J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line

Bank and Merchant Fees

All banking fees for your business bank account are deductible. These include not only monthly account maintenance and check processing fees, but also ATM charges, check printing costs, online banking charges, account closing fees, and other special charges (e.g., returned check fees). These fees can amount to several hundred dollars a month. You can reduce or eliminate these costs by banking with an institution that is pro–small business (e.g., offers free business checking) or by maintaining a minimum monthly balance.

NOTE

Financial institutions processing merchant accounts, including PayPal, must report transactions to the IRS; there is a small business exception. For more details, see Appendix A.

Like banking fees, merchant authorization costs to process credit and debit cards are deductible. These costs include an initial setup cost, processing fees per transaction, monthly account maintenance costs, and other charges.

If you accept PayPal as a payment method for sales, you can deduct PayPal fees as well. While there are no setup or monthly fees, you pay a per-transaction charge of 30 plus a percentage of the transaction ranging from a high of 2.9% to a low of 1.9% (depending on the size of the transaction).

NOTE

The IRS has noted that overstated deductions for items, including supplies and materials, account for up to $30 billion in unpaid ...