When you cater to businesses raking in near 7 figures a year, demand for online accounting and consulting services is high. A 24-hour, 7-day a week consultant is a handy thing!
That account and consulting is a business, in and of itself. And as a business, you need to make sure you’re protected from fraud, chargebacks, breeching regulations, and more.
To help you keep your business running smoothly, here are out top 5 ways to protect your online accounting service.
1. Become Licensed as a CPA or EA
This is the best way to protect yourself and show potential clients that you are qualified to do their taxes or give financial advice. It also ensures that you know what you’re doing when it comes to taxes, so you can give good advice and not make any mistakes.
You’ll need to become licensed as either a Certified Public Accountant (CPA) or Enrolled Agent (EA) in order to operate a legal online accounting business. The requirements vary by state but most states require passing the Uniform CPA Examination and meeting continuing education requirements.
It’s important to note that there are no federal laws governing tax preparers. Each state has its own licensing requirements and fees — as well as rules regarding what constitutes an illegal tax preparer. However, getting a license helps build credibility with your clients.
This license can also help you narrow where you provide your services. If you’re licensed in a specific state, clients from that state are more inclined to use you. You can even try taking that license across state lines and promoting yourself nationwide or for those who work abroad.
2. Improve Customer Data Protection
In this day and age, the internet is one of the most important tools that high-risk businesses use to grow. Whether it’s online accounting software or e-commerce sites, technology has become an integral part of running a business.
However, with so many companies using the internet to grow their business, there are also more ways for hackers to attack your website. This means that you need to take steps to protect yourself from cybercriminals who want to steal your data or use your website as a platform for spreading malware.
And when your entire business model involves collecting sensitive customer data, you better believe it’s a target.
Don’t store too much client data in the cloud. If you store client data on someone else’s servers, they can get hacked or go out of business overnight — taking all your data with them! Either get a personal server or store sensitive customer data offline for better protection.
Use two-factor authentication (2FA) for all admin access to your cloud-based accounting system (or any sensitive information). 2FA requires two different pieces of information to log in — usually something you know (like a password) and something you have (like a token). The two pieces of information don’t have to be from the same source (such as an SMS message), but they must be different from each other.
3. Understand Your Risk Profile
When we boiled it down to the basics, what you provide is advice. Any seller of advice, whether it’s about taxes, business consulting, or accounting, is considered high risk.
Advice is an abstract product. You sell something that’s not physical. All expectations about your product are inferred. And when a customer makes a purchase and doesn’t receive the outcome they expect or the level of service they expect, they can dispute it with their bank. That results in a chargeback for you.
When you sell something tangible, there’s little room for error. That’s a low risk business type. Sure, there are manufacturing flaws or shipping damage or pictures don’t match the real life product. But most of the time, you get what you pay for. When it comes to advice, which is intangible and therefore higher risk, there’s a ton of room for error. Any mistake or misinterpretation can affect your bottom line.
There’s no guarantee of success. One thing that makes this type of business risky is there is no guarantee of success in any way shape or form when it comes to selling advice. Your advice might be backed by data and years of experience, but that doesn’t mean the outcome will be positive. That’s not always something customers are willing to come to terms with.
Let’s look at an example: suppose a customer comes to your small business looking for financial advice about whether or not she should invest in a certain stock market fund. You spend hours with her discussing her options and finally come up with one recommendation. She takes it and then loses everything! There’s no way you could have known that stock would tank, yet you take the blame because you gave the advice.
Spell it out for your customers. You don’t have to say, “hey, all I’m giving you is advice”, but you should let them know that the final “product” might differ from the forecast.
4. Keep Chargebacks in Check
The rise in popularity of cloud accounting services has been accompanied by high chargebacks. If you provide online bookkeeping services, it’s important to understand your risk profile as an online accountant and take steps to mitigate your risk as much as possible.
A chargeback occurs when a customer disputes a transaction with their credit card company or bank. The card issuer then investigates the transaction and determines if there was fraud involved or if the merchant made an error (e.g., failed to deliver goods or services). If so, the merchant must refund the money to their customer and pay a fee for having made the error. Chargebacks are costly — they average around $10 per transaction — and can lead to fines from debit and credit card processing companies if they’re not resolved quickly enough.
Make your refund policy clear. One of the easiest ways to avoid chargebacks is by publishing and promoting a super clear refund policy. Tell your customers what they can expect, what they shouldn’t expect, and how you plan to handle things when they go south. And don’t be afraid to share these terms in emails, invoices, and on your site.
Risk management is one of the best things you can invest in as a business owner in a high-risk industry. Merchant service providers and credit card payment processors will be more likely to approve your application when you take risk seriously.
5. Use Fraud Prevention Tools
You have a business to run, and you’re busy. You don’t have time to be chasing down every little payment that doesn’t go through. But if you don’t take steps to protect yourself, you’ll be at risk of fraud and chargebacks.
Use tools like 3DS. Some credit card processors and financial institutions offer services that can help prevent fraud, such as address verification software (AVS) or 3D secure. These services add an extra step before the customer can complete their purchase. This can help reduce the risk of fraudulent transactions taking place on your website and increase the number of payment solutions you accept at your POS.
Monitor your accounts for suspicious activity. You should also make sure that you’re monitoring your accounts for suspicious activity by checking your transaction history regularly (or having someone else do it). If something looks unusual or out of place, contact your bank or payment processor to investigate further.
Protecting Your Online Accounting Business Is Easier with a High-Risk Merchant Account
When you’re working with a high-risk merchant account provider like DPN, you’ll have an easier time keeping your business secure. This is because we take the time to assist you, and give you the information you need to prevent fraud at every turn. We point out any weak spots in your system, and work with you to fix them. That’s why protecting your business is easier when it’s not just up to you; that’s where we come in.
Get in touch with our expert team here at DirectPayNet to get set up with a high-risk merchant account for your accounting and consulting firm. We’ll start the underwriting process now, connect you with a payment processing company that backs your business, fraud prevention tools to protect it, and a high-risk payment gateway.