Do you recognize revenue pre- or post- payment processing fees?
Suppose I get $1,000 in revenue and that Stripe's take is $30, leaving me with $970.
Which of the following is the more conventional technique?
- Recognize the full $1,000 as revenue and book a $30 expense
- Recognize $970 as revenue, with no expense
If it matters, for this year I'm taking a couple thousand in sole proprietorship revenue.
I personally stick to the first approach.
Now the question is how do you classify payment processing fees in your books. There's plenty of debate on the Internets whether they should be classified as Cost of Goods Sold (COGS) or as operating expense. Since products I'm selling are digital and can't be delivered without a payment gateway, I treat them as COGS.
All usual disclaimers apply.
Interesting! Had no idea there was still active debate about this. I guess accountants aren’t the type to move fast and break things, eh? 😅
Thank you for sharing! Followed you.