profit through sale and trade. As each NFT is unique, there’s added scarcity and the potential for desire.
  • Sales Income: For those with the means to do so, NFTs can be a place for artists to maximize profits on songs or artwork. Using NFTs allows artists to remove barriers and sell content with fewer fees.

Cons

  • Volatility: NFTs aren’t an exact science and are subject to volatility. An NFT worth a certain amount one day can be worthless the next.
  • Cyberattack: Anything on the internet becomes subject to the realm of hacking. It can be challenging to protect investments from these outside threats.
  • Rights Access: By purchasing an NFT, you gain access to the original of that object. However, it doesn’t give you the rights to memes or pictures already floating around the web.

Frequently Asked Questions (FAQs) for What is an NFT

With NFTs being so new, there are many unknowns swirling around about them. Below you’ll find answers to some of the most commonly asked questions about these unique tokens.

What is an NFT? Final Thoughts

NFTs are a lucrative means of offering unique digital content to collectors and investors alike. Since no two are the same, demand can cause massive fluctuations in price for any sought-after item. Because of this one-of-a-kind design, NFTs can also be used to represent ownership of physical assets or intellectual property.

The desire for NFTs only really took off in the second half of 2021, so much is still to be seen about where these tokens go. If they follow the path of certain cryptocurrencies before them, the sky’s the limit of what NFTs are capable of.

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What Are Inflationary & Deflationary Cryptocurrencies?

Graphical representation of inflationary and deflationary cryptocurrency

Inflationary and deflationary cryptocurrencies are opposite sides of the same coin. The first one consists of increasing cryptocurrencies in circulation, while deflationary cryptocurrencies have a limited amount circulating (this amount usually remains the same, it doesn’t increase). Or, if they eventually do, it rises at a slower pace. 

What is a Deflationary Cryptocurrency? 

A deflationary cryptocurrency is a cryptocurrency that reduces supply over time, resulting in a limited amount of the currency in circulation and ultimately increasing its value. This reduction of supply happens in two ways. One is through buyback-and-burn, in which developers repurchase a large number of cryptocurrencies and send them to a dead wallet (or in crypto slang, “burns” them) so that it’s no longer in circulation. 

The second way is through transaction fees–also called burn-on transactions. The coin’s contract states that the tax applied to all on-chain transactions that involve that coin will be burned and removed from circulation.

However, to better understand deflationary cryptocurrencies, you should first understand more about the concept of inflation and deflation.

Inflation vs Deflation: What Are the Differences?

Piles of coins rising in quantity with a crypto-themed background
Source: Freepik

If you Google “inflation and deflation,” you will find that inflation increases the price of goods and services and that deflation is the opposite phenomenon, where prices for goods and services go down. 

But why do these phenomena occur? After all, prices can go up or down for various reasons, being the laws of supply and demand one of them.

Well, when there is an increasing amount of money in circulation, the value of this currency drops. As part of the logic of the market economy, everything abundant and easier to access tends to devalue over time. As a result, consumers will need more units of the same currency to trade for a specific good or service. This phenomenon is called inflation.

When the supply of money and credit drops, the price of goods and services declines, and the amount of money in circulation remains the same, it is called deflation.

With global inflation on the rise–mostly associated with the Covid-19 pandemic–deflationary cryptocurrencies are now in the spotlight as a way to dodge inflation.

What is an Inflationary Cryptocurrency? 

In an inflationary system, the total amount of money circulating in the economy increases continuously. Thus, the value reflected in currency declines, and capital loses value. In crypto, the same phenomenon occurs–as cryptos are simply a digital currency. An inflationary cryptocurrency is when the number of tokens in circulation rises. 

One example of an inflationary cryptocurrency is Dogecoin. In 2014, one of its creators abolished a hard cap of 100 billion to ensure the cryptocurrency had an unlimited supply. Over time, its value has gone through severe fluctuations. If you go back to May 7, 2021, you might recall that the altcoin with the iconic Shiba Inu dog logo spiked, reaching its all-time high of $0.64. A few days later, the token was worth $0.30. Today, the current price is near $0.10. 

Moving away from the meme altcoin, here is another–quite surprising–example of a token that was once purely an inflationary cryptocurrency: Ether, from the Ethereum network. However, as of August 2021, an update mandated to burn some ethers whenever the network activity rises to make the cryptocurrency deflationary. 

Most Popular Deflationary & Fastest Growing Cryptocurrencies in 2023

Before we talk about the most popular deflationary cryptocurrencies, let’s explain the system around the leading crypto of all: Bitcoin. 

If you are a crypto enthusiast, you already know that Bitcoin–the pioneer of all cryptocurrencies–has a hard cap of 21 million units. This number is forecast to be reached sometime in 2140. 

Until then, Bitcoin uses a process called “halving,” where it cuts the number of Bitcoins that can be mined and put into circulation every four years. In 2016, the mining reward was 12.50 bitcoins. It dropped to 6.25 in 2020 and will drop to 3.125 by 2024. After 64 halvings, all 21 million Bitcoin will be in circulation. This will make Bitcoin a scarce asset, and if demand continues to rise, its value will likely spike.  

So, is Bitcoin inflationary or deflationary? 

Bitcoin on a bluish background
Source: Freepik

Bitcoin is technically inflationary because its supply increases over time. However, the halving process automatically reduces the supply of Bitcoins by 50% every four years, which makes Bitcoin resistant to inflation – a regular process for deflationary cryptocurrencies. It means that Bitcoin, one of the fastest growing cryptocurrencies, is both inflationary and deflationary. 

Besides Bitcoin, here are a few examples of the most popular deflationary cryptocurrencies in 2023. 

Binance Coin (BNB)

In the beginning of the article we mentioned that some deflationary cryptocurrencies use the Buyback-and-Burn approach to reduce supply.

One of the world’s leading crypto exchanges, Binance, uses this procedure to reduce the amount of Binance Coins (BNB). Binance repurchases BNBs from investors who profited more than 20% in the previous quarter and sends them to a dead address, out of circulation. As of January 2022, the total supply of Binance Coins is a bit over 166 million. 

Cronos (CRO)

Cronos (CRO) is the native token on another leading cryptocurrency platform, Crypto.com. This non-minable cryptocurrency has a limited supply of 30 billion tokens in circulation. 

PancakeSwap (CAKE) 

The native token of the PancakeSwap platform, CAKE, has no maximum supply – which would make it an inflationary token. However, CAKE uses a coin burn mechanism, making it deflationary. 

Litecoin (LTC)

Like Bitcoin, Litecoin (LTC) also goes through a halving process every four years. However, Litecoin supply has a hard cap of 84 million units. 

Solana (SOL)

Like CAKE, Solana (SOL) is both inflationary and deflationary. Having no cap on supply and distribution makes Solana an inflationary token. Also, Solana’s miners burn transaction fees, making it deflationary. 

Ripple (XRP)

Ripple (XRP) is the default currency of the RippleNet platform that charges transaction fees to reduce supply. These fees don’t return to the central authority nor are used to reward validators, but are burned – thus making XRP a deflationary cryptocurrency. 

Polygon (MATIC) 

MATIC is a native token to the Polygon blockchain technology. Its two purposes are to pay translation fees and participate in the Proof-of-Stake (PoS) consensus program. A percentage of each block’s transaction fees is burned to provide support for the MATIC crypto’s value. 

Bitcoin Cash (BCH)

Like Bitcoin, Bitcoin Cash (BCH) has a capped supply of 21 million units. And, like BTC, it also uses a halving process that reduces the mining rate by 50% every four years. In addition, Bitcoin Cash also burns coins: Antpool, a crypto mining pool that validates 10% of BHC transactions, burned 12% of the block reward received in 2018. As a result, the price went up.

