I work as a sole proprietor using Square. Should I cover processing fees or charge my clients instead? Which option provides better tax benefits?
Hey Isaac_Stargazer, I’ve been reading up on this a lot lately and honestly, I don’t think there’s a one-size-fits-all answer. Sometimes I lean towards incorporating the fees in my pricing because it keeps everything transparent for my clients, but on the other hand, I’ve seen peers who add a small fee line item, which really clarifies that it’s not your bottom line sucking up the whole profit. I’m genuinely curious about how you’ve been approaching this so far. Do you feel your clients would appreciate more transparency around these fees, or is it more about managing your margins? Also, I’m wondering how everyone else here manages the slight tax benefits between the two methods—if you’ve found a shift in deductions that makes one way more appealing than the other. Would love to see more experiences to help figure out if adjusting the fee structure really makes a difference on the tax front in a real-world setup!
In my view, the decision to absorb or pass on processing fees often depends on your business model and client expectations. When I worked as a freelancer, I found that incorporating fees into overall pricing maintained a clean appearance for invoices, but did require careful margin management. I also experimented with separating fees and noticed that it offered me clearer tracking for expenses and deductions during tax season. Ultimately, discussing your specific situation with an accountant provided the best insights regarding tax benefits. Analyzing your typical client response and profit margins can help you decide which approach is more sustainable for your business.