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bhcopy
Dec 28, 2023 5:42 AM UTC
Question

[QBSE] How to account for credit card fees?

I'm using Quick Books Self Employed and I have a discrepancy between the amount I have invoiced and the amount I receive. This is because I there is a fee for client paying via credit card (2.5% + 20p).

 

For ease of example, let's say my most recent invoice is £1025, which is made up of £1000 of billable work and £25 credit payment fee. This means, my accounting software records £1025 business income, but I only receive £1000 into my bank account.

 

How do I deal with this as it throws out how much I've earned when it comes to reporting to HMRC at the of the tax year?

5 replies

GenmarieM
Dec 28, 2023 7:02 AM UTC

Hi there,

 

I'll be glad to share some steps on how you can record the total amount that includes the credit card payment fee in QuickBooks Self-employed (QBSE).

 

You can manually record the card processing fee in QBSE. To ensure this transaction will show on the correct line, you'll need to categorize it.

 

Here's how:

 

  1. From the sidebar menu, select Transaction.
  2. Click Add Transaction.
  3. Enter the description and amount (£25) of the fee.
  4. Choose the nearest category that will fit as a processing fee.
  5. Select Save when done.

 

If you're not sure which category this transaction belongs to, I recommend referring to your accountant for professional advice.

 

Moreover, I'm adding this helpful article as your reference categorizing your bank transactions in QBSE: Categorise transactions in QuickBooks Self-Employed.

 

Come back to this post if you have other concerns or follow-up questions regarding processing fees in QBSE.

bhcopyAuthor
Dec 28, 2023 7:18 AM UTC

Thanks for that. There isn't a "transaction" category for this. I can select "Bank Charges" which then add that credit card payment as an expense, or "credit card payment" which isn't an expense and QBSE instead classes it as a transfer.

 

But, also, this doesn't address that "Business Income" will over be in excess of the what my true income is, again, affecting what I report to HMRC for SA. Using the earlier example, my Business income will record £1025, but my actual income will be £1000 with a £25 expense.

 

Is that right?

GenmarieM
Dec 28, 2023 9:43 AM UTC

Thank you for your quick reply and your screenshot provided, @bhcopy.

 

Please know that I've updated my response above with the correct information. The bank charges category is unavailable because it's only available in the US version of QuickBooks Self-employed. 

 

Concerning your unmatched business and actual income, if your bank account is connected to the QBSE account, you'll need to exclude the bank transaction and manually add £1025 as income and the other £25 as an expense under the nearest category to correct the recording in your business income.

 

Additionally, I'm adding this helpful article as your reference for manually importing your transactions in QBSE: Manually import transactions into QuickBooks Self-Employed.

 

Let me know if you have other concerns regarding your processing fee and bank transactions in QBSE. I'm always here to provide further assistance.

Paul999
Sep 17, 2024 1:44 PM UTC

This is such a massive manual processing overhead - If your business (like mine) receives EVERY payment via a card processing company, I have to manually exclude every linked transaction from my bank and create TWO new transactions. That's just a crazy situation - surely there must be some way that Intuit can make this easier and automated? Poor tech it seems. Hardly worth paying for QB.

Kalasin
Apr 4, 2025 7:52 AM UTC

I agree QB is not set up for card only businesses that payout daily or even hourly 

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