Dashboard: Why Gene Marks Is Happy to Pay Swipe Fees

[Music] welcome to another 21 hats dashboard brought to you by our sponsor the great game of business I'm Lauren Feldman and I'm here with genan marks welcome Jean hello Lauren how are you I'm doing great how are you doing doing good baseball season is back we're very excited about that right I am too all right Jean you you wrote a piece recently in which you made the point that if a customer wants to pay your business money you as the owner should be ready to take that money regardless of the form of payment the customer wants to use am I right you are absolutely correct do you disagree with that point of view I do not um I do have some and this is what I want to ask you I do have some empathy for the business owner with tight margins who gets annoyed at how much some of the credit cards charge and tries to manage that I understand the impulse do you as well I do um I I I just think it's another cost of doing business and you know you know it's funny I I actually just was talking to this woman who actually runs the uh the the Texas Restaurant Association who by the way Lauren you know you want to talk to like a small business person I mean this is like you know you know being in charge of an association of like restaurants like in Texas it's like it's a restaurant industry is like the number one employer in the state wow she was going off about credit card fees you know what I mean and uh the financing fees that get charged and I get it I mean they are high but Jesus I mean the story what prompted me to write the story was um uh it was was just the other weekend I was out at like some Italian restaurant in South Philadelphia you know and like you order the food and it comes time to pay and then the server comes over with the check and she's like oh we're cash only you know so first of all I didn't even know that I didn't see any signs around that I'm like what the hell of course I don't have any cash because who has cash so then I had to go in and use the ATM machine there like oh don't worry we have an ATM machine $4.50 Cent service charge on the ATM machine which I guarantee the restaurant is getting half of that and then had to pay in cash because the the restaurant doesn't want to pay the credit card fees you know and I'm just like man you're just inconveniencing me and you know I don't know I mean like it's just it creates a headache for me it has to cost them business and I mean you know even if it's it doesn't have to be as egregious as that even if you tell someone no I won't take that credit card the one that you're getting points on and really want to use I'll take another credit card that that's enough of a hindrance I would think 100% And then there there's another Little Deli it's like a bodega that I always walk by uh when I go to play Squash actually and they have like once I stopped there because I wanted to get like a drink like a bottle of water and it was $2.50 or whatever and they have like it's a $5 minimum your credit card and I'm like all right well I guess I'm not buying any water from you here because I don't have I'm not going to spend an extra $2.50 sorry you know what I mean like you know you yeah now you now you get no sale at all it's just Dopey like you you you make up these rules and then when people say like well you don't understand these credit card fees are so high and they they are I I totally get that so I mean come on you're you're lazy if you're just tagging on a credit card fee you know or or penalizing your customers for using a credit card there an easier way to do that it's just I don't want to say it's easier but it takes a little bit of work you figure out what these fees are across your entire business and then you you you allocate those fees in your pricing across all of your products because when I went to that if this guy at the Italian restaurant doesn't like me using credit cards if he charged me you know Lauren I don't know you know I I paid 20 bucks for a you know V par and he charged me $20.3 for a v parm because he actually did the math across all of his products and he knows that extra 30 cents would cover the extra cost of the financing fees over the course of the year I wouldn't blink you know what I'm saying but now here I am talking to you about this restaurant and how pissed I am and I'm not going to go back there again because I don't carry cash so there it is so let me ask you this you were right on the top of the news with this one because the same week your story came out there was the announcement of the settlement between the big credit cards and uh the the merchants associations about capping the fees that the credit cards charge which is going to have an impact I'm a little confused about this and I'm wondering if you can help us out on the one hand I see it reported that it's going to save retailers as much as $30 billion over the coming years on the other hand I know that some retail uh associations are not happy about this and saying that they didn't get enough out of the settlement what's the reality here well the reality is is that it's it's a temporary cap you know it's not going to last forever so the credit card companies can still go and and in the future have the ability to raise the fees but even more so they still think the fees are too high you know and and that's just the bottom line and you know she was giving me examples that these fees themselves you know are are slow becoming almost you know one of the top three expenses of a typical restaurant in Texas is paying these credit card fees so it's almost like they have these really high fees which people don't feel can be really Justified and now they're they're going to just cap them