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Discount for Cash

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JBloggs

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I just saw a BnB near us offers 10% discount for cash. I know you cannot charge more for a credit card transaction, is this their way of getting around that?
Your thoughts?
 

Morticia

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My thought would be they are going to 'hide' that cash business because a 10% discount is way more than the cc processing fee. We get the occasional guest who asks about a cash discount. I know they are talking bigger dollars than it is worth to me because they are thinking I'm going to 'hide' that money from the tax man. So, instead of giving the money to the tax man I'm supposed to give it to the guest?
 

gillumhouse

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Gas stations do it that way. Personally, I take cash with a thank you but there is no discount.
 

gillumhouse

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My thought would be they are going to 'hide' that cash business because a 10% discount is way more than the cc processing fee. We get the occasional guest who asks about a cash discount. I know they are talking bigger dollars than it is worth to me because they are thinking I'm going to 'hide' that money from the tax man. So, instead of giving the money to the tax man I'm supposed to give it to the guest?.
They think we all have a "cookie jar". The LAST one I am going to try to diddle is the tax man. Ain't worth it.
 

wendydk

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I agree...credit card fees are negligible...no discounts for cash.
 

Tim_Toad_HLB

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Only two truisms left are death and taxes.
Our county has a contracted CPA firm that is empowered to conduct random audits of lodgers without much notice at all.
We don't play that game because frankly this is the best tax deal in the industrialized world and we're happy to pay what little taxes we do pay.
After deductions, expenses and depreciation, anyone in this country who with a straight face feels overtaxed in comparison to the benefits they receive should pack it up and go elsewhere.
While we'll gladly accept whatever legitimate form of payment the guest desires to use, money is money and why should a guest using a credit card subsidize a guest with a wad of paper bills in their pocket?
 

sandynn

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Cash is not always that great. With all the counterfit money that goes around I am not sure I want it. If you take counterfit money to the bank they keep it and you lose. Not worth it.
 

mooseberry

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Cash is not always that great. With all the counterfit money that goes around I am not sure I want it. If you take counterfit money to the bank they keep it and you lose. Not worth it..
sandynn said:
Cash is not always that great. With all the counterfit money that goes around I am not sure I want it. If you take counterfit money to the bank they keep it and you lose. Not worth it.
Not only that, but you also have to deal with the hassle to go and deposit it in the bank.
 

One Day

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Cash is undeclared income....
CC payments are deposited into a bank account....a record of the transaction....declared income.
With the CC transaction there is a % fee taken by the CC company...Generaly 2.5 - 3.5% of the transaction.........Granted.....not much reason there to be offering a 10% discount of the nightly room rate. Perhaps this is an option rather than providing a "third night free" or some other 50% discount of a room night for multiple night stays?
Most discount offerings are not combined
Now.....most are reading this as a 10% discount on the room rate.
What we don't know is....lodging tax....The lodging tax is variable state to state. It is generaly 6 - 10+ %
Depending on how the discount is handled.......If it is stated on the "total" nights stay......that would be including the lodging tax........add the lodging tax to the CC transaction fee and where are you?
Additionaly with cash.....as stated at the top.....undeclared income.
Not reported on income tax. With most businesses, liability insurance is determined by the gross annual income. Showing a lower gross annual income will lower the liability insurance annual cost.
So......think about the CC transaction.....lodging/sales tax is added on...Transaction fee is deducted from that total....Income tax, insurance premiums.
Cash.....no record of the transaction.......unless it is a business traveler
 

wendydk

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Cash is undeclared income....
CC payments are deposited into a bank account....a record of the transaction....declared income.
With the CC transaction there is a % fee taken by the CC company...Generaly 2.5 - 3.5% of the transaction.........Granted.....not much reason there to be offering a 10% discount of the nightly room rate. Perhaps this is an option rather than providing a "third night free" or some other 50% discount of a room night for multiple night stays?
Most discount offerings are not combined
Now.....most are reading this as a 10% discount on the room rate.
What we don't know is....lodging tax....The lodging tax is variable state to state. It is generaly 6 - 10+ %
Depending on how the discount is handled.......If it is stated on the "total" nights stay......that would be including the lodging tax........add the lodging tax to the CC transaction fee and where are you?
Additionaly with cash.....as stated at the top.....undeclared income.
Not reported on income tax. With most businesses, liability insurance is determined by the gross annual income. Showing a lower gross annual income will lower the liability insurance annual cost.
So......think about the CC transaction.....lodging/sales tax is added on...Transaction fee is deducted from that total....Income tax, insurance premiums.
Cash.....no record of the transaction.......unless it is a business traveler.
Cash is not undeclared income. Cash guests are recorded and handled the same way (and deposited into the bank the same way) as any other payment type. In addition to that, lodging taxes are a pass-through to the cost, and do not come out of our pockets.
If you are planning on NOT including your cash guests in your income reporting, you are headed for big trouble.
 