How to Trade Crypto

You can make a crypto trade by exchanging one crypto for another (such as Bitcoin to Ethereum) or buying or selling crypto using fiat currency (like US dollar to Bitcoin). The process, however, isn’t difficult, as it just involves a few steps until you can buy or sell the cryptocurrency of your choice.

Similar to stocks and other financial markets, trading cryptocurrency can be daunting and complex, so before starting off, you should understand how blockchain technology and the market involved in trading crypto works. If you’re ready to venture into crypto trading, there are six steps to follow and we’ve detailed them in this complete guide on how to trade crypto..

Pros & Cons of Cryptocurrency

Cryptocurrencies are highly volatile, so it’s very common to see Bitcoin prices fluctuate over 10% in a single day. This is a great opportunity for high-risk profiles to make a profit quicker with crypto trading.

But is crypto worth investing? Or is it something for you? If you can handle volatility and are okay with the risk of loss (in case you can’t access your crypto wallet or private key) and security, cryptocurrencies have high return potential (oftentimes higher than the stock market), it gives users anonymity, and it’s very accessible and versatile–it only takes a few minutes to trade and transfer Bitcoin or any other crypto. 

Frequently Asked Questions (FAQs) for Deflationary Cryptocurrencies

We’ve wrapped up some of the most frequently asked questions about inflationary and deflationary cryptocurrencies. 

Bottom Line on Deflationary Cryptocurrencies

In short, deflationary cryptocurrencies are digital assets with limited or decreasing supply over time. In other words, the number of units – or tokens – doesn’t increase at all, or if it does,  increases very slowly. As a result, the value of each coin rises as long as the demand remains consistent. 

Deflationary cryptocurrencies are often classified as assets that protect money from inflation. With a limited supply and high demand, its tokens increase value–as opposed to inflationary currencies, in which its increasing supply lowers purchase power. 

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Merchant Cash Advance: How It Works, How to Get One + Pros & Cons

Businessman receiving a merchant cash advance concept

Small businesses that receive payments via card terminals like credit and debit cards can opt for a merchant cash advance (MCA) instead of traditional bank loans. An MCA is an advance on credit card receipts where small business owners receive an upfront lump sum.

What Is a Merchant Cash Advance?

A merchant cash advance is an alternative to traditional bank loans, only available to businesses that take credit card payments. It can benefit small businesses that mainly receive payment via credit card sales and do not qualify for traditional loans or require a quick cash advance to manage their cash flow.

The hallmark perk of an MCA is that the lender provides an upfront lump sum amount processed in one to three days. You don’t need to have collateral or excellent business credit, and there are no stipulations as to how you should use the advance. As long as you make credit card sales, you need to commit to repaying the advance plus the service fee with a predetermined percentage of your daily turnover.

Applying for an MCA is convenient, especially for businesses requiring a quick cash flow boost to streamline their operations. The catch is that the advance attracts a higher interest rate than traditional bank loans.

  • Fast funding typically approved in 24 to 72 hours
  • Easy to qualify (good credit or collateral are not a requirement)
  • Flexible repayment terms based on your sales
  • Freedom to use the advance as you deem fit
  • Expensive (APR could be triple digits)
  • Only businesses that accept credit cards qualify for MCAs
  • You must make daily payments which can affect your cash flow
  • MCAs are not subject to federal regulations (it’s easy to fall victim to predatory loans)

Who Is a Merchant Cash Advance Best For?

Merchant cash advances are ideal for small businesses that receive high volumes of credit card payments. Because of the extreme flexibility in the repayment plan and how you can use the money, an MCA can offer reliable short-term financing solutions if you need:

  • Quick working capital to boost a short-term cash flow crisis
  • Money for unexpected business expenses (like fixing broken equipment)
  • Money to fund a short-term opportunity and generate a higher ROI (like taking advantage of an inventory sale deal at discounted rates)
  • Settling pressing business debts where nonpayment attracts higher interests rates

Who Should Not Consider Taking a Merchant Cash Advance?

Generally, an MCA is not ideal for reviving the operations of a struggling business. Remember that you must make daily payments from your credit card sales, meaning the advance could throw you deeper into debt. If you are not borrowing to boost an ROI-generating project, an MCA can quickly become a toxic loan.

How Does a Merchant Cash Advance Work?

MCAs lack a stringent approval process. It’s easy to qualify for an advance even if you lack a business line of credit or valuable assets that attract deals from traditional lenders. The fast cash advance can allow you to manage any limitations in your cash flow and streamline your operations.

The MCA lender will provide an upfront sum of money for a percentage of your business’s credit card revenue. It is crucial to understand the three main components of a merchant cash advance for you to acquaint yourself with the strings attached to a deal. These include the following.

Cash Advance

The cash advance is the primary subject of interest that links small business owners and MCA lenders. The lender needs transparency into a business’s average monthly turnover before agreeing to the advance amount and the repayment plan. Also, the business owner must stipulate the required amount.

The lender can offer the requested amount or reduce it depending on the risks presented. Generally, MCAs are short-term loans, although the lender has the discretion of offering money that is less than, equivalent to, or greater than your monthly credit card turnover.

Repayment Amount

The MCA lender will need to recover the upfront advance and a profit typically known as a “factor.” Most lenders set the factor rate at 1.1 to 1.5. To figure out the estimated repayment amount, multiply it with the advanced money. Also, you should note that the transaction can attract a variety of fees that can further inflate the total repayment amount.

Because merchant cash advances are not typical loans, they have higher interest rates and lack a true APR (annual percentage rate). Depending on the advance given and the length of the repayment plan, the “APR” can fall anywhere between 80% and 200%. Often, the repayment period ranges between three and 18 months and depends on the amount of money you generate from sales.

Example of an MCA Repayment

If you apply for a $50,000 merchant cash advance, and the lender sets the factor rate at 1.4, the loan will attract a $20,000 fee. The total repayment amount will be $70,000. If the contract stipulates that the lender will deduct 10% from your credit card sales each month and your business generates $100,000 monthly, $10,000 will be deducted monthly or $333 daily.

In the above example, the APR is at 125%. However, it will reduce to 87.3% if your monthly turnover drops to $70,000, and you will start making payments of $233 daily. The majority of MCAs attract triple-digit APRs.

What Affects an MCA Factor Rate?

Lenders set their factor rates depending on a borrower’s industry, business financial stability, credit card sales history, and years of operation. The repayment fees can be higher depending on the level of risk posed and how quickly you are willing to repay the MCA.

For instance, if you apply for a merchant cash advance of $20,000, and the lender sets the factor rate at 1.5, you are obligated to repay $30,000. The lender will earn a profit of $10,000, meaning the MCA has a 50% fee.

Cash Advance

Factor Rate

Repayment Amount

Overall Fees

$20,000

1.5

$30,000

$10,000 (50%)

Note that the total repayment amount can be higher after including administrative and underwriting fees.

Holdback Rate

There are two main ways of repaying an MCA. They include:

  • Credit card sales percentage: This involves automatic deductions of a predetermined percentage of your daily debit and credit card sales
  • Fixed bank withdrawals: This option involves the lender withdrawing a fixed amount daily or weekly from your business bank account. Click here to learn how to open a bank account with EIN only.

The agreed-upon percentage that a lender will deduct from your daily or weekly debit and credit card sales is known as the holdback rate. It could range between 5% and 20% depending on the MCA repayment period you choose.

The holdback rate is responsible for MCAs lacking a true annual percentage rate. Lenders deduct varying amounts daily or weekly, depending on your sales volume. If your revenue increases, your effective APR increases. Fortunately, even if your lender deducts a higher amount of money during your heydays, the total repayment amount remains constant.

Steps for Applying for a Merchant Cash Advance

Most businesses are eligible for MCAs as long as they accept credit and debit card payments. A lack of good credit, years of operation, or high-value assets will often not exclude you from qualifying. It only takes a few minutes to apply for this alternative financing solution, and most providers offer relatively quick turnaround times. Here are five steps to applying for a merchant cash advance.