they're going to keep them at their high levels and that's not what they wanted they wanted a reduction in these fees and that's because they think that they're you know they're taking advantage and on they didn't get that and that's why they're annoyed did the woman from the uh Texas Restaurant Association change your thinking at all because I mean I do have again some empathy for for restaurants I mean they're struggling to figure out a business model and they're looking for any way they can raise uh you know the their ticket price you know whether it's you know building in a service charge or whatever uh I I understand why this is an issue yeah oh there's no doubt about that and I understand it's an issue as well um she actually agreed you know with me about you know getting better at absorbing these costs and then charging them through to your customers in a better way do you know what I mean like yep she and she said she flat out said that more restaurants should be doing that and some good smart operators that's exactly what they do um you know it takes it takes effort to calculate that you have to figure out your fees over the course of a year actually you should be doing it over like 24 months um and then you have to then compare that to what your revenues are as a percentage and then you have to then build in a price increase you know so if there's fees are you know you know 1% of your total revenues that you have um then you're like okay well if I increased my revenues by that % it would cover the cost of those fees so now I got to go back to all of my menu items and have a 1% increase in each of these line in these items so it's work to do that it's kind of a pain but if you do that then you've got it covered and then you don't have to go to your customers and anger them because you're asking them for an additional you know an additional fee so she agreed let me ask you this you you run a Professional Services business you have you know Big Ticket charges for your Consulting do you get paid ever by credit card yeah oh yeah yeah yeah yeah I do I don't and I don't charge extra when people use a credit card in fact my business model is a little bit different I'm B Tob um when somebody pays me a credit card I look at that expense as saving me the time and effort going after to try and collect money from them when they don't pay it's an advantage to me so number one the credit card fee that I get charged I'm actually happy to pay for that because when I look back on it over time the amount of money that I spent and lost chased ing customers for payment were easily recouped by just getting a credit card payment right up front and secondly of course that's part of my overhead so I build that into my pricing just like restaurants should be doing that is a great point I'm so glad I asked you about that because you know with with what you charge for your uh Technical Services I mean the fees that you end up paying are a lot more than for a v parm dinner yeah it's true but then again I mean it it adds up overall so I I can't I can't compare myself I don't know what the revenues are total for this Balian restaur they're pretty busy by the way so maybe this really doesn't have an impact on them at all um but they but you know for in my case though um yeah I mean they can be big but I'm telling you I mean you know every year there's a certain percentage of customers or clients I have to go after or my bookkeeper has to go after I'm paying her 40 bucks an hour and she's spending however many hours a month chasing down Collectibles do you know what I mean that costs and uh you let alone having uncollectibles where people don't pay at all so having the credit cards in place to me was like I see value in having that and I guarantee you that if anybody from Visa or Mastercard is listening to this right now they'd be like yeah that's right that's right keep talking keep talking and by the way that I am glad you asked that question and Lauren you ask really good questions so thank you Jean yes I have a high amount of respect for you and your journalistic intelligence so don't be glad for asking it you just accept the fact that you're just skilled at what you do okay well I have to say I I did not expect your answer uh um so I I appreciate it but I appreciate what you just said all right next topic you also wrote recently about bankruptcy um not something that people particularly want to think about but you made the point that while bankruptcy should be considered a um you know a last resort it's less of a defeat and more of a business strategy these days especially because of the way the rules have been changed for small businesses can you give us a quick update on that yeah that I mean listen the the bankruptcy bankruptcies are go going up okay but before anybody like you know panics about this I mean the bankruptcy levels themselves are still so far below what they were even you know preo you know um and by the way just that that also ties into the fact that the economy is really good Lauren okay let's not forget that either okay but okay so um so I'm supposed to make that point to you g yeah you're supposed to make it to me but I want to like reiterate the fact the econom is good so everybody shut up there there's although bankruptcies themselves are going there's still very much you know you know behind the game having said that there there have been rule changes and and you can read my piece about this but there there have been rules changes around bankruptcies and these actually all these changes happened back in in 2019 um and the changes themselves were to to make it easier for small businesses to emerge from bankruptcy okay so if your debts were below a you know a certain level