I am a sole proprietor (freelance programmer) and usually receive payment for projects by check. I send an invoice to my clients with a breakdown of my work and payment terms. Because of the long turn around checks are becoming for getting paid I setup a Google Wallet account and taught my clients how to pay me through that. Now I get paid much faster.
For any tax implications to this question and answer my business operates out of Idaho and California.
To discourage future clients from choosing the check option I would like to charge a $5 fee per check; which of course based on the client and situation I would waive.
- This is legal to do correct?
- Does this fee count towards what I have to pay taxes on (1099) since I'm charging it to discourage that option but not because I have a check processing fee?
- If I state it in the terms can I charge a $25 late/ bounce fee and does this also count towards what I have to pay taxes on (1099).
Similar Scenarios That Could Benefit Others
Does the answer(s) to the above question(s) change if:
- I do have some kind of fee from my bank for cashing checks.
- My bank or payment processor charges a 3.5% fee on payments made by card and I want to pass that fee on to my client.