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Level 2

## How do I enter credit card fees when receiving a payment from a customer?

For the first time I am processing a credit card payment for an invoice.  I can't figure out how to deduct the credit card fee from the deposit amount.  I am not using the online service and need some help to figure out how to get this into my QuickBooks. I tried the Receive Payments - didn't work.  I tried to go through Make Deposits from undeposited funds- couldn't do it.  Help!! Thanks!

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## . It involves three steps process. Let's say for example...

.

It involves three steps process.

Let's say for example, customer invoice is \$100 and credit card fee is \$3, and net bank deposit is \$97.

1) Customer Invoice = \$100 (it creates a/r as debit and credit to income a/c)

2) Receive Payment  = \$100 (it relieves balance from a/r, moves it to undeposited funds)

3) Bank Deposit = \$97* (it relieves balance from undeposited funds to bank account)

Important split entry here:

Received From         From Account           ..............                              Amount

Line 1   Jane Smith                Undeposited Funds                                                 \$100

Line 2   CC Fees*                  Merchant Service Fees (expense acct)                     -\$3 (notice negative amt)

Deposit Subtotal as well as Deposit Total should show \$97

* optional: setup "cc fees" as other type

.

## . It involves three steps process. Let's say for example...

.

It involves three steps process.

Let's say for example, customer invoice is \$100 and credit card fee is \$3, and net bank deposit is \$97.

1) Customer Invoice = \$100 (it creates a/r as debit and credit to income a/c)

2) Receive Payment  = \$100 (it relieves balance from a/r, moves it to undeposited funds)

3) Bank Deposit = \$97* (it relieves balance from undeposited funds to bank account)

Important split entry here:

Received From         From Account           ..............                              Amount

Line 1   Jane Smith                Undeposited Funds                                                 \$100

Line 2   CC Fees*                  Merchant Service Fees (expense acct)                     -\$3 (notice negative amt)

Deposit Subtotal as well as Deposit Total should show \$97

* optional: setup "cc fees" as other type

.

Anonymous
Not applicable

## Right.  Like I posted, but with more of a picture.

Right.  Like I posted, but with more of a picture.
Level 1

## When I try to do this, I get "You can't Deposit money TO...

When I try to do this, I get "You can't Deposit money TO the Undeposited Funds account. Instead choose a Bank Account"
Level 1

## When I do this I get the following message when I try to...

When I do this I get the following message when I try to print the deposit slip "The sum of cash of cash deposits must be non-negative."  The deposit slip won't print, but the information is all entered and saved how I want it to be in QB.  How do I correct this so I don't have to manually write out the deposit slip.
Anonymous
Not applicable

## The fees are deducted from the deposit into your checking...

The fees are deducted from the deposit into your checking account, each day, or once a month (depending on your account options.)   If in every deposit, then add a fees line to the deposit using the fees expense.

Level 2

## I still can't get the credit card fee listed on the custo...

I still can't get the credit card fee listed on the customer's invoice to show the difference between billing and deposit.
Anonymous
Not applicable

## Credit card fees don't belong on the invoice.  They're ta...

Credit card fees don't belong on the invoice.  They're taken our of your deposits when the payment received are deposited, or once a month.  This is just like a bank fee.
Level 8

## Not sure why you got voted down big red, I passed on this...

Not sure why you got voted down big red, I passed on this on 14hrs. ago because you had already posted the correct answer.
Anonymous
Not applicable

Thanks.
Level 1

## So I enter it all correctly but then I get a reconciled d...

So I enter it all correctly but then I get a reconciled deposit of \$97 on my bank account and then another \$97 payment for that invoice that is not yet reconciled.  Do I just delete the partially reconciled \$97 bank entry?
Level 1

## Re: . It involves three steps process. Let's say for example...

I am new to Quickbooks (essentials) can you give me a Step by Step (for dummies) on how to do this?  I'm a construction worker, not so good at accounting.

How do I split the amounts (i.e. which accounts?  do I need to "create" accounts called "undeposited funds" and if so, where? same with "CC Fees"?

