How to Handle Credit Card Fees in QuickBooks
Question: I have customers that pay me by credit card, but the credit card company takes out fees. I am receiving less than the total amount on the invoice. How do I handle that in QuickBooks Premier?
Answer: I am seeing this situation more often, where the credit card company takes out the fees and then pays you the remainder, instead of paying you the full amount and then charging the fees as a separate line item. This creates additional steps and calculations for distributors who are receiving credit card payments from customers against invoices.
To process this payment, you will need to create an account called merchant bankcard fees set up as a cost of goods sold account in your chart of accounts. Let me explain by an example.
Say the invoice amount is $1,000, and you receive only $950 from the credit card company (their fee of $50 removed). When you get to the deposit screen, add a line item with “received from” as the credit card company, such as Stripe. The “account” will be your merchant bankcard fee account, and the “amount” will be -50.00. This negative number will make your deposit equal to the amount actually being recorded—$950.00, the $50.00 fee will be recorded correctly, and the invoice will record as being fully paid.
Please email your questions to Harriet at Ask The Accountant.
QuickBooks Premier and Enterprise can be modified to better serve ad specialty distributors. Harriet Gatter is a QuickBooks ProAdvisor, a former accounting professor and a former ad specialty distributor. She advises ad specialty distributors to use QuickBooks Premier and Enterprise, often in conjunction with other industry-specific software, to manage the complexities of the ad specialty business, with the results being time saved, errors eliminated and an overall accurate accounting of your business. Contact her at firstname.lastname@example.org.