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Senior Explorer *

How to account for using Square

I use QuickBooks for accounting, but not for invoicing.  When a customer pays me via cash or check I enter it into QuickBooks via the Sales Receipt option.

I just signed up for Square so that I could accept credit cards.  I will be paying the fee myself, not the customer.

So when I give a customer a bill for $100, they will swipe their card and have $100 taken from them.  Square will take their fee off the top and then deposit $97.25 into my business checking account.

I understand that I have to take the loss for this fee.  Can I just enter the sale into QuickBooks as $97.25?  I know it wouldn't match up with the amount I originally charged the customer, but I don't expect to have too many customers paying with CC.

I've read other explanations on how to enter a Square deposit into QuickBooks and I just couldn't understand it  Is there an easy way?
Solved
Best answer 12-10-2018

Accepted Solutions
Established Community Backer ***

There are a couple of ways to do this. 1. Setup Square...

There are a couple of ways to do this.


1. Setup Square as a bank type account. Receive payment for the full amount of the sales receipt/invoice, group with undeposited funds and make deposits to your Square account. When funding and fee status are known transfer funds to your working account, write checks from your Square account for the fees.

2. Receive payments for the amount of the sales receipt/invoice, group with undeposited funds. When funding and fee status are known make deposits, select your Square payment on the next line of the deposit enter the fee as a negative amount and assign to your processing fee expense account.
44 Comments
Established Community Backer ***

There are a couple of ways to do this. 1. Setup Square...

There are a couple of ways to do this.


1. Setup Square as a bank type account. Receive payment for the full amount of the sales receipt/invoice, group with undeposited funds and make deposits to your Square account. When funding and fee status are known transfer funds to your working account, write checks from your Square account for the fees.

2. Receive payments for the amount of the sales receipt/invoice, group with undeposited funds. When funding and fee status are known make deposits, select your Square payment on the next line of the deposit enter the fee as a negative amount and assign to your processing fee expense account.
Senior Explorer *

I used the second technique you posted, it seems to have...

I used the second technique you posted, it seems to have worked just fine.  I wrote this up for myself to use in the future since I will probably forget by the next time a customer wants to pay with a CC.  Does it look accurate to you?

-Enter Sales Receipt like normal only choose "Group with other undeposited funds" instead.
-Go to Deposits, another window will open first showing that undeposited sales receipt.  Choose it.
-In the Deposit window, go to box underneath the sales receipt and choose "Merchant Service Fees" under "From Account".
-Enter the amount of the Fee as a negative amount (-50.00), then choose OK.
Established Community Backer ***

That will do it.

That will do it.
Senior Explorer *

This is a year old and the entire time I have been doing...

This is a year old and the entire time I have been doing this as you said, SkinnyRaven, and it has worked fine.  But for the sake of curiosity, I am still wondering about entering just the amount that Square deposits into my checking account, since I never touched the full amount of money anyway nor did I actually pay out a fee.

So if I charge the customer $100, square takes their fee and then deposits $97.25 into my checking account, can I just enter that invoice as $97.25 and be done with it?

Again, this isn't a big deal, it's just that I like to know the in's and out's of what I am doing and I am curious about this.

In the end, can it hurt doing it the way that I proposed?  

Thanks!
Established Community Backer ***

The fee is not part of he sale it's a result of the sale....

The fee is not part of he sale it's a result of the sale. To account for it at the invoice level would require a discount item, however the fee is an expense not a discount.
Not applicable

Hello! SkinnyRaven - thanks for this helpful info, it's e...

Hello! SkinnyRaven - thanks for this helpful info, it's exactly what I was looking for. Here's another question to go with it....if I am uploading my bank account transactions can I still do this? Meaning can I easily match transactions up or will that mess it up? Just trying to minimize the amount I have to manually enter. Thanks!
Established Community Backer ***

As long as you group your payments with undeposited funds...

As long as you group your payments with undeposited funds and only make deposits when funding and fee status are known, your QB data and banks data will match.
Not applicable

Thanks for this, one more question for you. Where I live...

Thanks for this, one more question for you. Where I live we have PST (provincial sales tax) and GST (federal sales tax) . The GST paid to operate a business is recoverable as ITC credits. Entering the amount of the Square fees on the Deposit slip does not seem to be recording the taxes so that they can be retrieved. Any suggestions?
Super Explorer **

SkinnyRaven, I used your first technique for accounting f...

SkinnyRaven, I used your first technique for accounting for Square. When you say "write checks from your Square account for the fees." to whom am i writing the check to in the pay to ther order of space??
Established Community Backer ***

You would write the check to whom you are paying the proc...

You would write the check to whom you are paying the processing fees.
Super Explorer **

I am paying Square the processing fees. So I write a chec...

I am paying Square the processing fees. So I write a check from the Square account to Square???
Established Community Backer ***

If you checking account name and vendor name are the same...

If you checking account name and vendor name are the same, yes.
Senior Explorer *

Wow, time flies, SkinnyRaven made that post 5 years ago....

Wow, time flies, SkinnyRaven made that post 5 years ago.  I have been following his method #2 ever since and it works perfectly for me. Quick and easy.
Not applicable

Using QB online, Square & QB link and set the deposit (fu...

Using QB online, Square & QB link and set the deposit (full amount charged) in QB on the square account I have set up there. The problem is that the fees charged from me are NOT linked in QB online. Is the only solution to do this manually? Seems a pain. Those fees are less regular than the payments as each CC may charge a different % - airline miles, having to enter the CC number if the swipe doesn't work, etc.