Step 1: Do Your Research

It is crucial to compare the fees and factor rates of different merchant cash advance providers. Some popular options include Lendio, Rapid Finance, CAN Capital, and Square Capital. Make sure you go through their eligibility requirements and ensure there is a reasonable likelihood of your application being approved.

Step 2: Set Up Credit Card Processing

Having your credit card processing approved is crucial to enhance your chances of receiving a merchant cash advance. Your lender will automatically deduct payments through your credit card processor.

If you are already working with a specific company, find out whether it has a working relationship with merchant cash advance lenders who interest you. It is also perfectly okay to jump straight to the next step and switch to a credit card processor accepted by your lender once your advance is approved.

Step 3: Apply for the Advance

MCA lenders typically operate online, and you can quickly obtain their application forms. You will be required to fill in basic information such as your Social Security Number, EIN (employer identification number), and type of business.

Step 4: Submit the Required Paperwork

The next step is to submit paperwork that supports your request for a cash advance. Apart from documents showing your business structure, you will also need to provide credit card processing statements and your bank account statements.

It’s relatively easy to obtain your financial statements if you have an online business checking account. Depending on the lender you choose, you also need documents that project your annual business income and the estimated income growth in the next 12 months. The idea is to be transparent about your sales and cash flow This allows a lender to evaluate the risk of lending to you.

Step 4: Get Your MCA Approved

MCA lenders differ in their style of operation. While some can have your advance approved in a few hours, others can take between 24 and 72 hours to deposit the money into your account. Often, businesses with online accounts can access their money faster. Click here to learn how to open a fee-free business banking account.

Step 5: Review the MCA Contract

Once a lender approves your merchant cash advance, you will receive a finalized financing contract. You must review all the details, including the penalties that apply if you default. Do not hesitate to ask questions if you find the contract confusing or need clarity on any information.

If everything checks out, it’s time to sign on the dotted line and receive an upfront lump sum. Your lender will deposit the advance into your small business bank account, where the agreed daily deductions will take place automatically.

What if You Want to Get Out of the MCA?

It is vital to make a calculated decision before applying for an MCA. In case you find yourself struggling to repay the debt, here are a few things you could do.

  • Consider credit unions for business banking accounts. Apply for a loan with more favorable repayment terms and pay off the merchant cash advance
  • If you don’t qualify for bad credit business loans from other lenders, negotiate with your MCA lender to settle the debt. Note: It may be imperative to work with a skilled attorney
  • As a last resort, you can file for bankruptcy. An MCA is an unsecured loan that could be erased through bankruptcy (consult with an attorney before attempting this approach)

Frequently Asked Questions (FAQs) for Merchant cash Advance

It is imperative to be an informed consumer before applying for a merchant cash advance. Here are answers to some frequently asked questions.

Final Thoughts on Merchant Cash Advance

A merchant cash advance offers an excellent short-term financing alternative ideal for small business owners. The lender provides a cash advance and sets repayment terms based on how much your business makes on average each day. The arrangement generally involves buying your future sales at discounted rates. If an MCA is your best bet, beware of the recurring fees to ensure you don’t fall into a devastating cycle of debts.

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What Is the Purpose of Operations in a Business?

7 purposes of operations in a business

Business operations is an elusive but necessary part of any organization looking to maximize productivity and profit potential. Companies that struggle to understand operational demands often miss key opportunities to succeed. This article explains how operations applies to businesses and tips for improving efficiency across the board.

What Are Operations in a Business?

7 purposes of operations in a business

An operations department exists to manage and facilitate the internal components of a business. The individual or team responsible for operations helps ensure a company has everything it needs to run smoothly from within. These requirements can vary drastically from one business to the next, but always tend to contain four things.

The Right People

Making sure your team fills their roles well is imperative for an efficient business operation. The right people will get tasks done faster and be more productive along the way. 

An Efficient Process

Building processes goes a long way toward having an efficient business model. These methods give employees a roadmap to follow when performing tasks in the workplace. Having a uniform system keeps everyone on the same page and allows teams to complete challenges with little help from management.

The Ideal Location

Having the right location is vital for accomplishing the goal of your business. Whether you’re making items or rendering a service, your team works best in an environment suited to the task at hand.

Keeping Up With Equipment

Be it computer systems or manufacturing tools, your company works best with the right equipment. These crucial elements can have a substantial impact on how your business runs.

Which Types of Companies Need Operations?

Many types of companies can benefit from operations. Here are some of the most common ones.

Retail

Retail business operations revolve around product availability and managing inventory. An efficient retail business knows the items it has on shelves and in storage at any given time. This allows teams to place products in strategic locations around the store (or website/online store) to make sought-after items easily accessible.

Having a pulse on inventory also reveals products that aren’t selling and what a retail store may want to buy less often in the future. It also helps keep fast-moving products in front of customers that generate the most revenue.

In a similar vein, having operations in retail helps track price points and how much you can charge for particular items. Prices set too high won’t sell, but anything priced too low is a loss of profit potential.

Retail businesses are just as popular online as brick-and-mortar locations, and selling in the right place makes a huge difference as well. A storefront in a busy shopping area with ample room for stock will likely have more success than a remote location off the beaten path. Selling products online also needs the proper outlet, whether an individual site or an online marketplace.

Service

Services businesses depend primarily on customer interaction. Operations teams must consider all the client touchpoints, such as in-person or via an email campaign. Effective companies find ways to make these connections as seamless as possible, involving efficient processes to communicate promotions, expedite interactions, and generate ongoing sales.

In addition, service teams rely on equipment that makes the experience better for both consumers and the organization. Having individuals that know how to use project management tools go a long way while creating an atmosphere the client feels favorable about.

As in retail establishments, operations teams work to find the best location for providing these services. While some services can be rendered online, others require a physical location that draws customers in.

Restaurant

The restaurant industry combines the best (and worst) of both service and retail. Where a clothing store can leave unwanted clothing on a back shelf for an indefinite period of time, food doesn’t last forever.

Operations must have a solid grip on foodstuffs that sell well and those that need to come off the menu. Food prices fluctuate, and operations must keep tabs on the latest costs and what to sell dishes for. It’s also beneficial to implement processes for food storage and preparation so items don’t go to waste.

On the service side, hiring the right people to fill various positions plays a major role in customer satisfaction. Not everyone can cook a filet mignon perfectly medium-well, and approachable wait staff have a better chance of leaving diners with full stomachs and happy hearts. 

A restaurant’s location is paramount to success. Heavily trafficked zones bring in more patrons, and ample space means more seating and shorter wait times.

Manufacturing

The concept of operations began out of a desire for more efficient manufacturing processes. Businesses needing parts to assemble finished goods needed stable processes and organized purchasing systems.

In many cases, several parts come together in one location with the goal of building a quality finished product to sell to consumers. Teams need to carefully track each of these components to ensure nothing is missing and costs aren’t out of hand.

A well-established process for assembly spells more output per day and high profits down the road. An inefficient operation leads to mistakes and slower turnaround times. In most cases, manufacturing occurs in large facilities that must be accessible to receiving lanes to prevent part delays.

Small businesses can also fall under this umbrella if they put together a product to sell. The same guidelines help an in-home business succeed, albeit on a smaller scale.

Technology

Technology is a very skill-specific category where hiring the right people can make all the difference. Operations teams must have a deep understanding of job requirements to bring in staff to handle the scope of projects. Having a training process in place helps new employees get started on the right foot while maximizing chances for success.

Using common hardware and software across teams makes collaborative efforts that much easier across the board. For clients, seeing the same faces and results each time only adds to overall satisfaction.

The Role of Business Operations

Business operations is rarely a solitary position, except in the smallest of companies. Consider whether your organization could benefit from plugging people into any of the following roles:

Forecasting

A forecasting team looks forever to the future, predicting pitfalls that may cause the organization to stumble. Hindsight may be 20/20, but catching issues before they happen keeps a business running like a well-oiled machine.