One Day

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agreed with the lodging tax....
Business owner benefits on not having the CC transaction fee.
As for the declared income.......what ever you want to do
 

JBloggs

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I declare all cash payments...wish there were more of them! Very few this year so far.
I can't imagine someone putting that on a website (Advertising it) and all the directories and not paying the IRS, that would be totally foolish. It may just be their way of a running a "SPECIAL" and not getting bit too much by the discount themselves?
 

egoodell

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agreed with the lodging tax....
Business owner benefits on not having the CC transaction fee.
As for the declared income.......what ever you want to do.
One Day said:
agreed with the lodging tax....
Business owner benefits on not having the CC transaction fee.
As for the declared income.......what ever you want to do
I would not mention on a public forum if I didn't declare cash income....
RIki
 

Morticia

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Cash is undeclared income....
CC payments are deposited into a bank account....a record of the transaction....declared income.
With the CC transaction there is a % fee taken by the CC company...Generaly 2.5 - 3.5% of the transaction.........Granted.....not much reason there to be offering a 10% discount of the nightly room rate. Perhaps this is an option rather than providing a "third night free" or some other 50% discount of a room night for multiple night stays?
Most discount offerings are not combined
Now.....most are reading this as a 10% discount on the room rate.
What we don't know is....lodging tax....The lodging tax is variable state to state. It is generaly 6 - 10+ %
Depending on how the discount is handled.......If it is stated on the "total" nights stay......that would be including the lodging tax........add the lodging tax to the CC transaction fee and where are you?
Additionaly with cash.....as stated at the top.....undeclared income.
Not reported on income tax. With most businesses, liability insurance is determined by the gross annual income. Showing a lower gross annual income will lower the liability insurance annual cost.
So......think about the CC transaction.....lodging/sales tax is added on...Transaction fee is deducted from that total....Income tax, insurance premiums.
Cash.....no record of the transaction.......unless it is a business traveler.
The probelm with undeclared income in a business this small is that you can't sell it down the road saying it makes $x when you are only declaring $x-y. We saw a couple of those wink-wink businesses when we were looking and we based our purchase price on what they declared for taxes not what they told us they made. I guess you could start doing only cc transactions once you decide to sell and suddenly have a very good year.
And, yes, adding on the tax does make the cc transaction fee higher.
 

gillumhouse

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Cash is undeclared income....
CC payments are deposited into a bank account....a record of the transaction....declared income.
With the CC transaction there is a % fee taken by the CC company...Generaly 2.5 - 3.5% of the transaction.........Granted.....not much reason there to be offering a 10% discount of the nightly room rate. Perhaps this is an option rather than providing a "third night free" or some other 50% discount of a room night for multiple night stays?
Most discount offerings are not combined
Now.....most are reading this as a 10% discount on the room rate.
What we don't know is....lodging tax....The lodging tax is variable state to state. It is generaly 6 - 10+ %
Depending on how the discount is handled.......If it is stated on the "total" nights stay......that would be including the lodging tax........add the lodging tax to the CC transaction fee and where are you?
Additionaly with cash.....as stated at the top.....undeclared income.
Not reported on income tax. With most businesses, liability insurance is determined by the gross annual income. Showing a lower gross annual income will lower the liability insurance annual cost.
So......think about the CC transaction.....lodging/sales tax is added on...Transaction fee is deducted from that total....Income tax, insurance premiums.
Cash.....no record of the transaction.......unless it is a business traveler.
Cash is undeclared income
Cash.....no record of the transaction.......unless it is a business traveler
Sorry, but you are making an incorrect assumption as much as the person thinking they should get a discount for cash. Yes, I do save on cc fees and do like cash & personal checks for that reason (I will make the trek to the bank any day as it combines with other errands). However, I am proud of the revenue generated by my inn. I am pleased to show my City via my B & O tax payments that I had business (and that is on my GROSS and I do not cheat there either!) and am bringing economy here. My records show every guest and the rate charged plus tax for every night I had guests.
My tax person tells me I have to declare every penny of income but am not required to claim all my deductions. I declare ALL income - cash, checks, cc, poll worker wages, SS, City Clerk wages, everything!
 

wendydk

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It's probably a moot point anyway, since cash transactions are very few and far between. I've seen more of them this year than ever before, but it's still small change in the overall scheme of things.
 

One Day

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The powers that be know about "cash"
That is why during audits you are asked to provide your ledger, cash book and so on.
When I am audited I am always grilled regarding cash....I look them straight in the eye.......If my business name was my own name. I can understand your point.....but since my business name is not in any way related to my personal name and the fact that I send invoices through the mail. Take payment via CC or check.....I guess it would be rather difficult for me to deal with cash.
then I am asked about cashing checks......duh.....bank does not allow me to cash checks written to the business name.
that's not to say that while at a customer doing routinely scheduled job that I am asked to something small extra and they give me some cash....I'd say 19 of 20 times it's "add it to the bill"
I wish my business used my personal name.....then I'd be like so many others cashing checks.
I have 2 audits coming up.....Workmans Comp and State Dept of Labor ( unemployment )
<edit to add>
Don't read to far into a discount for cash.....it's just another gimmick to entise people to chose them.....not any different than the 50% off a third night....or 3rd night free.....or any of the midweek specials.....If you think about it......the 10% cash discount is better for you.
Suppose you were running a 3rd night free special......$100 a night......you are out $100........now......if you did a 10% cash.......you'd be out $30 for the same 3 nights
Or you could do a 10% discount for the entire 3 night stay
I actualy think in this case the "cash" is irrelivent.....unless........unless they are not reporting that income.
 

wendydk

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IMO, a 10% discount is not enough to entice potential guests to scrape up that hard-to-find cash. And, not being an innkeeper, I just can't take your arguments seriously wnen it comes to Inn Operations.
 

The Farmers Daughter

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Joe Bloggs said:
I know you cannot charge more for a credit card transaction.
That is what I initially thought too. Imagine my surprise when I went to pay my taxes online and discovered my state charges a 4% 'convenience fee' if you want to use a credit card.
 

wendydk

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Apparently the only thing I do differently is report all of my income? Good luck with your audit!
 
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