I am a sole proprietor. I invoice a client monthly. They pay the invoiced amount, less $20, which is a charge back to me for a processing fee.
How do I account for this on my tax return/accounting statements so that the IRS (principally) would be happy?
Do I record the actual invoiced amount, say, $8,000 and then a $20 expense (neither of which show in my bank statements?)
Or, do I simply record the amount deposited, $7,980, as income and forget about the charged back fee? This matches my bank statement, but not my invoice.
It seems that in either case, there will be missing documentation.