Do you receive payments from your clients via Square, Stripe, or another third-party payment processor? If yes, there are a couple of special considerations to remember when doing your bookkeeping that aren’t necessary when you’re paid by check.
Platforms like Stripe charge you a fee for processing your payment transactions. Stripe sends you the money you’ve earned after subtracting that fee. Therefore, the money you see on your bank statement or your QuickBooks bank feed won’t match a particular invoice. The deposit transfer from Stripe will be less than your invoice amount. Or, to complicate things further, the deposit from Stripe may be representative of two or more customer payments.
For example, if you use Stripe, you’ll see something like this in your QuickBooks Online bank feed. QuickBooks will typically incorrectly suggest a categorization for these transactions, as demonstrated by its “Owner’s Investment” suggestion in the screenshot below.
|DATE||BANK DETAILS||CATEGORY OR MATCH||SPENT||RECEIVED||🖇️||ACTION|
|10/20/2023||STRIPE SOUTH SAN FRA CA XXXXXX 10/20||Owner’s Investment||$153.52||Add|
|10/19/2023||STRIPE SOUTH SAN FRA CA XXXXXX 10/19||Owner’s Investment||$499.62||Add|
|10/16/2023||STRIPE SOUTH SAN FRA CA XXXXXX 10/16||Owner’s Investment||$499.62||Add|
The $153.52 you see could be tied to a payment of one invoice for $160.00. However, it could also represent payment of two or more invoices that total $160.00.
You’ll have to log into your Stripe account to determine which situation you’re facing. Once logged into Stripe, click on the left Payments menu. On the new screen that opens, click on the third tab for All Transactions. From here, find the payout that matches your bank deposit. Beneath it, you will see the related charge(s).
Here’s what our $160 example looks like.
|All Payments||Disputes||All Transactions|
|Charge||($155.06)||($160.00)||($4.94) USD||Charge for Invoice|
And here’s what the other scenario would look like, where multiple invoices were batched into one deposit.
|Charge||($426.94)||($440.00)||($13.06) USD||Charge for Invoice|
|Charge||($601.72)||($620.00)||($18.28) USD||Charge for Invoice|
When clearing this transaction from your QuickBooks bank feed, be careful not to record the $153.52 directly to an income account. Doing so will understate your income and expenses and potentially leave your accounts receivable overstated.
What you should do depends on whether you maintain accounts receivable in QuickBooks Online. If you do have open invoices, follow these steps:
(1) Figure out which invoice(s) has been paid as described above.
(2) Navigate to the open invoice(s) in QuickBooks and receive payment on each invoice for its total amount – $160.00 in this example.
(3) On the Receive Payment screen, ensure the selected “deposit to” account is Undeposited Funds, not your checking account.
(4) Go to +NEW in the top left corner of QBO and click on Bank Deposit. Under the heading “Select the payments included in this deposit,” check off the invoice(s) you just received payment on.
(5) Under the heading “Add funds to this deposit,” enter a negative number in the amount column equal to Stripe’s processing fees, for example, $4.94 and $1.54. In the account column, select an expense account similar to merchant processing fees. The date on this bank deposit transaction should match your bank statement.
If you do not have invoices in QBO, you can skip the steps about marking invoices paid. Instead, right from the bank feed, follow these steps.
(1) Click on the transaction row to open up additional options. Click Split.
(2) In the pop-up that opens, on row one, enter the $160.00 coded to an income account.
(3) Enter the processing fees as a negative number in the second row. You may optionally code the costs into different accounts, one for the processing fee and another for the instant deposit fee.
These steps will always work but can take considerable time as your transaction volume increases. If you have a high transaction volume or want to automate this process, we recommend Synder for syncing Stripe data to QBO. We have a growing number of clients using Synder to sync all sorts of platforms to QBO, from Stripe to Square to Shopify and others.
Synder will create a sales receipt for each payment received and deposit it to a holding account within QuickBooks. An expense transaction for each processing fee will also be made. Finally, transfers between the holding account and your bank account will automatically be created for you to represent each Stripe payout, keeping your books reconciled at all times.
If you follow these steps consistently each time, you can be assured your gross income will be accurate, your expense of the payment processing fees will be recorded, and any open invoices will be marked paid. Ensuring all this is done before it’s time to reconcile your checking account will ensure your month-close process can proceed without hiccups.
Szweda Consulting, LLC does not provide legal advice. This material has been prepared for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice and is not to be considered an exhaustive resource on the topic presented. Contact us individually or consult your tax, legal, or accounting advisor before engaging in any transaction.