#BookkeepingTip: Processing Fees Forgotten
This is a tricky one that a lot of business owners forget! When you take credit card or ACH payments, a processing fee is removed.
You need to check whether your processor removes the fee before giving you your money (like Stripe) or after (some apps where you pay a monthly fee + processing fees all at once).
So let me explain with an example since this can be confusing.
Let's say you charge a client $2,000 with Stripe. Stripe will remove 2.9%+.30, in this case $58.30 for processing the payment. The deposit you see on your bank statement will be $1,941.70. A lot of people just mark that as income and move on.
But wait! That could really throw you off when you're trying to figure out how much you made over the month or year. Instead of reporting $2,000 in income, you've now only reported $1,941.70. So how do we fix this?
Well, unfortunately every software is different. But most have the ability to create an invoice to match this payment to. When you do that, the difference of $58.30 will show up and you can create a separate transaction for the processing fee.
Like I said, this process will be different in every software so if you need help let me know, I'm happy to help you out 😁