um and I think it's like 7 and a half million bucks now in outstanding debts um you know you could the process for um going into a reorganization a chapter 11 reorganization is much easier much less expensive uh you can you know you don't have to have the whole Committee of creditors your your house won't be up you know you know on the on the selling block um you know all of these things were part of this this act that came into effect back in 2019 and so the reason why I bring that up is you know if you are struggling um and you know you have your debts are really overwhelming your assets and you're you know you're really wored about staying in business um filing chapter 11 is is actually much easier for for smaller companies and it's a strategy I mean rather than just throwing in the town running away and you know taking the bad credit rating and you know pissing off a lot of people you might be able to reorganize and still pay people back and they'll still be pissed because they won't get all the same the money that they were owed but you can still um maybe navigate your way out of it and have a second life so that was the point of the piece it's an entrepreneur actually just a good thing to know keeping the back of your mind if times are tough that there are options that didn't used to exist correct correct it's only a couple years old so um and they are very very beneficial to small businesses so um it is just something that that bu it's called the 2019 small business reorganization act so you can look it up and talk to a bankruptcy attorney all right uh similarly there changes on taxes you wrote another piece in which you pointed out that a lot of owners are focused right now on paying their taxes for 2023 when they probably really should be thinking about planning for 2024 and there are some rules changes that they should be aware of which you pointed out in your piece can you update us on that a little bit yeah let me give you three things uh to know I obviously it's it's funny because I'm doing like like radio and TV stuff with taxes now people want to talk about it because it's tax you know you're filing taxes and I'm like dude you you we do realize 2023 is pretty much over right uh people don't seem to understand all this whole conversation for 20 24 however let me also point out though that you still do so's the first quarter of 2024 yeah it is but uh you can still just so you know if you want to make a retirement plan uh contribution an IRA contribution you can still do that for 2023 up until when you file your taxes for 2023 and the same thing for businesses that are on the acrel method of accounting not cash method when they want to pay in their tax uh they can make a contribution to their 401K plans um and still get a deduction for 2023 that's the last remaining thing you can do for 2023 okay but let's look at 2024 there are three changes that I think we should all be aware that we should be very much aware of okay number one we are we are now allowed to deduct less depreciation in 2024 than we were in 2023 in the first year um and that's going to be even less in 2025 so you know prior to the past couple of years it was about a million dollars you could deduct right away in the first year if you bought equipment or furniture and pictures or software or Hardware or whatever you can just deduct it in the first year that'd be great last year that deduction was 80% 2024 is now 60% which means that if you um you if you buy an asset for $10,000 the you could take the first 60% of it as a deduction this year and the rest of it you have to advertize over its remaining life next year you can only take 40% of that in the first year so that's a change this year that you need to be aware of it's still even though it sucks because you're getting less of a deduction from the past you can still get a first year deduction this year more than next year so take advantage of it okay you you do still get the full deduction over time you just don't get it right away exactly right the first year you get 60% and then you depreciate it over the remaining life of the asset okay so that's number one number two is um these clean vehicle rules from the inflation reduction act are really taking effect and have been changed a little bit this year to our benefit it's expanded the definition of vehicles that can be used you can use it individually or buy a vehicle for for your business and if it's a if it's a your proper electronic vehicle you can get up to a $7,500 tax credit and now you can also get a $2,500 credit if you buy a used vehicle so um and not only that but um the dealers now can get used vehicle that's electric yeah yeah okay used electric vehicle and not just any used vehicle no no no no all they all have to be like EV and they have to meet certain definitions of you know of of whatever they are for the environment and uh the the the um dealers themselves now have been set up so they you can take the credit right against your purchase price at the time of buying so it's not like you have to wait till the end of the year to follow your taxes and get the credit you can do it right at the time so that's kind of cool um and you know obviously electronic vehicles are now you know less people are interested and there's still not enough infrastructure and there's not enough charging stations and all of that so it kind of depends but again it's a it's a pretty generous tax credit that's been expanded this year like if if you need vehicles for your business and you're driving around your town and you can you know you you don't need to rely on um finding yeah exactly yeah that could be an incredible saving yeah they can be and by the way there there are plenty of electronic trucks as well