Sales Your Books Are Missing

Most small businesses here take cards now, and a lot of them do it through a payment app. Square, PayPal, Stripe, a reader on the counter or a pay link on the invoice.

The app takes its fee first, then deposits the rest in your bank. That deposit is where a lot of books go wrong.

Here's an example with made-up numbers.

A salon in Kaimuki takes almost every payment by card through an app. Last month, customers paid $9,000. Say the app's fee is 3 percent. The app keeps $270 and deposits $8,730.

The books were built from the bank feed. So QuickBooks recorded one sale for the month: $8,730.

What went missing

The books lost $270 of sales and $270 of fees.

Because both are missing, profit comes out right. Sales are $270 too low, expenses are $270 too low, and the two cancel out, so nothing looks wrong.

If every month looks like this one, that's $3,240 a year of sales the books never saw.

Where it does matter: GET

GET is owed on what your customers paid, before any costs come off. The state's own guide puts it plainly: gross receipts are total business income before any business expenses are deducted. A card fee is a business expense.

So if the GET return is filled in from these books, it reports $8,730 a month instead of $9,000. Over a year, the return comes up $3,240 short on income and $145.80 short on tax.

For one salon that's a small number, and an easy one to avoid.

How to tell if it's happening to you

Look at one month. Pull the sales report from the app itself, the one that shows what your customers paid before fees. Then look at what QuickBooks shows as sales from that app.

If QuickBooks matches your bank deposits instead of the app's report, the fees are missing.

The fix is to record the full sale and the fee separately. Most often that means giving the app its own account in QuickBooks, the same way your bank has one. Sales go in at what the customer paid, the fee comes out as an expense, and the deposit is just money moving from the app to the bank.

The two-minute check

This is question 2 on a short check I built. There are ten questions, each one yes or no, and a few will look familiar from other posts here. At the end it gives you one of three results: your books need catching up, they need keeping current, or they're ready to plan with.

Try It: Every Account

1. Take the Books Health Check. It runs on your own screen and collects nothing, and it takes about two minutes. A good answer is an honest yes or no on all ten, and the result at the bottom.
2. For each payment app you use, pull last month's sales from the app's own report and compare them with the sales QuickBooks shows from that app. A good answer is that they match, and the fees show up as an expense.
3. Compare that same total with the income on your GET return for the same period. A good answer is that the return reports what customers paid, not what landed in the bank. If there's a gap, that's a question for whoever prepares your GET.