Credit Card Surcharges

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This video is going to discuss the credit card surcharge feature for your invoices. First off, keep in mind that this is not a QuickBooks feature. This is only available through HomeWatch IT, and is something that you have to set up within the HomeWatch IT application in order to work.

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So let's look at two pieces here. First off, what are the surcharges? You know, what do we need to know when we're set up surcharges? Basically, there's three pieces of information that we're going to have to put in the system in order to set up the surcharge feature. First is where to post the surcharge.

So the surcharge has to go somewhere, and what we're going to do is add a services code to QuickBooks so that you have a place for the surcharge to go and show up on your profit and loss statement. That income has to go somewhere, and it's usually a small income account, and then you have the expense account, which would be the bank charge, which would offset it, and you net out with zero, or hopefully close to zero. The second question is who should receive the surcharge.

So you can program the system to add surcharges to selected customers. Maybe you don't want surcharges added to some customers. Maybe you only want some customers to be able to pay you with a credit card at all, and that's part of the key decision we'll talk about in a moment.

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And then the last question that we'll have to set up is how much is the surcharge. So this is really up to you. By law, I think the limit is 4% is the maximum that you can add for any kind of a surcharge for credit cards, or a convenience fee, whatever you want to call it.

Most of the time, you keep this closer to the actual amount that the bank charges, which for most QuickBooks clients is about 2.9% plus $0.25, so it rounded up to 3%. Now, the key decision here, and I'll try to explain this a little bit, is you can set the system up so that only customers that you've added a surcharge to will be able to pay you by credit card. If you think about the QuickBooks invoice that gets sent out, there are two check boxes that you can select on there.

One allows them to pay by eCheck or ACH, you know, a bank-free transfer, and the other allows them to pay with a credit card. So within HomeWatch IT, you have the option of leaving those both checked so that anybody can pay you with either one of those methods, or you can set the system up so that only the customers that have a surcharge added will be able to pay you by credit card. Everyone else will have to pay you by eCheck and will not even have the credit card option turned on on their invoice that they receive from QuickBooks.

So now that we've covered the intro, let's set things up. All right, we're here in our QuickBooks account. So the first step we have to do is set up a place for the surcharge to go.

This is the where. So what we're going to use is a services code for the surcharge. So I'm going to hit my gear here in the upper right-hand corner, go to Products and Services, and we're going to add a new service.

So using the new here, we can say New, click on the button, and say Service. And for the name, this is a description that you will use to pull up the item. So let's just call it Credit Card Convenience Fee.

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And then the description is what will appear on the invoice itself as far as a description. And let's just put the same thing there. So that's fine.

That's set up. Sales price, we don't need to worry about. The income account, though, you need to pick an account where those charges should go.

Now, most likely, put it in bank service charges, which is actually an expense account. It'll kind of net out. Or you can create a brand new income account for other fees received.

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I would check with your accountant to see if there is another sales account that you would want to use there. I don't necessarily have one on mine, but you get the idea that you can put it to any account you want. Once you've set that up, hit Save and Close.

Skip on that. Hit Save and Close. And now that services code is saved in the system and will synchronize to method.

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So now we're in our HomeWatch IT method system, and we can actually turn on the feature itself. To turn it on and set it up, we will use our Preferences screen. So the Preferences screen is accessed by clicking the three dots here on the HomeWatch Admin tab and clicking on the word Preferences.

This will open up your Preferences screen. The settings that we want are here in the Accounting section. So we'll go ahead and open that, and you'll see there's three questions that we need to set up here.

So the first is our credit card markup percentage. So this is how much you want to charge for the markup. So let's say we want to do 3.5%. I can put 3.5 in there.

Then we'll pick our services code. So the services code is the code we just set up a moment ago in QuickBooks. So I can start typing in the description, and you'll see here's the one we set up, credit card convenience fee.

And now the last one is that key decision. Should all customers be allowed to pay with a credit card, or only the ones with the surcharge added? I'm going to set it up so that only clients that have the surcharge added are capable of using a credit card. Everyone else must use the ACH or the E-Check feature within QuickBooks payments.

I'm going to save that. So now that setup is done. All you have to do is mark the customers that you want to have the credit card surcharge added to, and that you want to allow to make credit card payments to you.

So to do that, all you have to do is go into your customers application, pick the customers that you want to allow credit card payments for. Let's say we pick the Hernandez's. I will go in there, and you will see there is now a checkbox here that says credit card markup on invoice.

Go ahead and select that. Hit save and close. And that's it.

Hernandez will now have the surcharge added. They will have the ability to pay by credit card, and it's all set. Go through and do the same with all the other customers that you want to allow credit cards usage from.

That's it. Next time you generate your invoices, the system will manage everything else for you. Hope that was helpful.

Let me know if you have any questions. Thank you.