you electronic vehicles that are that are trucks um you know the way I've seen some clients do this is you know they build out their charging station in their in their residence or in their business and I'm not an electrician Lauren so I don't really understand this but it's like you change the configuration of your electrical for more wattage and voltage and vorts and then you you you pull the car up to it and then you just charge it at your place of business you know and I you know these things have a range of a couple hundred miles now so unless you're really driving far if you're using it for local deliveries or local whatever uh yeah I mean you know it's it's uh to me it's like it really makes sense it can give you a bit and somebody I think Tesla's I mean you can still buy test it for what like 30 or 35 Grand now it's not it's pretty um they're getting pretty competitive um so I don't know I mean I think that that's a good credit so that was the second one and then the so the first one was the Capital Equipment you got to be aware of that deductions going down first year uh clean vehicles that's a credit that's available the third big thing in 2024 is just if you retirement plan stuff uh some of these things from the secure Act of 2022 are coming into place this year like if you there's big tax credits available if you want to start a 401k plan the government will pretty much pay for it uh through tax credit so there's like no reason not to start a 401k plan in your business number two is pay for it meaning paying the cost of administration setting it up um yeah yeah all of that which could be hundreds or a thousand bucks or whatever they're offering like up to like 15,000 15,000 in tax credits over a three-year period of time just for starting it up you know so the government will pay you to get it started they will pay in tax credits to have automatic enrollment in your plan as well um so they'll actually give you a tax credit just for doing that um and in addition to that depending on the size of your business they will give you a tax credit if you match your employees contribution warn so like you have an employee that contributes 500 bucks and then you match it um you again depending on the size of your business you can get a tax credit for that match so for the full thing so you're B you're matching for free essentially yeah 50% of their contribution I think up to $2,000 for the employees it's a th000 for you so theoretically if you have 40 employees and they each contribute $2,000 to your 401k plan and it's a new plan by the way um you could get up to a $1,000 credit for each employee if you match it so I mean they're you know government's like stepping up to help you and one other thing the government is now also allowing Roth 401ks so you can set that up for your employees and they can put after tax money into it and it grows taxfree forever so those are like some really big changes this year that you know we all as business owners should be looking into are there advantages for uh a business that hasn't established for a 1K plan not as many as you think these U most of these which which is really a bone of contention with me there is um these incentives are mostly for businesses that start new 401ks right they don't have one because the the government is all upset because not enough businesses have 401ks like only 50% do and that's fair enough but there's another problem which is there are a lot of businesses that do have 401ks but a too small a percentage of the employees participate thank you exactly right I mean we just we have a lot of companies that um I have a lot of clients that have 401ks and their employees aren't contributing to it and there there needs to be more incentives to get them to contribute and they've been kind of ignored by this legislation so there will be a uh secure 3.0 and I hope that that you know that's part of it do you know what I mean I hear you I hope you're right um what are you working on anything we should look for in the coming week let's see you know what I'm gonna write about did I tell you last I was g i I blew it off for a week I was going to write about fractional uh fractional Chief marketing oh that's right you did mention that yeah that got delayed a week so I'm going to do that this this week that'll be fun to write about and then also I'm GNA write about um somewhere the we you and I have talked before about the corporate transparency act the one where the treasury Department is making us report our beneficial owners although it's on hold now right yeah kind yes and no yes and no so you know a federal court found it to be unconstitutional the treasury says this really only affects a small amount of business owners so they're moving forward with it other people are suing it's kind of a mess but you know you know depending on the size of your business and the nature of your business you might still have to be doing this so um you're your contention that it's on hold a lot of people do feel that you know say that same thing but that may not necessarily be true so I'm going to be about that well we will look forward to that genan marks is a CPA who writes weekly on small business for the guardian the hill the Philadelphia inquire the Washington Times the Chicago Daily Herald Forbes and entrepreneur you can hear I'm on ABC radio's eye on the world with John Bachelor Jee host two small business podcasts with paychecks Corporation and the Hartford this episode was brought to you by the great game of business which helps businesses use in open book management system to help build healthier companies you can learn more at Great game.com thank you Jean thank you Lauren we'll see you soon have a great week everybody [Music]