Knowledge of past events and shortcomings with careful documentation can prevent repeat mistakes the next time around. It similarly helps with creating timelines and budget plans while anticipating expenses, profit, and loss.

Finance

A financial operations manager (or team) oversees the flow of money through an organization. This individual ensures spending doesn’t get out of hand while keeping the company supplied with necessary resources.

This role also plays a part in finding ways to generate new funds as needed for a business to grow. It can also limit employee spending and allocate funds to the right buckets.

Product Design

Product designers use their skills to discover customer needs in a specific market. This group then sets out to create goods to meet that need at a price consumers are willing to pay. Even if a product is not new, product designers can innovate existing items to pinpoint what a customer is looking for.

Quality Control

Quality control teams set guidelines in place to catch potential issues during design and manufacturing processes. Products going out the door with defects reflect poorly on a company and can lead to loss of customers and revenue.

Error-checking begins during the design process and sees a project through to completion. Along the way, quality teams periodically check for flaws and misassembled goods. Consistency also builds toward smoother flow and more finished items heading to stores.

Strategy

Operations strategy involves creating and executing plans that help companies grow. Since businesses don’t have an unlimited source of funds, strategy teams work to determine where resources should go to maximize their chances of success. Strategies may also look to improve product costs or find ways to eliminate budget constraints.

Supply Chain Management

Supplies often constitute the lifeblood of a retail or manufacturing company. Without inventory or components, it’s not possible to generate income or sustain a business model.

Those working in supply chain operations keep products flowing into (and out of) a business. They anticipate and work around shortages while predicting how supply and demand will affect costs and availability in the coming months. The group should also be the first to identify items that aren’t profitable and how to move away from them altogether.

Human Resources

Human resources teams are responsible for putting people in the right positions throughout a company. Doing so keeps people happy and productive while adding to the efficiency of the business as a whole. Interested in hiring the right people for the right positions, then check out our 8-step guide on how to interview someone.

What Does a Director of Operations or Chief Operating Officer (COO) Do?

These two roles are usually synonymous and represent an individual in an executive position. The position comes with the responsibility of overseeing daily operations with a wide lens, ensuring all departments work together as efficiently as possible. Typically, operations analysts from these different groups report directly to the COO.

COOs are often the second-highest rank in any organization, just under the CEO. They handle the internal affairs that keep a company running, executing plans and strategies to accomplish this goal. With such a critical role, a director of operations salary ranges around the $180,000 mark.

Ways to Improve Operations in Your Business

Business operations are fluid in nature, as customer demands change over time. Below are a few methods for improving operations, no matter what size your organization may be.

Measure Performance

To understand how to grow as a company, you must first learn where you stand. Measuring performance requires taking careful stock of budgets, plans, timelines, and processes that make your business work. From there, it’s a matter of uncovering what’s not efficient and improving upon it.

Streamline Processes

Without a good operations strategy in place, processes can be clunky and inefficient. With performance metrics in place, you can zero in on areas of improvement and streamline them. Following this information over time reveals what makes systems work well.

Follow the Latest Trends

An operations analyst should stay on the pulse of the market, making note of ways to improve overall efficiency. Trends could come in the form of new laws or an innovation taking the sector by storm.

Customers change their minds often, so staying apprised of social media chatter or new interests can help your business catch a client’s eye. Don’t be afraid to peek at what the competition is doing well that you can glean from.

Invest in Your People

No matter how many employees you have, investing in your people helps build morale and create a more efficient work environment. Team building events allow individuals and cross-platform teams to work together and accomplish common goals, which they can take back to the task at hand. Check-ins with employees and rewards for jobs well-done speak to the operation of the business as a whole.

Try New Software

Adding new management software or changing up existing programs can provide new insights or the means to streamline processes you couldn’t before. With these services, you can have on-hand sales data, project tracking, inventory management, and more. Best of all, you can store all this information in a single online location.

Frequently Asked Questions (FAQs) for Operations in Business

Operations in business is a bit of a gray area that looks different from company to company. These questions address some of the biggest questions surrounding the concept.

Bottom Line on Operations in Business

Operations are crucial for any business looking to thrive in an ever-evolving marketplace. Developing streamlined processes and hiring the right people can catapult your company ahead of the competition. No matter your size, having operations in place can spell the difference between success and failure.

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Pros & Cons of Cryptocurrency: Should Small Businesses Invest?

Person studying cryptocurrencies chart

With more than one-third of U.S. small businesses accepting virtual payments, cryptocurrency is gradually making its way to the mainstream. But when we evaluate the pros and cons of cryptocurrency, we realize that the crypto market isn’t as stable as traditional financial markets. 

The 2022 crypto crash is the most recent example of how unpredictable the virtual currency market is. However, despite the volatility, crypto is still a highly attractive investment avenue for small businesses. Even public companies including Tesla and MicroStrategy, both Fortune 500 companies, have invested billions in Bitcoin and other fast-growing cryptocurrencies. 

So while cryptocurrency is all the hype nowadays, should you dip your toes in the water too?

What are the Pros & Cons of Cryptocurrency?

Is cryptocurrency a good investment for your small business? Should you start accepting virtual payments? These questions can only be answered when you weigh the pros and cons of crypto against each other and analyze their implications on your unique SMB. The table below gives an overview. Continue reading for an in-depth analysis of crypto investments.

Pros

Cons

  • Inherently secure technology
  • Decentralized 
  • Can be traded 24/7
  • Works globally
  • Offers high accessibility and liquidity
  • Highly transparent
  • High return potential
  • Inflation-resistant asset
  • Helps diversify portfolio
  • Highly volatile market
  • Unregulated
  • Transactions are irreversible
  • Not widely accepted
  • Commonly used for criminal purposes
  • Complex to understand 
  • Vulnerable to cyberattacks

Pros of Investing in Cryptocurrency

Investing in crypto brings a host of advantages. These include everything from highly secure transactions to trading markets that operate round the clock. Let’s take a look at each of these pros and discover them in detail. 

Inherently Secure Technology

Cryptocurrency is an application of blockchain technology, which is based on the principles of security and transparency. A blockchain is a decentralized record of transactions that shares each transaction with every computer present on its network. Every piece of information or transaction is shared across the blockchain, making it a highly secure and reliable store of data. 

You can only make a transaction on the blockchain with your unique private encryption key. Once you make a transaction, it can never be erased from the blockchain. Unlike fiat money, you can’t create a counterfeit cryptocurrency. This decentralized security mechanism makes crypto a good store of value. 

Decentralized

The traditional financial system, including stocks, bonds, and currency markets, involves each transaction going through a central regulatory body. This means you have to trust a bank or financial institution when carrying out every transaction. This also means you don’t have full control over your assets.

The crypto market is decentralized in nature. There are no third parties or intermediaries involved and you are free to carry out transactions peer-to-peer. As a result, you have greater control over your assets and don’t have to pay payment processing fees.  

Can be Traded 24/7

Cryptocurrency is not bound by the limits of time and space. Apart from being accepted internationally, and maybe even on different planets, cryptocurrency can be traded 24/7. While conventional financial markets follow conventional working hours, crypto markets operate at all times. So if you want to trade capital assets after office, trade crypto. 

Works Globally

As mentioned in the section above, crypto isn’t bound by the limits of space. In other words, it works across borders and is a great solution for multinational businesses. Using virtual currency, you can transfer handsome amounts of crypto to another corner of the globe without having to worry about heavy international transaction fees and exchange rates.

Bitcoin or any other cryptocurrency does not belong to a single country or government. Nor are crypto transactions overseen by any country’s central bank. This makes it a much better international payment method.

