In Praise of Off Shore Merchant Accounts by Trevor Tootle

Among the many smart business accounting practices that can help your business is that of using an off shore merchant account for your credit card processing needs. These offshore accounts are completely legal and can help your business save money. They also provide service levels comparable or often even better than their on shore counterparts.

These days, no business, however small, is complete without a credit card processing facility. The reason for this is that a large number of people prefer to pay for goods and services with debit or credit cards instead of paying by check or cash. By adding the ability to process debit and credit cards, you can serve a wider range of customers. Thus, it is a smart business practice to offer this facility to your customers.

But when you accept credit and debit cards, you also need a way to process them and to make sure the money is properly transferred from the customers' accounts into your account. This is where a merchant account comes in. Merchant accounts act as a way for the credit or debit funds to transfer. It is an account much like any other bank account, but for accounting purposes should be kept as a separate business account.

You can open a merchant account with one of many companies in the United States. But you could also look at offshore accounts available in countries in Central America, Europe and the Caribbean. An off shore merchant account can help you save money in many ways with respect to your debit and credit card transactions.

With the merchant account located off shore, the income from your credit and debit card transactions will often count as foreign income. Domestic income is taxed at a higher rate than foreign income. A tax attorney or accountant can help you with the accounting necessities to facilitate this option. Also, by choosing an off shore account, you can always choose to send less of your money to the United States.

Another way that this accounting trick saves you money is by making it possible for you to save money in upfront costs and security fees. Many on shore accounts require quite a bit of money for an opening account and for security reasons, and then keep back a certain amount of money, on top of the original security amount, each month in order to cover charge backs. Initial deposits and holdbacks for charge backs are usually lower with off shore accounts.

While some transaction fees in off shore accounts are a little bit higher, these are more than offset by the savings in other fees and taxes. Moreover, the service levels are often very good, as these offshore companies are actively trying to win and maintain customer accounts.

Whether or not you go in for it, it is a good idea to explore the option of off shore merchant accounts. If it works for you it may well be one of the best accounting moves you can make for your business.

Trevor Tootle is the webmaster for F accounting, the web's premier resource for information about accounting. For questions or comments about this article visit: http://www.rmaccounting.com/articles
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