How to categorize "convenience fees"

CottageOven

When I pay my county's business tax receipt (aka occupational license) every year, I do so online using a card. The organization handling the transaction charges a "convenience fee" of something like $1.93 and that gets charged to my same card as a separate charge (i.e. the county never incurs the fee, but just passes it on to me).

The business tax receipt can be categorized as "Business licenses and permits," but how do I categorize the convenience fee? Should it be under the same category, or is something else more appropriate? I wouldn't list it as a credit-card-processing fee, since it is not a fee for my having accepted a credit card.

Thanks.

Barsin

Hey there @CottageOven

I think you be able to follow the steps in the following article on How to account for transaction fees. You can simply use our split transaction feature located at the bottom of your transaction details panel when you select the transaction.

CottageOven

As stated in my original message, this is not a transaction fee that I am being charged for a sale made to a customer. It is a fee being added to (but charged as a separate transaction from) a payment I made for county business tax receipt. It is already a separate transaction, so there is nothing to split. I need to know how to categorize that second transaction, since it is not the actual business tax, but a convenience fee they add on for my having paid by card instead of cash or check.

Barsin

If it's a merchant provider fee, I think it may still be best to categorize it as a merchant fee regardless of whether it's a split transaction or not. @CottageOven

CottageOven

But it's NOT a fee being charged to me by a merchant provider for a sale that I have made. It is a fee being charged by the merchant provider of ANOTHER entity who is passing the fee on to the customer (me), rather than charging their actual client (the county, state, etc.).

It's not a "split transaction," but a separate transaction. Two different charges show up on my statement: one for the actual charge and then a separate one for the "convenience fee."

HelpIfICan

The way I handle mine (for my business license) is that I added the Convenience Fee as a separate Product and add it as a separate line on the same invoice. I like my Waveapp invoices to match the physical ones. It's categorized under "Taxes and Licenses" because I like to try to match the categories on my 1120-S tax return. I use a separate expense account for Merchant Fees. The Convenience Fees are operating expenses while the Merchant Fees for Sales are COGS or Cost of Sales.