Can a Business Use Venmo for Payments?

Venmo is a widely used digital payment platform. It offers specialized functionalities for commercial use, allowing businesses to accept payments for goods and services. These tools provide a structured approach, separate from personal financial exchanges.

Official Venmo Business Features

A Venmo Business Profile provides a distinct identity for commercial activities, operating separately from a personal account while remaining linked under the same user login. This separation helps maintain clear distinctions between business and personal finances. Businesses can present themselves with a professional display name and a unique username that customers can easily find.

The business profile allows for the display of additional information, such as a website, physical address, and social media links. Venmo provides dedicated QR codes that customers can scan for quick and contactless payments. Businesses also benefit from in-app payment tracking, which helps in monitoring transaction history and managing sales records. Additional features, such as the ability to enable tipping options and issue refunds directly from the app, further support business operations.

These specialized features ensure that commercial transactions adhere to Venmo’s terms of service for business use, distinguishing them from personal transfers. The platform also offers increased visibility for businesses within the Venmo feed and provides business insights.

Establishing a Venmo Business Profile

Creating a Venmo Business Profile involves a straightforward process, beginning with the prerequisite of having a personal Venmo account. If you do not already possess a personal account, you can establish one simultaneously with the business profile. Users initiate the setup by navigating within the Venmo app to either the settings menu or the profile tab, where an option to “Create Business Profile” is available.

You will need specific business details readily available. This includes the business’s legal name, its physical address, and contact information such as a phone number and email address. Businesses are also prompted to indicate their tax identification type, whether it is an Employer Identification Number (EIN) for registered entities or a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) for sole proprietors. Linking a bank account is another step, as this facilitates the transfer of funds from the Venmo balance to a traditional bank account.

Users input the gathered information into the designated fields within the Venmo application. This includes selecting a business category and providing a short description of the business. After entering all required information and linking the necessary financial accounts, the profile can be published, allowing the business to begin accepting payments. Venmo may require additional identity verification, sometimes requesting documentation to confirm the provided business and personal details.

Understanding Business Fees and Tax Reporting

Using Venmo for business transactions involves specific fees and tax reporting obligations. For payments received for goods and services through a Venmo Business Profile, a standard seller transaction fee applies. This fee is typically 1.9% of the transaction amount plus a fixed charge of $0.10 per transaction. For example, a $100 payment would incur a $2.00 fee, resulting in the business receiving $98.00.

While there are no setup or monthly fees for a Venmo Business Profile, businesses should be aware of other potential charges. Instant transfer fees apply if funds are moved from Venmo to a linked bank account more quickly than the standard 1-3 business days. This instant transfer service typically incurs a fee of 1.75% of the transferred amount, with a minimum fee of $0.25 and a maximum of $25. When customers use a credit card to fund their payment to a business, an additional 3% fee may apply.

Regarding tax reporting, Venmo, as a third-party payment network, is required to report certain payment transactions to the Internal Revenue Service (IRS) using Form 1099-K, “Payment Card and Third Party Network Transactions.” For the 2024 tax year, Venmo is mandated to issue a Form 1099-K if a business receives over $5,000 in payments for goods or services, regardless of the number of transactions. This threshold is a transitional measure, with the threshold set to decrease to $2,500 for 2025 and $600 for 2026 and beyond.

Form 1099-K is an informational document; it reports gross payments and does not account for business expenses or refunds. Businesses are responsible for accurately reporting all taxable income on their tax returns, typically on Schedule C for sole proprietors, even if they do not receive a 1099-K form. To avoid potential tax holds or backup withholding (a 24% withholding on payments), businesses should ensure their tax identification information is provided to Venmo. Maintaining meticulous records of all transactions, distinguishing between business and personal payments, is also important for accurate tax compliance.