Where do my payment processing fees actually go in my books?
They belong in their own operating expense account, usually named something like Merchant Processing Fees or Payment Processing Fees. And in most of the practice books I am asked to look at, they are not there at all. That is because the fee never shows up as a charge you pay. It gets taken out before the money reaches your bank, so it hides inside a deposit that is simply a little smaller than it should be.
Here is what that looks like. A client pays $175 for a session. The processor keeps its cut and deposits $169.62. If you record that deposit as $169.62 of income and stop there, your books now show revenue that is short by the fee and fee expense of zero. The correct version records $175 of session revenue and the fee as an expense, and the difference still ties to the $169.62 that hit your account.
Batch payouts make this trickier. One Thursday deposit might cover six sessions from three different days with the fees pulled out of the total. The fix is to work from your processor’s payout report, which shows gross, fees, and net for every batch. In QuickBooks Online, I usually set up a clearing account for the processor, record the gross payments in, record the fees out as expense, and move the payout over to checking. When it is done right, that clearing account returns to zero and everything reconciles.
Watch for the other charges too. Monthly platform or gateway fees, per-transaction fees, and chargeback fees all count. Some processors deduct as they go and some bill once a month, and a few do both, so it pays to read the statement rather than assume. This kind of detail is a normal part of bookkeeping for therapists, and it is the difference between guessing at your numbers and knowing them.
Why bother with all of it? Because a few dollars a session adds up to real money over a year, and you cannot decide whether your processing arrangement is reasonable if the cost is invisible. Understated revenue also throws off your income statement and any look at profitability by clinician or service. On top of that, the 1099-K your processor issues reports gross volume, so books built on net amounts will not tie to it, which creates extra work for whoever prepares your return. Reporting thresholds and rules change, so check the current ones, and leave the tax amounts and strategy to your tax preparer.
Netted fees are one of the most common things I correct during a clean-up, and it is a quiet relief for owners who never understood why their income looked lower than their session count suggested. If you want a second set of eyes on how your deposits are being recorded, book a consultation with me and we will take a look together.
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What do you deliberately not do?
Four things stay outside my scope. Tax return preparation, insurance billing and credentialing, payroll system setup, and clinical or legal advice. Naming those lines up front means everything inside them gets my full attention.
Read answerHow much should I set aside from each payment so taxes never surprise me?
Common guidance runs 25 to 30 percent of profit, and your tax preparer should confirm the right figure for your situation. The percentage applies to profit rather than to the full deposit, so knowing your real profit number is what makes the reserve accurate.
Read answerWhat's the difference between catch-up and clean-up bookkeeping?
Catch-up is for books that were never done, meaning months or years with nothing recorded. Clean-up is for books that exist but cannot be trusted because things are miscategorized, unreconciled, or duplicated. Both end the same way, with accurate current books and a monthly rhythm going forward.
Read answerHow should insurance payments show up in my books if you don't do billing?
I don't do insurance billing, claims, ERA posting, or credentialing. That work stays in your practice management system or with your biller. What bookkeeping does is reconcile what that process produces, matching every payer deposit that reaches your bank against what your records say you were paid.
Read answerHow do I know if my group practice actually makes money on each clinician?
Take what each clinician actually collected, subtract everything you pay them, then subtract a fair share of overhead. What is left is what that seat contributes. Run it person by person, because a practice-wide margin can look fine while one seat quietly loses money.
Read answerWhat should an addiction counseling practice's books account for?
Separate income by the kind of work behind it, since individual sessions, groups, assessments, and education programs earn very differently for the time and space they use. Your books also need a consistent way to record sliding scale fees, payment plans, and partial payments, plus clear tracking of group revenue and unpaid balances.
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