Offers High Accessibility and Liquidity

Anyone can enter the crypto market with any amount of money. As far as accessibility goes, you can invest in cryptocurrency anywhere as long as you have an internet connection. There are plenty of crypto exchanges out there for you to use. 

When it comes to liquidity, the crypto market does offer a fair amount of freedom, especially because they’re tradable 24/7. However, it depends on the token you chose to trade. For instance, Bitcoin and Ethereum are two of the most liquid digital assets out there. Smaller cryptocurrencies can be less liquid. 

Highly Transparent

The increasing distrust in banks and other financial institutions is one of the reasons why more investors are turning towards the digital currency market. Crypto offers more transparency, as well as user anonymity than any other investment.

Crypto investors can be identified with public keys. Every user has a unique public key one can be use to identify every transaction on the blockchain. This means although their real names aren’t shared, transactions can still be tracked for transparency. 

All the transactions are permanently viewable on the blockchain. This not only gives you greater transparency but all data is also safe from breaches and fraud due to secure blockchain technology. 

High Return Potential

Crypto can turn people into overnight millionaires. There’s no doubt about that. But there’s also a high risk associated with it. 

The market is very volatile and can make huge upward movements in very short periods of time. For example, Bitcoin was priced at a mere $975 in March 2017. It only took a few months for it  to increase to $20,089 in December of the same year. And from 2018, it rose to an all-time high price of $67,500 per Bitcoin in August 2021. 

Don’t forget that the same digital currency crashed down to $30,000 in May 2022. So while there is potential for high returns, there’s potential for big losses too. But smart investing and technical analysis of each digital asset allows you to capitalize on the high returns while staying safe from losses.

Inflation-Resistant Asset

Cryptocurrencies do not belong to a single country’s economy or currency. Instead, they are a global store of value that helps investors deal with national inflation. Plus, national inflation is fuelled when central banks decide to print more currency. This is not a problem with virtual currencies because they have caps on the total supply of each currency. In fact, most cryptocurrencies are deflationary, which means they either reduce or limit their supply over time.

Some cryptos have absolute caps and some have yearly caps on how many units of a virtual currency can be coined. This helps make crypto a great inflationary hedge that small and large investors alike can invest in. 

Helps Diversify Portfolio

If you already have invested in conventional capital assets like stocks, bonds, and fiat money, investing in crypto can be good for portfolio diversification. The market is rapidly growing and a  lot of quality assets are emerging with unique use cases. Small businesses should invest not only because of diversification but to attract new customers who prefer virtual payment systems. 

Cons of Investing in Cryptocurrency

We’ve seen plenty of overnight billionaire cases in the crypto world. But what we don’t realize is that more than half of cryptocurrency investors end up making a loss. This suggests that there are definitely more cons to investing in cryptocurrency than there are pros. 

But that’s not the most accurate conclusion. In reality, most crypto investors end up underwater because they invest following a hype without technical analysis. Let’s look at the cons of investing in crypto to get a clearer picture. 

Highly Volatile Market

The volatility increases the potential to make huge profits but can also lead to huge losses overnight. Most virtual currencies including BTC have a cap on the maximum number of units that can exist ever. For Bitcoin, that limit is 21 million BTC. This gives it the attribute of absolute scarcity, which also means the only force driving BTC’s value is its demand. 

With no supply force to balance out the changes in demand, most cryptocurrencies are extremely volatile. Plus, rumors and economic and geopolitical events have a profound effect on crypto markets. It’s only advisable to invest if you have a sharp eye out for global economic events and can act quickly to mitigate potential losses.

Unregulated

Decentralization has its pros and cons. When it comes to the cons, the fact that cryptocurrency is not regulated by any government means investors are not protected by the law in case they fall victim to fraud. 

Moreover, several countries including Qatar, China, Russia, and Bangladesh have placed bans on crypto. You can lose access to your investments if your country decides to ban crypto too.

Transactions are Irreversible

Crypto transactions are irreversible and final. This means if you send funds to the wrong crypto wallet, there’s no way to recover them unless the receiver agrees to send them back. 

You can also permanently lose access to your cryptocurrency if you lose your private access key. There’s a very low chance to recover your crypto assets if you lose them by error, or if someone steals them. 

Not Widely Accepted

Bitcoin, the world’s first cryptocurrency, was introduced in 2009 but it’s still a relatively new form of payment. It’s no wonder that it isn’t accepted as widely as cash or debit cards. 

Cities like Miami, Florida, and Amsterdam in the Netherlands have a considerable number of BTC ATMs and vendors that accept crypto payments. But the overall transition toward a virtual payment system is moving sluggishly. Ultimately, you will have to convert your crypto back to fiat money to make most purchases whether you’re buying for yourself or your business. 

Commonly Used for Criminal Purposes

The anonymous nature of crypto transactions makes it virtually impossible to trace them back to a real person. This is why black-hat hackers, scammers, and other criminals use crypto to receive ransom payments. 

Scams are also rife in the crypto world with dozens of phony projects offering huge returns for making a small investment. You should to move with extreme caution and always double-check online reviews before making an investment decision.

Complex to Understand

It makes financial sense to understand a capital asset and how it works before you invest in it. Not to say that fiat money and stocks are easy concepts to get your head around, but cryptocurrency has a touch of technological complexity that makes it hard to understand. This is especially true for many conventional investors.

Vulnerable to Cyberattacks

Blockchain technology is secure, but not entirely. You still need to take adequate measures to keep your digital assets safe including keeping your private key safe and storing your assets in a crypto wallet. 

Your virtual currency holdings are vulnerable if you leave them on a crypto exchange or if you lose your private key. Cybercriminals can also target you with phishing or malware attacks in the absence of adequate cybersecurity. 

Should Small Businesses Invest in Cryptocurrency? 

Good financial health helps businesses survive tough times. You should always consider whether you have the financial freedom to invest in an asset before you commit funds to it. 

Cryptocurrency is no doubt a good investment avenue, but only after you’ve analyzed the market and your business’s position. Whether it’s a good decision to invest in cryptocurrency depends on several factors including your financial situation, the type of industry you’re in, your location, and your target market.

Consider Your Financial Health

When done after a thorough technical and risk management analysis, your investment in Bitcoin or any other digital currency is likely to be profitable. But like any other asset, there is always a chance to go underwater. Follow the golden investment rule to only invest the money you can afford to lose. If you feel your business won’t be able to survive if you lose a particular amount of money, it’s better to not invest.

Consider Your Industry

It makes sense to see if your business can benefit from a crypto investment according to the industry you’re in. For example, it makes more sense for an ecommerce company to invest in crypto than it does for a barbershop. Evaluating the benefits of crypto industry-wise will facilitate your decision. 

Location

We can say that crypto is global and decentralized, but that is just theoretical. When it comes to the ground reality, it’s evident that some countries and cities are far ahead in adopting virtual currencies. For instance, a business in San Francisco or Miami would benefit more from adopting crypto because the cities are two of the most popular crypto hubs.  

Target Market

Small businesses that want to target the younger or more tech-savvy customer demographic can attract new customers by investing in crypto. 

Benefits of Accepting Payments in Crypto

If your small business invests in cryptocurrency, you should also consider accepting payments in it. There are quite a few benefits that can help your business grow if you start accepting virtual payments for your goods or services.

  • Fast transactions: Quicker transactions lead to a better customer experience. This can especially help if you have to deal with international bank transfers. With cryptocurrency payments you can complete cross-border transactions in minutes instead of days.
  • Lower transaction fees: Since there are no intermediaries involved, crypto transaction fees are much lower than other forms of payment. If you accept credit card payments, you incur fees of almost 25 cents with each swipe plus a 2-4% charge on the total amount. Accepting virtual currency can take this down to less than 1% per transaction.
  • Merchant protection: All transactions are irreversible and this is advantageous from a business standpoint. The decentralized nature of crypto protects businesses from fraudulent chargebacks. 
  • Increased sales: Accepting crypto helps SMBs to expand their reach to a much bigger customer demographic. A business can target international customers who couldn’t purchase their offerings previously due to international payment constraints. This will also attract younger, more tech-savvy customers to your business. 
  • Convenience for customers: You can offer your customers additional payment methods by accepting cryptocurrency. This not only provides an extra layer of security but also adds to your overall customer lifetime value.