HELP!

Moderator

## Re: . It involves three steps process. Let's say for example...

What specific amounts are you trying to split? What transactions did you create or trying to create? Do you have a screenshot about this so we can have a clearer view?

Level 2

## Re: . It involves three steps process. Let's say for example...

The undeposited funds account is used when you apply the payments to the invoice. There is a bank account, which you more than likely have as your standard bank account. This is what is causing the issue.

They say say it is a three step process and that is correct, but for those that aren’t familiar with the processes it is not English.

the bottom line is that the Banking step you are trying to accomplish is the third step and separate from the first two.

Step one is to invoice the client. Sounds like you have that down okay.

Step two is to accept the payment against the invoice. BE SURE YOU ENTER THE ACTUAL DATE OF THE DEPOSIT. When you do this you do not do it from the bank like you would expect. You apply the individual payments to each invoice. Try this...Open the invoice and click Receive payment. You will record the entire payment amount. If you look at the tops of the screen you will see a bank account. This is where you can select Undeposited funds. It is a “Bucket” that holds what you say you have been paid. Go ahead and do that and click save.

BTW- You can run a report that shows you how much is sitting in the “Bucket” by running a report from the chart of accounts. This “Bucket will be zero when you receive the payment from the bank in step three.

Step three, your bank feed shows a deposit minus the bank fees. Don’t try to add the transaction as is, you will need to click the “find Match” option. You will see the payment you posted against the invoice in the list, select it. At the bottom of the screen you will see a toggle that allows you to enter an adjusting entry. Press the toggle and enter the merchant fees as a negative number and use Merchant Fees as the account for this expense.

This is should resolve your issues.

I hope other professionals in the QBO community appreciate that I am simplifying in plain English here to make it easy for a new user to understand.

Best wishes.

Level 2

## Re: . It involves three steps process. Let's say for example...

The undeposited funds account is used when you apply the payments to the invoice. There is a bank account, which you more than likely have as your standard bank account. This is what is causing the issue.

They say say it is a three step process and that is correct, but for those that aren’t familiar with the processes it is not English.

the bottom line is that the Banking step you are trying to accomplish is the third step and separate from the first two.

Step one is to invoice the client. Sounds like you have that down okay.

Step two is to accept the payment against the invoice. BE SURE YOU ENTER THE ACTUAL DATE OF THE DEPOSIT. When you do this you do not do it from the bank like you would expect. You apply the individual payments to each invoice. Try this...Open the invoice and click Receive payment. You will record the entire payment amount. If you look at the tops of the screen you will see a bank account. This is where you can select Undeposited funds. It is a “Bucket” that holds what you say you have been paid. Go ahead and do that and click save.

BTW- You can run a report that shows you how much is sitting in the “Bucket” by running a report from the chart of accounts. This “Bucket will be zero when you receive the payment from the bank in step three.

Step three, your bank feed shows a deposit minus the bank fees. Don’t try to add the transaction as is, you will need to click the “find Match” option. You will see the payment you posted against the invoice in the list, select it. At the bottom of the screen you will see a toggle that allows you to enter an adjusting entry. Press the toggle and enter the merchant fees as a negative number and use Merchant Fees as the account for this expense.

This is should resolve your issues.

I hope other professionals in the QBO community appreciate that I am simplifying in plain English here to make it easy for a new user to understand.

Best wishes.

Level 1

## Re: . It involves three steps process. Let's say for example...

I don't have a bank feed set up, so my step 3 was a little different and thought I would share if someone else has the same issue. I followed steps 1 & 2 but for step 3 :

I selected bank deposit and the total amount received from the customer appears. Below I have another section that says "Add funds to this deposit" I selected the account for "Credit Card Fees" added my description and put it in fee amount (-\$3.00). The new total now shows the correct amount of the deposit minus the processing fees. (I am using QB Online)

## Re: . It involves three steps process. Let's say for example...

Welcome to the Community, newbie2019. Thank you for taking the time to share the process that you employed to record your fees.

