Question from a reader: What is the proper way recoup the fees being charged to me by my credit card company for consumer transactions?
Answer from Rex Collins, principle of HBK CPAs & Consultants: The first thing a dealer should do is review their agreement with the credit card processing company, to make sure their agreement doesn’t prohibit a business from charging a fee to the customer. That practice is rare, but it does happen.
Next, a dealer should clearly post, where transactions are occurring, that a processing fee will be charged. The fee you are being charged is on the entire transaction, including tax, so your fee should be based on the entire transaction amount as well.
For accounting purposes, the fees you pay are considered an expense, so you will be able to claim those as deductions. The fees that you charge will be considered “other income” under standard accounting practices. Those fees are considered additional taxable income.
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