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Armadillo Disposal
Level 1

Card Processing Fees - How to Pass on to the Customer

We've just signed up for Quickbooks online Essentials. We are exploring the Quickbooks mobile POS card reader as an option. Currently we use another provider called PayAnywhere and a flat rate 4% fee is automatically charged to the customer. We offer junk removal and 90% of our sales are cash or card, paid there an then. However with our current card reader we would have to reconcile all these sales manually as it isn't integrated into QB. So, looking at the Quickbooks I see that we can add multiple line items to the sale and a Quickbooks sales advisor said we could pass on the 3.3% fee (to cover our costs) to the customer.  It is under new product or service.

BTW, it IS legal in Texas to pass on the transaction fee to the customer.

 

  1. Is it considered taxable income if it’s covering your transaction fee cost ? There is a taxable tick box. (see attached screenshots)
  2. It asks to ‘categorize expense income’. What should this be as it’s not technically income?

20240109_114836.jpg20240109_114800.jpg

2 Comments 2
Rea_M
Moderator

Card Processing Fees - How to Pass on to the Customer

You're already on the right track in recording the transaction fee as a line item in QuickBooks Online (QBO), Armadillo Disposal. I'll encourage you to contact the next best help to identify how to categorize them accordingly.

 

To help us determine the tax status and whether transaction fees are considered taxable income, I'd recommend reaching out directly to your state (Texas) agency. 

 

You can also use this guide to help understand US sales and use tax rules: Sales tax in QuickBooks Online.

 

Additionally, you can use reports to get helpful insights on the things you buy and sell and the status of your inventory in QBO. To know which one to run depending on what kind of info you want to see, you can check out this article: See your best sellers, what’s on hand, the cost of goods.

 

If there's anything else you need to know about sales taxes and managing sales transactions in QuickBooks, please don't hesitate to leave a reply below. I'd be here ready to assist you.

4Gal
Level 10

Card Processing Fees - How to Pass on to the Customer

@Armadillo Disposal 

You can use a 3rd party payment processor to let your clients pay the fees.

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