US LLC is it ok to have revenue show as lump sum from Stripe?

[Topcat]

Hi all,

I'm in the process of setting up accounts tracking for my US LLC. I want to keep it simple and use Wave accounting to track the LLC's only bank account. This way Wave will track all payments in and out and I'll have accurate accounts. BUT I want to take customer payments with Stripe and Paypal, and send a monthly lump sum from Stripe and Paypal to my LLC bank account. This will show all revenue as 2 lump sums in my Wave accounting records. Individual customer transactions would not show up in those accounting records.

Are the IRS okay with this? Or are they going to want my accounting records to show the fine details of each and every customer payment from Stripe and paypal? Getting wave to track that would make the accounting a lot more complex, so I want to avoid it if possible and keep it simple.

For any responses, many thanks I really appreciate it. TC

 

[Sols]

There's a 99%+ chance the IRS won't care and won't look. If they do, showing a lump sum amount for payment processing probably won't cut it and they'll ask you to provide sales receipts for each transaction.

If you want to import Stripe data into Wave, there are options such as Zapier: Add transactions in Wave for new Stripe sales

 

[Topcat]

There's a 99%+ chance the IRS won't care and won't look. If they do, showing a lump sum amount for payment processing probably won't cut it and they'll ask you to provide sales receipts for each transaction.

If you want to import Stripe data into Wave, there are options such as Zapier: Add transactions in Wave for new Stripe sales

Ok thanks Sols. Then I think my approach is going to be to proceed as planned and show payment processing income (all income) as 2 lump sums per month from stripe/paypal. And then in the unlikely event the IRS ever ask questions (which is extremely unlikely because I'm foreign non-resident no ties to US so there'd be nothing for them to get out of it) ... in the event they ask questions regardless, each sale in stripe/paypal generates a receipt and I'd be able to go through my records in the payment processors and send them the data they ask for.

Do you think that's okay to do or would you recommend I go the more complex route and pull in all sales from stripe/paypal into Wave?

 

[Sols]

Do you think that's okay to do or would you recommend I go the more complex route and pull in all sales from stripe/paypal into Wave?

I'm a proponent of doing accounting fully and properly, but I usually make sure to outsource or hire for it. If you're a small business owner and can't budget that, do your best and have all data available in clean, easy to read format so that you're not stuck with weeks/months of backlog if you have to go back and redo the books.

 

[Topcat]

I'm a proponent of doing accounting fully and properly, but I usually make sure to outsource or hire for it. If you're a small business owner and can't budget that, do your best and have all data available in clean, easy to read format so that you're not stuck with weeks/months of backlog if you have to go back and redo the books.

Ok thanks. So in other words: make the extra effort. Get stripe and paypal set up properly with wave. Only issue I have with this is that it will mean Wave will pull in revenue sale by sale AND when I withdraw monthly lump sums from stripe and paypal. So the same revenue will be counted twice by wave, if I am thinking this through correctly.

 

[Xshore]

You can show them detailed transactions if they request it, make sure you have access to that (export copies). No need to file all transactions in the accounting.

 

[SoNewToAllShit]

You can show them detailed transactions if they request it, make sure you have access to that (export copies). No need to file all transactions in the accounting.

How would you do this other way if not file all transactions in the accounting ?

 

[Topcat]

You can show them detailed transactions if they request it, make sure you have access to that (export copies). No need to file all transactions in the accounting.

Interesting. I mean all the data from sales sits there in Stripe and paypal. So what you're saying is, export that data each month from stripe and paypal as a spreadsheet and store it. Then if the IRS ever want to see data from individual sales, I can send them these monthly sales spreadsheets. And that will be good enough for them because they can see from it that the monthly revenue matches with the lump sums of revenue that are present in my accounting. Did I interpret you correctly?

 

[Topcat]

Conflicting answers. Some say include all data from 3rd party payment gateways like Stripe, Paypal etc in the accounting data, and some say it's fine to just include the income in the data as lump sum withdrawals from the payment gateways. Hmm

 

[Sols]

Interesting. I mean all the data from sales sits there in Stripe and paypal. So what you're saying is, export that data each month from stripe and paypal as a spreadsheet and store it. Then if the IRS ever want to see data from individual sales, I can send them these monthly sales spreadsheets. And that will be good enough for them because they can see from it that the monthly revenue matches with the lump sums of revenue that are present in my accounting. Did I interpret you correctly?

IRS doesn't exactly have a checklist of documents they want to see and then off you go. If they audit you, they presume you are guilty and it's your job to prove that you're innocent. The point of having all the data available is to be able to answer whatever questions they have in case of an audit.

 

[Topcat]

The point of having all the data available is to be able to answer whatever questions they have in case of an audit.

But in the event of an audit, wouldn't those questions be answered just by sending the IRS exported sales data from the payment processors?

 

[Sols]

But in the event of an audit, wouldn't those questions be answered just by sending the IRS exported sales data from the payment processors?

Stripe's reports tend to be very good, so it's probably enough. But most tax audits aren't friendly. You can't assume the IRS is going to be lenient or go the extra mile for you. You may need to prepare GAAP compliant financial statements and back that up with processing and bank statements where everything lines up.

 

[Topcat]

I paid a US-based CPA to answer this one. I'll paste the relevant part of his answer here:

"Now from a pure compliance perspective, if you are earning revenue from your US LLC that is not going to be taxed in the US (i.e., no effectively connected income or US trade or business), then for purposes for your annual tax filing you just need to report cash movements and not sales activity. Therefore it sounds like you'll have the proper information to do your filings as is. If however, you were to get audited, that is where you will have an issue."

I then asked him IF in the event of an audit, I was asked to provide detailed sales data by the IRS, would exporting sales data from payment gateways such as stripe and paypal satisfy them?

He said:

"As long as you have the ability to get the data organized in a timely fashion that would be ok. You just want to be able to gather if you were ever requested."

He also mentioned that the chance of an audit on a foreign non-resident-owned US LLC is low. Hopefully this helps someone other than just me.