Stripe Payments: Are You Recording Your Income Correctly?
Recently, a question came up from one of my clients about Stripe payments.
They were wondering whether, when a customer pays through Stripe, the payment could simply be recorded as the net amount that reaches the business bank account, with the Stripe fee effectively taken out and not recorded separately.
It’s an easy assumption to make — but that is not the correct way to record the transaction.
Your Stripe payment should be recorded at the gross amount
When a customer pays you through Stripe, the full amount paid by the customer is your income.
The Stripe processing fee is a separate business expense and should be recorded separately in your accounts.
For example, if your customer pays you $500 and Stripe charges a $15 processing fee, you will receive $485 in your bank account.
Your bookkeeping should show:
Sales income: $500
Stripe processing fee: $15
Bank deposit: $485
The $485 appearing in your bank account is therefore not your sales income. It is the net amount left after Stripe has deducted its fee.
Why is this important?
If you simply record the $485 bank deposit as income, your sales will be understated.
In the example above, you’ve actually made a $500 sale, but your accounts would only show $485 of income.
You’re also losing visibility of how much you’re paying in Stripe fees. This might not seem particularly important for one transaction, but if you’re processing hundreds of payments throughout the year, those fees can add up quickly.
Recording the transactions correctly means your accounts show both the true amount of your sales and the cost of accepting those payments. The supplied accounting guide recommends exactly this approach: record the gross sale, record the processing fee separately as an expense, and then reconcile the net payout to the bank.
What about Xero?
The good news is that you don’t necessarily have to do this manually for every Stripe transaction.
If your Stripe account is connected to Xero, the integration can help bring the transactions into your accounting system, including the gross payment and processing fee. This allows the net amount received to be matched to your bank transaction.
The important thing is to make sure the integration and your bookkeeping are set up correctly in the first place.
The simple rule to remember
Customer payment = income at the full amount.
Stripe fee = separate business expense.
Amount deposited into your bank = net payment after the fee.
So, if you’re currently recording only the amount that Stripe deposits into your bank account, it’s worth checking how those transactions are being treated in your bookkeeping.
It may only be a few dollars difference on each transaction, but accurate bookkeeping is about getting those little details right — because they add up.
Need help getting your Stripe payments and bookkeeping set up correctly?
At One For The Books, I help small businesses keep their bookkeeping accurate, up to date and easier to understand.