I wanted to take a quick moment to include an article which covers this process in QuickBooks Online: Enter a Bank Service Fee While Using a Third-Party Merchant Service. This resource walks a user step by step through the workflow.

The sharing of ideas and solutions is one of the many things that help to make the Community such a great place. Hope you have a good weekend.

Level 1

## Re: . It involves three steps process. Let's say for example...

I have done this process on my invoices when I process through Square. I Invoice client, and once I receive payment I go back to the invoice and add a line that says Square Fees. Once I deduct the fees I can match the invoice with the deposit. I have now run into a problem in my income account. I have my Income and a Square income. The square income is income that has already been matched to an invoice from QB. Its like Square generated its own invoice and attached the payment, making those transactions double income. How do I resolve this issue.

Moderator

## Re: . It involves three steps process. Let's say for example...

Hi, MariaCeci22.

Allow me to lend a helping hand and get you pointed in the right direction.

I'd like to check this for you and get it taken care of myself. However, I won't be able to check your account without asking for sensitive information. I don't want your account information displayed here for security reasons since Community is a public forum.

Please feel free to reach out directly to our Merchant Services Center and schedule a callback so they can talk to you with your most convenient time.

You can get our most-up-to-date contact number here: https://community.intuit.com/browse/payments-contact-us.

You can always get back to us if you need further assistance with Square fees, feel free to drop a reply below.

Level 1

## Re: . It involves three steps process. Let's say for example...

follow up question: after doing that it solves the issue with reconciliation. However, if one wishes to record it as an expense (bank/merchant fee) what steps shall be taken. it's my assumption that VAT(Value added Tax) doesn't apply in your system but i would be grateful if you could help out how to record the Vat ON the credit card processing fee(as Vat on Purchase) at the same time.

for example - Invoice & received amount is 105

The Bank deposit is 102.24

The cc processing fee is 2.63 + Vat on Processing fee (5%) 0.13( my question is how to record this ?)

Moderator

## Re: How do I enter credit card fees when receiving a payment from a customer?

Hello Habeshacorner,

To add the VAT on the credit card processing fee, you can add another line item when making bank deposit. Please see the screenshot below. If you don't have an account for VAT, please create a new one. You can ask for more help from your accountant on which detailed account type to select, or how to record the VAT together with the credit card fee.

If you have more questions, please let us know. Thanks!

Level 1

## Re: How do I enter credit card fees when receiving a payment from a customer?

When i do what you suggested the following happens.

when i check VAT summary to file Vat - The vat figure on purchase shows the correct figure, while the purchase before vat is less by the amount related to the cc processing fee. (i am using QB premier accountant edition 2017 Desktop).

Level 1

## Re: How do I enter credit card fees when receiving a payment from a customer?

Before any posting can be done or deposits can be made, am I correct in thinking that the proper "accounts" and "items" need to be already created in the Chart of Accounts and in the List of Items. Can someone please walk through creating the account and item for Square Fees.  Thank you.

Moderator

## Re: How do I enter credit card fees when receiving a payment from a customer?

Good day, ldj.

Yes, you are correct. An account and item should be created for you to categorize transactions when creating them in QuickBooks Desktop.

Let me show you how:

1. Go to Lists.
2. Choose Chart of Accounts.
3. Click on the Account drop down and select New.
4. Select Expense and click on Continue.
5. Enter the name of the account.
6. Once you're done, click on Save & Close.

For further guidance, you can check out this article: Create, edit or delete account in QuickBooks.

1. Go to Lists and select Item List.
2. Click on the Item drop down and select New.
3. Select a type of the item.
4. Enter some necessary information.
5. Click on OK once you're done.

As a reference, you can also check out this article for more in-depth information: Add, edit, and delete items.

You should be able to add an account and item in QuickBooks. Please let me know if you have any other concerns. I'm always around to help.

Level 1

## Re: How do I enter credit card fees when receiving a payment from a customer?

Create a new "Products and Services" category for your fees, then you can put it directly on an internal invoice, this would only work for electronic transfers where you are not sending the invoice to the client, but it works great for transfers from paypal or the like.

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