Frequently Asked Questions (FAQs) for Pros & Cons of Cryptocurrency

If you’re going to invest, you likely have a lot of questions in your mind. Here are some of the most common questions people ask when it comes to the pros and cons of investing in cryptocurrency. 

Bottom Line on Pros & Cons of Cryptocurrency

Generally, there’s a lot that cryptocurrency can help small businesses with. This includes improving customer experience, increasing sales, and expanding your reach. But it also has plenty of drawbacks, the most glaring of which are market volatility and lack of regulation. Ultimately, the better decision for your business depends on how crypto can help your business grow and whether you will be able to deal with the associated challenges.

Disclaimer: The content of this post is not investment advice and does not constitute an offer or solicitation to offer or recommendation of any investment product. It is for educational purposes only and does not take into account your individual needs, investment objectives, and specific financial circumstances.

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The Ultimate Guide to VPNs: What Does a VPN Protect You From?

What a VPN is illustration concept

According to recent reports, 43% of all data breaches target small businesses. Roughly 61% of all small to medium-sized businesses have been affected by at least one cyber-attack in one year. These stats help you understand how vulnerable small businesses are to cybersecurity threats. But what can you do to make sure your business stays safe from these threats?

Using a VPN is one of the most effective ways to protect your business against cyber-attacks and data breaches. A VPN (Virtual Private Network) is a handy piece of software that allows you to protect your data and surf the internet safely. Continue reading this in-depth guide to understand what is a VPN, how it works, and what it protects you from.

What is a VPN?

When it comes to internet security, VPNs have become an essential tool today. But what is a VPN? As the name suggests, a VPN or Virtual Private Network is a network of servers located at different locations. A contemporary VPN service consists of a server network and a VPN client, the software that enables you to connect to one of these private servers. 

Virtual Private Network technology creates an encrypted tunnel between you and the internet. It hides your online activity and digital identity to help you stay safe on the internet. When you connect to a VPN, it reroutes the traffic flowing to and from your device via this encrypted tunnel. This way, no outsider can track your identity, location, or online activity. 

Logos of ExpressVPN, CyberGhost VPN, NordVPN, and Surfshark - Ultimate Guide to VPNs

There are dozens, if not hundreds, of VPN services on the market today. ExpressVPN, CyberGhost VPN, NordVPN, and Surfshark are some of the most secure VPNs available. Before we get to why and how to use a VPN and how to choose one for your business, you must first understand how this technology works. 

How Does a VPN Work?

As mentioned above, a VPN helps you hide your online activity and surf the internet anonymously. It does this in two primary ways: by masking your IP address and encrypting your internet traffic. 

Let’s see what happens when you activate a VPN connection on your mobile device or computer. As soon as you’re connected, the VPN client sets up an encrypted tunnel between your device and the VPN server. As shown in the graphic below, your internet traffic is encrypted as soon as it leaves your device and stays that way until it reaches the server. 

How a VPN works - Visual representation of how a VPN hides your traffic

When you’re connected to the internet without VPN protection, your ISP (internet service provider), government, cybercriminals, or any other outsider can intercept your traffic. They can see what you’re doing on the internet at all times since your traffic is not encrypted and can be easily traced back to you.

But when you’re using a VPN, no one can intercept your traffic as it’s secured with a strong encryption key. Even though the encrypted data tunnel flows through your ISP, it can’t see what you’re doing online. 

Your traffic is only decrypted once it reaches the VPN server, and proceeds to the website you want to visit. This means even the website you’re visiting can’t tell who you are or where you’re located. All it knows is that the traffic is originating from the VPN server and there’s no way to trace it back to you.

How Does a VPN Hide Your Location & Digital Identity?

Your IP, or Internet Protocol, address is a unique string of numbers assigned to your device. This number allows websites, government agencies, your ISP (internet service provider), and any other outsider to identify you and find out your exact location. 

When you connect to a VPN, it masks your real IP address with its server’s IP, making you appear as if you’re using the internet from the server’s location. Not only does this help you hide your location, but it also hides your identity from spying eyes. 

How Does a VPN Hide Your Online Activity?

A Virtual Private Network service secures your online traffic with end-to-end encryption. It encodes the data with the help of an encryption key before it can travel over the internet. Some of the best VPNs on the market use AES 256-bit and XChaCha20, two of the strongest encryption algorithms in the world.

These encryption algorithms make it virtually impossible for an outsider to see what you’re doing on the internet. Whether it be your ISP, government agencies, or a cybercriminal, no one can bypass the encryption and intercept your traffic.

Your data can only be decrypted by you and the VPN server. This is because only you have access to your unique encryption key every time you activate the VPN connection. 

Why Do Small Businesses Need a VPN?

Why does your business need a VPN? Once you’ve understood what a VPN is and how it works, knowing why you need to use one is the next most important thing. 

As mentioned at the beginning of this VPN guide, a significant chunk of cyber-attacks targets small businesses. This means it’s not just financial institutions and top tech companies that cybercriminals have their eyes on. It’s SMBs too, and the impact of cybercrime on small businesses is much more pronounced than most people think.

As a matter of fact, small businesses are a much easier target as they often don’t take ample security measures. Using a VPN helps protect businesses from online threats, especially those with a hybrid work or remote work setup. Here’s a list of reasons why small businesses need a VPN:

  1. Safe remote access: Employees working remotely need a VPN to access office networks and company resources without compromising their security. If you access your company’s internal network without a VPN, any outsider can easily access the network and steal sensitive information.
  1. Easy access to geo-restricted content: Professionals often need to access websites and resources that are not always available in their region. A VPN allows you to change your IP address to the location where the content is available so you can access it with ease.
  1. Protect employees’ privacy: ISPs, government agencies, and marketing companies are always tracking users’ online activity. This is a serious breach of privacy. Using a VPN lets you protect your privacy as no outsider can track your traffic when it’s encrypted. 
  1. Use open networks safely: If you run a restaurant or any business that provides customers with free WiFi, you need to take precautionary measures to protect your own devices. Open WiFi networks are dangerous because anyone can enter the network, bypass its security and gain access to other devices on the network. A VPN ensures your device stays safe even if you’re using a public network.

What Does a VPN Protect You From?

You now have a clear overview of why small businesses must use VPNs. But what exactly are the cybersecurity threats that a VPN protects you from? 

A VPN protects you from anything that involves using your data without your consent. This includes company and personal data breaches, identity theft, and malware attacks.

  • Data breaches: A data breach occurs when an unauthorized individual gains access to sensitive data that either belongs to a business or an individual. This information can either be stolen or used to sabotage your business’ image in many ways. A VPN helps prevent data breaches as it hides your employees’ internet activity. This means no one can intercept your company’s data whether employees are working on-site or from home. 
  • Identity theft: A VPN helps protect your data. Cybercriminals cannot intercept your traffic and gain access to your personal information when you have VPN protection. This reduces the risk of you and your employees falling victim to identity theft.
  • Malware attacks: If your business uses an open Wi-Fi network, a cybercriminal can easily install malware on your network. This malicious software can breach your privacy, and inflict damage to your business in many different ways. Using a VPN you can rest assured that no one can bypass your internet security even if you’re on an open network.

How to Choose the Right VPN?

Using a VPN is indeed a must in today’s business environment. But with dozens of VPN service providers on the market, how do you choose the right one for your business? This section will specifically talk about the factors you should consider when selecting a VPN service provider. We will also briefly mention some of the best VPNs for PC and mobile to narrow down your search. 

