The Internet opens up the doors for entrepreneurs to reach a larger client base. It also gives small businesses opportunities to source supplies from vendors across town, the country and the world. It can be difficult to send and receive money on accounts timely, but a wire transfer helps to eliminate this issue.
A wire transfer is a process used by financial intermediaries to transfer money electronically from one individual or business to another. It can be accomplished between one bank account and another, or by using cash where it's permitted. If you're dealing with people or companies you know and trust, the wire transfer process is a safe, convenient method for sending or receiving money.
Wire transfers have many advantages over the more traditional forms of fund transfers. Probably the most important is that you can complete wire transfers quickly and conveniently and with greater levels of security than dealing with cash. It is also quicker for the recipients to receive payments in comparison with using checks or demand drafts. You can use wire transfers to process funds locally as well as across many countries.
Making the Request
The process of a wire transfer between banks starts with a request from the sender. You often can make a request online or in person, depending on the bank's policy. You'll need to provide information about the recipient of the transfer, as well as information about you.
Your information must include the account from which you'll withdraw the funds, your identification credentials and the amount you want to transfer. You also need to provide the recipient's name and address, along with the recipient bank information, including the account number and bank address.
Transferring the Funds
To wire money, you'll need to pay a fee, which might range between $25 and $35 for domestic transfers and $45 and $65 for international transfers as of 2015. Your bank will send the funds using a secure electronic platform. Domestic transfers in the U.S. use the Federal Reserve service called the Fedwire Funds Service and, depending on the time of the transfer, funds will normally be available either the same day or the next business day.
For international transfers, banks use the Clearing House Interbank Payments System, which is commonly referred to as CHIPS. International transfers are subject to various provisions of the Patriot Act designed to prevent money laundering and reaching enemies of the state.
Except for providing accurate information about yourself and your bank, as the transfer recipient, there's little for you to do except collect your money. You might also need to pay a fee for the service. Incoming wire transfer fees can range between $15 and $30. When there's a fee, it remains the same regardless of the amount you're receiving. Some banks charge nothing at all for the service and some waive the wire transfer fees for certain customers.
Reporting High Value Payments
If your company receives $10,000, or more, in a single payment or a series of related payments, you need to report it on form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business. You must file the form within 15 days of receiving the money. The Internal Revenue Services and the Financial Crimes Enforcement Network issue this form. It's used to track tax evaders and people who make money from criminal activities.
Talk with an accountant like Dale K. Cline, CPA PLLC today to find out if using wire transfers to send and receive money on accounts is a viable option for you