Senior Explorer *

I can't help with QB Online, but I can say that Square sh...

I can't help with QB Online, but I can say that Square shouldn't charge you any different percentage for anything such as airline miles or rewards.
The only difference in percentage should be if you enter the numbers manually.  And in my opinion, you shouldn't do that anymore since they allow you to send out an Invoice.  In any situation that I used to get customers credit card numbers and enter them manually, I now just send the invoice and let the customers do it on Square's website.
Community Explorer **

Re: I can't help with QB Online, but I can say that Square sh...

This is what I am doing.

 

I created a bank account called "square"

 

1) Create invoice for the customer

2) Click on the receive payment button

3) Then go in and add an expense that matches the fees in square

4) Then match the transaction for the deposit and create a "transfer"

 

Huge head ache, I am switching off of Square to another processor that deposits the funds in full and deducts fees after.

Moderator

Re: I can't help with QB Online, but I can say that Square sh...

I appreciate all the steps you've done, brucesupply.

 

The steps you've provided is correct. You'll need to manually record your bank Square fees.

 

Let me know if you need more help.

Not applicable

Re: How to account for using Square

I own a restaurant and this has been a big issue for me since I have about 7 different delivery services like Uber Eats, Door Dash, etc. that all operate like Square in that they deduct their commission fee before depositing the funds in our account.  

 

I'm newish to QBO and bookkeeping in general, so I'm not sure if the way I'm accounting for commission is correct. Basically, first I create a manual entry, logging the commission as 'sales' income. Then, I make a second entry logging that same amount as a 'commission' expense.

 

Anything wrong with doing it that way?

 

2nd question: Is it common to account for discounts and refunds given to customers? I thought it might be of value to track this data on my P&L so I used the same method as above. I manually entered it as income, then logged it as an expense. Is that standard?

 

Thank you!

 

 

 

 

 

Frequent Explorer **

Re: I can't help with QB Online, but I can say that Square sh...

I don’t know of a credit card processor that deducts the fees after.  I use square and paypal and they are both the same.  A pain to deal with for bookkeeping 

Anonymous
Not applicable

Re: I can't help with QB Online, but I can say that Square sh...

Hi there, @LisaLMT,

 

Thanks for joining the conversation. I want to make sure you're able to record your fees correctly in QuickBooks Online.

 

At the moment, there isn't a direct option in QBO to record credit card fees. You'll need to follow steps so you can complete your work.

 

Step 1: Create the invoice.

  1. Click the Plus (+) icon.
  2. Select Invoice.
  3. Enter the exact amount to be invoiced. (See screenshot below)

 

Step 2: Receive payment.

  1. On the invoice, click the Receive Payment button.
  2. Select the correct invoice on the Receive Payment screen.
  3. In the Deposit to field, choose Undeposited Funds.
  4. Click Save and close. (See screenshot attached)

 

Step 3: Enter a Bank Deposit for the fee to relieve the balance from Undeposited Funds account to bank account. (See screenshot)

  1. Click the QuickBooks Plus (+) icon.
  2. Select Bank Deposit.
  3. Mark the invoice payment you received previously from the Select the payments included in this deposit section.
  4. Expand the Add funds to this deposit section to add a new line item.
  5. In the Received From column, enter the credit card fee as a vendor.
  6. In the Account column, add an expense account for the fee.
  7. In the Amount field, enter a negative fee amount.
  8. Make sure the deposit matches the net bank deposit amount.
  9. Click Save and close.

 

That should get you on the right track, @LisaLMT. Being able to automatically record CC fees is a great idea we can add in QuickBooks Online, you can submit a product request to our developers.

 

Here's how you can send a request:

  1. Click the Gear icon.
  2. Select Feedback.
  3. Enter your feedback and suggestions.
  4. Click Next.
  5. Select Feedback for the Category.
  6. Click Send message.

You can also submit your suggestion through this link: Customer Feedback for QuickBooks Online. I'll do the same thing on my end to reinforce your request.

 

Please let me know if you have any more questions about QBO. I'm here to lend you a hand anytime. Have a good day!

Frequent Explorer **

Re: I can't help with QB Online, but I can say that Square sh...

I use square and paypal for Credit card processing .  Just switched to go payments.  So DO i have to enter all the transactions that go with the deposit for square on one invoice then go receive payment.  I'm totally new so I'm a bit confused.  So I enclosed a pic of first electronic square deposit of 83.33.  Do I do one invoice list all the clients that paid in that deposit, subtract the square fee and receive the payment of 83.88 out of undeposited funds?

Frequent Explorer **

Re: I can't help with QB Online, but I can say that Square sh...

No it still does not make sense

QuickBooks Team

Re: I can't help with QB Online, but I can say that Square sh...

Hi Lisa,

 

Thank you for your screenshot.

 

If your Square transactions (payments and fees) are already posted in your actual bank account, you can just download and add them to your bank register in QuickBooks. It would double your work if you create invoices for those paid transactions.

 

I can see $83.88 on your screenshot, but I'm not seeing the $83.33. It appears to me that $83.88 is the actual amount that shows in your actual bank. We can follow that.

 

I'm just here if you have questions.

Not applicable

Re: I can't help with QB Online, but I can say that Square sh...

If she just adds the payments and fees to cash, there's no sales data in her accounting.

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