A VPN impacts almost all aspects of your online experience so there are quite a few things that you need to consider. Here are the most important.

Pricing

While there are 100% free VPNs out there, there’s no such thing as a free lunch. With a free VPN, you won’t get the same quality of service as a paid one. That said, there’s still variation in the prices when it comes to paid Virtual Private Network service providers. As a business owner, you always want the most cost-effective solution so pricing plays an important role. 

Bandwidth Caps

A lot of VPNs place bandwidth caps on their plans. This means you can only use a limited amount of data while connected to the VPN. This can be a huge problem, especially when your work involves downloading heavy files. 

Also, running out of bandwidth is the last thing you want when you’re nearing a deadline. We recommend VPNs that offer unlimited bandwidth so you don’t have to keep an eye on internet usage. 

Internet Speed

Using a VPN does slow down your internet connection, and it’s not a myth. But to what extent? If you go for a high-quality service provider, you won’t notice a drop in speeds. But your connection can significantly slow down if you go for a low-quality VPN. In some cases, a VPN can help speed up your connection by bypassing ISP throttling.

Data Security

Data security refers to the strength of encryption a VPN uses to protect your data. We recommend you use a VPN with AES 256-bit encryption to ensure the highest level of data security possible. 

Server Network

How many servers does a VPN have and in how many countries? The server network matters a lot as it directly impacts the availability of IP addresses from different countries. Moreover, VPNs with limited server networks are not a good choice because their servers are often overcrowded resulting in low connection speeds. The leading service provider, CyberGhost VPN has almost 8000 servers across 91 countries. These figures beat most other service providers when it comes to the server network. 

Number of Users/Devices

How many devices or users are allowed to use the VPN server per subscription? Some VPNs only allow one device or user at a time. However, there also are services that let you connect up to seven or 10 devices simultaneously. We recommend VPNs that let you connect more devices per subscription as they are a better choice for teams with more than a few people. 

VPN Features to Look for

The section above talks about the basic factors that need to be taken into account when picking a service provider. However, that is not all. You also need to keep an eye out for additional privacy, security, and performance features that can considerably impact users’ online experience. 

No Logs Policy

A No Logs policy dictates that a VPN does not track any data on you whatsoever. This means that no matter what you do online, no one can see your activity, not even the VPN itself. Some of the top VPNs including NordVPN, CyberGhost VPN, and Surfshark follow a strict No Logs policy. 

We recommend you use a VPN that has a no logs or zero logs policy to make sure your data is private. If a VPN keeps logs on you, more often than not they do it to sell your data to third parties.

Headquarter Location

The country a VPN provider is based in matters a lot to your privacy. Some countries mandate that VPNs must store users’ data and share it when requested by government agencies. On the other hand, some countries have good privacy laws that allow VPNs to protect your privacy and follow No Logs policies. 

Countries including Switzerland, Iceland, Sweden, Romania, Panama, and Malaysia have supportive privacy laws. We recommend that you use a VPN headquartered in one of these countries. 

Dedicated IP Addresses

When you use a VPN, you are assigned the IP address of the server you connect to. This is a shared IP address that all users on the server are using. Shared IPs can sometimes have a bad neighbor effect which means another user on the same server misusing the IP address can have a negative impact on your internet experience. 

You can solve this problem by using a dedicated IP service. This is a unique IP address supplied by the VPN service that only you can use.

Kill Switch

The Kill Switch is an important precautionary feature that instantly cuts off your internet connection if the VPN protection drops for some reason. This way, it prevents data leakages and your data from falling into the wrong hands. All quality VPNs have a Kill Switch feature. 

What are VPN Protocols?

If you want to understand Virtual Private Networks, then understanding the protocols they use is of key importance. A VPN protocol is a combination of encryption and transmission protocols. In other words, it’s a set of rules that dictate how your data is encrypted and travels over the internet. Four of the most popular VPN protocols are OpenVPN, WireGuard®, IKEv2, and L2TP. 

OpenVPN is the most popular VPN protocol for its strong security and versatility. It’s an open-source technology which means it’s being constantly upgraded to face new cybersecurity challenges. WireGuard® and IKEv2 are best if you need a VPN for mobile. These are light and fast VPN protocols that offer strong security without overloading your device. 

Pros and Cons of Using a VPN

Yes, using a VPN keeps your data safe. But it has its drawbacks too. Take a look at the table below to get an overview of the pros and cons of using a VPN. 

Pros

Cons

  • Allows you to surf the internet anonymously
  • Hides your internet activity from outsiders
  • Keeps you safe from cybercriminals 
  • Allows you to access geo-restricted content
  • Allows you to bypass ISP throttling
  • Slows down your internet connection
  • Low-quality VPNs may sell your data
  • Bad neighbor effect with shared IP addresses
  • Quality VPNs charge money

Frequently Asked Questions (FAQs) for What Is a VPN

Here are some of the most frequently asked questions about VPNs and how they work. Skim through this section to find answers to any questions you still have.

So What Does a VPN Protect You From?

Virtual Private Networks, or VPNs, are a useful technology that allows you and your employees to protect their internet traffic and digital identity. This means your personal and business data stays hidden from spying eyes. We recommend using a quality VPN service that offers advanced privacy and performance features including a no logs policy, a vast server network, and fast VPN protocols. 

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The Ultimate Guide to State Corporate Tax Rate

Businessman calculating state corporate tax rate

Corporations are responsible for a bevy of taxes on the state level across different mediums. Above that, each state sets its own rates for corporate entities to contend with. State corporate tax rate varies depending on which state from which you operate your business.

Corporate State Tax Rates Explained

Corporations are a type of business that stands separate from its owners. Owners are shareholders that drive the direction of the business, but are not held personally responsible for the corporation’s debts. The corporation itself is a legal entity that can own assets, bring employees on board, and pay taxes.

Every business has to pay taxes, though. And if you have employees, you’ll need to learn how to calculate payroll taxes. These are in addition to state corporate taxes, though.

Corporate State Income Tax Rates

If you have (or plan to have) a corporation in one of the 50 states, be prepared to pay money back to the state based on how much you make. The government imposes taxes on a corporation’s profits, including most income. As a corporation, you can first deduct expenses for things like development, research, and marketing.

Each state sets its own tax rates a corporation must pay on a yearly rate. Several states have a flat income tax rate, remaining the same no matter what your corporation’s income bracket is. Those remaining have a fee schedule that grows depending on the amount of profit your company brings in.

State Corporate Tax Rate

State Gross Receipts Tax

Some states choose to charge a gross receipts tax either in place of or in addition to a corporate income tax. As the name implies, the government applies the gross receipts tax to a corporation’s gross sales, before any deductions have been made.

Nevada, Ohio, Texas, and Washington do not have state income tax rates but do have a gross receipts tax. Delaware, Oregon, and Tennessee levy both types of taxes on corporation owners.

State

State Gross Receipts Tax Rate

Delaware

0.09% – .75%

Nevada

0.05% – 0.3%

Ohio

0.26% on sales over $1 million

Oregon

0.57% on sales over $1 million

Tennessee

0.02% – 0.3%

Texas

0.58% – 2%

Washington

0.48%

Corporate State Unemployment Tax Rates

Alongside income taxes, corporations are responsible for unemployment pay as part of the State Unemployment Tax Act (SUTA). The state government calculates these rates based on your account balance and average taxable payroll over a certain period. Each state has a minimum and maximum range the rate must fall into.

Corporate State Unemployment Tax Rates

The Best States to Start a Business in for Tax Purposes

Because tax rates vary from state to state, there are benefits to incorporating in certain ones over the other. If you have any flexibility with where to start your corporation, consider the following states:

Wyoming

Wyoming doesn’t require a penny for state corporate taxes or any income on the individual level. Sales tax is only 4%, one of the lowest in the nation. It ranks number one even though unemployment insurance and property taxes can be on the higher side.

