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  #1  
Old 06-14-2012, 08:58 AM
Jeron Jeron is offline
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Question about Credit card fee's

Hey everyone, I started a new handyman business and I have a question about how to enter something into quick books.

I am starting to get a lot of credit card payments from my customers. I charge them a 3% convenience fee to use the card( because i prefer cash or check) and that covers the % that the card company takes out. So for example

I do a job for $100. I add 3% to the invoice, and show it on the invoice as a 3% convenience fee. So now the Invoice amount is $103. The people pay this amount when i give them the invoice. But now The Credit card place takes 3% for their portion and deposits $100 into my bank account about 2-3 days later.

I want to be able to leave the 3% on the invoice but i need to know how to track it so when i reconcile I'm not $3 off because i haven't accounted for the 3% the card company takes. I can record the payment from customer for the whole amount, but then when i go to the deposit money page it wont let me break up the amount. How is the best way to do this

Thanks,

Jeron
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  #2  
Old 06-14-2012, 09:13 AM
cojhl2 cojhl2 is offline
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First of all I would take the total invoice amount as income. The CC fees are an expense of course so eventually it works out.

Now for the CC deposit. The only way I could get may hands around that was to use a separate bank account for the CC processing company to use. I did that becasue reconciling was bear. the deposits never matched my books and the fees were never easily calculated.

Therefore, a separate account only for those transactions eased the problem. Although each transaction was not uniquely traced at the end of the month expenses, deposits, and revenue were correct.
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Old 06-14-2012, 10:44 AM
Wartrace Wartrace is offline
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cojhl2 is right, the entire amount on the invoice is income and the card discount fee is an expense. The expense will offset your income when you record the actual fee from the credit card company.

If you wanted to TRACK the amounts you charge for the convenience fee you could point the fee to a separate income account so you could see the totals.

Do you know how to account for credit card discount fees? It is very simple to do The first thing you need to do is NOT deposit the card payment until your card company has notified you they have made the deposit.

1) If your card company takes out the discount fee monthly you will just write an EFT check for the amount to your credit card discount fee expense account.

2) If your card company removes the discount and deposits the "net" amount in your bank account you select the payment to deposit in your make deposits window and on the deposit form you add a line pointing to your credit card discount fee expense account as a negative number. In your example you would select the 103 dollar credit card deposit and in the next line add a -3.00 charge to credit card expense. The net amount that was actually deposited will match your bank statement.

NOW, I have to ask what credit card company you are using that charges you a 3% discount rate. Do you have a mobile card swiper? You could get a lot lower rate if you used a swiper on a smart phone.

I will also mention that Intuit merchant services has GoPayment and integrates perfectly with QuickBooks. All you do is download your CC transactions and the discount goes to the proper account and the net deposit goes to your bank account.
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Old 06-15-2012, 12:54 AM
Jeron Jeron is offline
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OK i think that makes sense. Let me tell you how i have it set up. and what happened when i tried it just now.

I have a item named Credit Card Fee. Its type is "other charge" In the "amount or %" i have 3% and the account it goes to is a sub account of "bank service charges" Called "credit card fee". So what I do is put everything i need in the invoice then do a subtotal. then i do this credit card fee line item and it adds 3% to the entire invoice.

The Credit Card service i use is called the square card reader. It is mobile phone based and has a card swiper that plugs into my smartphone. They only Charge me 2.75% if i swipe the card and 3.5% + 15 cents per transaction if i enter the card number manually. There are no monthly fee's or anything like that. So the only thing i pay ever is when i actually take a card payment they take their % accordingly. If you know of something better i would love to look into it. I chose to just do 3% always. I make a little if i swipe the card and i take a little hit if i forget my card swiper.

The only problem i see after following you deposit instructions now is this.

I just did a invoice for $112. i added the 3% and it went to $115.36. That is what the customer payed the other day. Square just deposited $112.19, and they only took 2.75% because i swiped the card. So now after i deposited the money like you told me to the deposit to my bank account is accurate and the amount square took is accurate also, but I have a -19 cents in my profit and loss statement in the credit card fee expense part. I think its because on the invoice it puts 3% into the expense account but square only takes 2.75%. Is there any way to fix that or do i need to change my % to 2.75 so it matches up

Thanks for all the help guys and sorry for the long story of a post lol..

P.S. I use a separate bank account just for the credit card deposits. It is a savings account that is linked to my business checking and the only thing i do with is is the credit card stuff

Last edited by Jeron; 06-15-2012 at 01:01 AM.
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  #5  
Old 06-15-2012, 06:30 AM
Wartrace Wartrace is offline
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Your credit card fee needs to point to an income account, not an expense account.

You could set up a separate income account to track fee income or just point it to your regular income account.
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  #6  
Old 12-10-2013, 04:22 PM
S_E S_E is offline
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My drivers also use square to process credit cards on site, however we do not pass the charge on to our customers. My problem is we invoice car clubs (ie: AAA) for payment and collect overages from the customer, if I take the 2.75% off the invoice, it affects the amount due from the amount we invoice the club for. Haven't had much time to work on a solution, any help or suggestions would be appreciated.
Thanks, S_E
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