avatar1235

Frugal newbie here who struggles to meet some of the minimum spend requirements for some of the signup bonuses. I know using services such as Plastiq used to be popular to pay mortgages or other high ticket items but with the changes to their program it is largely unusable.

Has anyone ever tried using a Square chip reader and simply becoming the merchant? Swipe your own card for whatever amount you want, pay the 2.75% fee, and have the funds deposited into your own bank account? In theory this seems so much more practical than Plastiq, as you were always wondering if your mortgage company ever actually got their check or not, or got it on time. This would allow you complete control over the process for a nominal processing fee.

cbn42

Square will generally shut your account down quite quickly if you do this. It may work for very small amounts.

royallyflushed

avatar1235

LLC's and sole proprietorship are both considered pass through entities so all accounting goes on your personal tax statement. So would be as simple as adding 2k (or whatever amount) of income, and 2k of business expenses, which wouldn't change your overall amount of taxes owed.

And why would Square shut down your account? I find it difficult to believe that a company would care what you did as long as they are collecting their fee and it isn't illegal.

mia

This suggests you have not read Square's terms, which list two dozen types of businesses which may not use their service.

In any event you may wish to read this thread in Square's own forum regarding using your own card. They simply do not permit it.

https://www.sellercommunity.com/t5/Q...ess/td-p/42436

avatar1235

To be fair, many of the manufactured spending options are against company policies in one way or another. If it wasn't there wouldn't be so much YMMV when it comes to finding a store / clerk to process the transaction the way you want it to. Buying a gift card with a CC should trigger the cash advance fees, but they often don't. My credit cards that offer annual travel credits specifically state in the user agreement that the credits will not be granted for buying airline gift cards. Yet there are thousands of dollars worth of free travel codes sitting in my email box that I have accumulated over the years.

It's not really a matter of what do they allow, its a matter of what do they enforce which often times is simply a matter of what can they enforce.

I find it difficult to believe that Square knows who owns the XYZ LLC. There would simply be no recourse for Square since the funds are being charged by XYZ, and deposited into a bank account owned by XYZ. My name would never appear on the merchant statement so there is no way for them to know what is going on. The technique would be legal, but it would be against their EULA so they could theoretically disable my account if they ever found out. The key is finding out. I'll keep you posted if it works or not.

camaross

This is a terrible idea for many different reasons, and gets suggested by newbies all the time. Search one of the 400 threads where this has been suggested and shot down before if you want to know more, or just go ahead and do it if you want to experience what happens first hand.

Hint: The 2k you think you can deduct as business expenses against your "income" aren't considered legitimate business expenses by the IRS. Also don't forget the business license you'll need from your county and state, as well as a sales and use permit. Oh and on't forget paying state and local taxes on your "income" as well.

robchow

Use Player-2 credit cards; done.

jags86

mia

In many jurisdictions this is a public record, which Square can retrieve automatically, but you will tell them who you are when you open the account.

DBFL

SideShowBob

I did this for me and P2. Used to liquidate gift cards not meet MSR. As expected both accounts were shut down in about 3 weeks. They kept money from the last charge day for 6 months. Still I could float it so I'd do it again, but understand this WILL be the eventual result. Make sure you can float whatever amount you're charging for up to 6 months.

avatar1235

In 20+ states, only the Organizer is listed in public records. The organizer is nothing more than the person who officially registers the LLC with the state, and doesn't need to be the owner, or even an employee of the LLC, they simply need to be authorized to act on behalf of the LLC. This could be a lawyer, the LLC's secretary, a friend, or some random bum you found on the street and paid them with a handle of Jack Daniels so that they would walk inside and hand the registrar some paperwork that you had filled out. The actual Operating Agreement which would list all of the members/owners of the LLC is not required to be filed with the state.

Even if you lived in one of the states that does require the owner to be listed on the documents, its easy enough to use any number of techniques to hide your identity. Set up a daisy chain of ownership, such that your XYZ company lists ABC company as the parent company, and ABC is registered in a state such as Nevada which doesn't require ownership disclosure. Or create an anonymous trust and list the trust as the owner of the LLC. There's dozens of ways to structure your overall company so as to never disclose your real name. I would argue that if your name appears anywhere on public records as an owner that you have failed, and are creating unnecessary risk for yourself as privacy alone can mitigate an enormous amount of risk.

Secondly, while Square does ask for information such as the businesses EIN number, not once does it ask who the ultimate owner of the company is. It asks for the full legal name of the person registering the square account, but nowhere does it say that the person registering the Square account must be the same as the person who is the primary owner of the business. My secretary can fill that out just as easily as i could. How many CEO's of companies do you think would actually take the time to fill this kind of paperwork out themselves? I'm guessing not many.

"Federal law requires that all financial institutions verify and record information that identifies each person who opens an account." Notice it doesn't say they need to verify the information of the business owner, just of the person who opens the square account. You may argue that the person who opens the square account should be the same as the owner of the company, and I would equally argue that it doesn't need to be the same and if it did need to be the same, the verbiage Square used during the account creation process would be much more precise and explicitly ask for the business owners information as opposed to the information of the person who opens an account. When it comes to the law and legal practices, there is no such thing as implied, it is either expressly stated or it does not exist. But for funsies if you wanted to make that argument that the owner of the business must be the same as the owner of the square account, how do you account for partnerships where there is multiple business owners? Square only lets you input one persons information for verification purposes as the account owner. Additionally Square does not allow for the transfer of the ownership of the square account from one person to another, yet businesses can be bought and sold regularly, further implying that the two do not need to be the same. The only way to update ownership information in Square would be to create an entirely new account as ownership of the square account is simply designated to whoever originally signed up for the account.

royallyflushed

DBFL