South Dakota

South Dakota follows in Wyoming’s footsteps as one of the few states without income taxes for individuals or corporations. It doesn’t fare as well with sales tax or rates for unemployment insurance.

Alaska

Alaska may seem like a strange choice with a significant corporate income tax rate, but the state makes up for it with zero individual income taxes and no sales tax. Property taxes are also lower than most for setting up corporate offices.

Florida

Florida’s corporate income tax is lower than most, and the state doesn’t collect any individual income taxes from business owners. Furthermore, sales and unemployment taxes are some of the lowest in the country. Florida also makes the list of one of the best states to buy investment property.

Montana

Montana has middling corporate and individual income tax rates. However, the state sits well with sales, property, and unemployment taxes, making it an enticing choice to set up shop.

Recent State Corporate Income Tax Rate Changes

Tax rates don’t always stay the same. Check out the rate changes that have already taken place this year:

  • Arkansas: Lowered its tax rate from 6.2% to 5.9%
  • Florida: Raised its tax rate from 3.35% to 5.5%
  • Louisiana: The state’s top tax rate dropped from 8% to 7.5%
  • Nebraska: Lowered its top tax rate from 7.81% to 7.5%
  • New York: Added a second tax bracket at 7.25%
  • Oklahoma: Reduced its tax rate from 6% to 4%

Federal and Local Tax Rates

Corporate taxes don’t start and end at the state level. The Tax Cuts and Jobs Act of 2017 set the current federal corporate tax rate at a flat 21%, where it remains today.

Local taxes may pop up in certain locations around a state, especially in larger cities. Corporations headquartered where local taxes abound will have to pay those fees as well.

Frequently Asked Questions (FAQs) for State Corporate Tax Rate

Trying to understand how state corporate tax rates can be overwhelming. This FAQ answers some of the most common questions surrounding them.

Bottom Line on State Corporate Tax Rates

Corporations can’t avoid having to pay taxes to the government on the federal level, but the state level isn’t so black and white. There are several tax factors to consider when choosing a location to incorporate, such as income and employment. With planning and research, a corporation can lessen the blow each year by setting up shop in a state with little to no corporate taxes.

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The Ultimate Guide to Income Tax by State

Different tax (and income tax by state) concepts

It’s your responsibility to pay income tax by state if you earn a salary as an employee or profits through your own business. However, it can be challenging to compute your total state income tax because each state in the U.S. has its own taxation guidelines.

No matter which state you live in, read our ultimate guide to discover the tax rate ranges and brackets for 2022. Learn the basics of state income tax so you can pay the right employment or business taxes to your state government.

What Are the State Income Tax Requirements?

Every state in the U.S. has different requirements when it comes to state income tax. Study the chart below to find out the 2022 tax rate ranges and income brackets for individual taxpayers.

State Individual Income Tax Rates & Brackets 2022

While these are the general tax rates and income brackets per state, other computation aspects also affect the total amount of your state income tax. These factors include personal exemptions, standard deductions, and federal income tax deductibles. Keep these elements in mind as you compute state income tax.

What the Difference Is Between Federal Tax and State Tax

Both federal and state taxes are legitimate types of taxation in the U.S, but there are crucial distinctions between the two. Check out the table below for an overview of the differences between federal and state taxes:

Federal Tax vs. State Tax

Government Type

Tax System

Tax Rates

Federal Tax

Paid to federal government

Progressive tax system

10% – 37%

State Tax

Remitted to state government

Graduated or flat rate system, depending on state

0% – 12.3%

The main difference between federal and state taxes is the type of government which requires them. Federal income tax is imposed by the federal government, while state income tax is levied by state governments.

Another dissimilarity between them is that federal taxes generally involve a progressive tax system, where higher tax rates are required for higher income brackets. In contrast, state taxes can have either graduated rates or flat rates, depending on the specific regulations of each state.

Last but not least, federal tax rates are usually higher compared to state tax rates. On one hand, federal tax rates typically range from 10% to 37%. On the other hand, state tax rates can be as little as 0% or as much as 12.3%.

What Else You Need to Know About Income Tax by State

Gaining foundational knowledge on income tax will make it easier for you to make tax filing preparations. Find out more vital information about income tax and state income tax to familiarize yourself with these matters.

What Is Income Tax?

Income tax is a form of taxation that is paid by individuals, for-profit businesses, and corporations who earn income in the U.S. The tax amount is calculated by applying a tax rate to the income amount of each taxpayer. Plus, the taxes must be filed and paid every year before the April 15 deadline arrives.

Together with your payment, you must also submit tax forms and other federal, state, and local tax requirements by the Internal Revenue Service (IRS). State income tax is one of the major types of income taxes in the country.

What Are the Basic Approaches to State Income Tax?

Different states have various approaches when it comes to imposing state income tax on resident and nonresident workers. First, most states utilize a progressive tax approach, which means that the higher taxpayers earn, the higher the tax amount that they’re required to pay. Next, some states use the flat rate system, where the same rate applies to all income amounts. Finally, certain states don’t require residents and workers to pay any income tax at all.

What Are the Marginal Rates for Tax Year 2022?

There are different marginal rates for the tax year 2022 in terms of federal tax and state tax. Based on IRS tax inflation adjustments for 2022, the highest federal tax rate is 37% for individual single taxpayers who earn more than $539,900 each year. In contrast, the lowest tax rate is 10% for single individual taxpayers with an annual income of $10,275 or less. 

For state income taxes, the highest rate is 12.3% for individual single taxpayers who earn approximately $625,369 every year. On the other end of the spectrum, the lowest tax rate is 0% for single individual taxpayers with $25,000 and below annual income.

How Can I Compute State Income Tax?

There are different methods you can use to calculate the total amount of your state and federal income taxes:

Manual Computation

You can manually compute your taxes using a calculator or spreadsheet program. Just multiply your income by the tax rates, then subtract the personal exemptions, standard deductions, and federal income tax deductibles. Just be aware that tax computation can be a complex process, which is why it’s a good idea for you to read how to payroll calculation guides and similar instructional articles to reduce the risk of calculation errors.

IRS Free File

The IRS provides a free online tool called IRS Free File for taxpayers like you. It simplifies the way that you prepare and file your federal tax income through guided tax preparation at the IRS partner site, as well as free fillable forms. Take note that this solution is only available for federal tax planning so you have to find another alternative for state tax computation.

Tax Software

You have the option of using tax software to streamline the way that you calculate your taxes and fill up tax forms. There are free and paid tax programs that you can choose from, according to your tax needs and budget. You can go for basic software if you are an individual taxpayer, but you can go for more advanced solutions if you have corporate requirements.

Tax Professional Services

If you can afford it, you can hire a tax professional or agency to complete your tax computations, forms, and filing for you. While it’s a smart option for you if you are an employee, it’s an even more important investment for you if you own a business. Tax experts specialize in tax services so they can ensure that you promptly and properly meet all the tax requirements of the federal and state government so that you can continue to operate your for-profit organization.

Do Small Businesses Pay State Income Taxes?

Yes. Small businesses in the U.S. are required to pay state corporate taxes. Take note that the corporate tax rates by state 2022 are different from the state income tax rates for individual employees which we discussed in this guide. Keep this in mind if you are planning to compute DIY payroll taxes for your own business.

Frequently Asked Questions (FAQs) for Income Tax by State

State income tax is one of your essential obligations if you have a paying job or own a for-profit business. Learn the answers to basic questions about income tax by state to get ready for the filing and payment process.

Bottom Line on Income Tax by State

You must pay state income tax on a regular basis as long as you are earning income in the U.S., whether you are an employee working for a company or an entrepreneur operating your own business. Nevertheless, computing your annual income tax by state can be a daunting process, especially since different states have varying tax requirements.