This bank account provides you with a ledger where you can handle all the gross payments received and processing fees without mucking up your current account or invoices. It’s really nothing more than a way to abstract all the activity of the payment processor to a dedicated account.
Now when PayPal, GoCardless, SagePay or whoever else transfers the funds to your Current Account you can literally enter this on the Merchant Account and tag it as a transfer to your Current Account. If you’ve downloaded your bank statement then you would just tag the income as a bank transfer from the Merchant Account. Also when marking invoices as paid you simply pay the gross amount into the merchant account.
First create a new bank account (make sure the account type is a Merchant Account), let’s call it “GoCardless Merchant account”.
Now let’s say we make 4 sales on the 5th August. We can simply go to these invoices and log the gross amounts as paid, nominating the GoCardless account as the receiving account.
Our GoCardless Merchant Account now looks something like this for the 5th of August.
Now on the 11th August GoCardless have paid the balance of those invoices (less their fee, we’ll call it £4, or £1 per transaction) into the current bank account.
We, therefore, enter this as a debit on the GoCardless Merchant Account:
The balance on this account now is exactly equal to the processing fee charged by GoCardless for processing those 4 payments.
We can now enter a new debit on the account that matches the GoCardless fee and in this case, brings the merchant account back to zero.
This debit should be tagged as a payment to a supplier. Setup a supplier in your account called something like “GoCardless Fees” (obviously substitute the name for the payment processor of your choice).
Your account is now back to zero, all items have been tagged, your invoices are reflecting the gross amounts and any processing fees have been accounted for and will be offset against your profits.
You can do this daily, weekly, monthly, or at any interval that suits you. The same applies for the charges, rather than individually enter every single charge, just enter all the charges as one lump debit on the Merchant Account on a daily, weekly, or monthly basis.
For more information on bulk processing entries on merchant accounts see here.