Stripe charges 2.9% + $0.30 per transaction. On a $5,000 invoice, that's $145.30 out of your pocket — unless you pass it to the client. Rebilling Stripe processing fees is legitimate, common in B2B consulting, and straightforward once you understand the accounting and legal basics.
This guide covers when rebilling makes sense, how to tag Stripe fees in ExpenseBot, the three ways to structure a surcharge or reimbursement on an invoice, and what Schedule C says about the transaction on both sides.
What "Rebilling" Means for Stripe Processing Fees
When a client pays your invoice by credit card through Stripe, Stripe deducts its fee before sending you the net amount. You invoiced $5,000. You receive $4,854.70. The $145.30 Stripe took is a real business expense.
Absorbing the fee means treating it as a cost of doing business — you effectively earned $4,854.70 on a $5,000 invoice. Most freelancers on retainer absorb the fee and factor it into their rates.
Rebilling the fee means adding it to the client's invoice as a separate line item or building it into a surcharge. The client pays $5,145.30 (or $5,000 + a disclosed 2.9% + $0.30 surcharge). You receive the full $5,000 after Stripe's cut.
Rebilling is most common in agency billing (where margins are thin), large project invoices (where the fee is significant in dollar terms), and with clients who insist on paying by card when you'd prefer ACH.
It's different from a surcharge in timing and framing: a surcharge is disclosed before the transaction as a condition of paying by card. Rebilling adds the fee after the fact as a reimbursable expense on an invoice. Both are legitimate for B2B billing; surcharges have more regulatory nuance for consumer transactions.
How to Tag Stripe Fees in ExpenseBot
Stripe sends a payout email every time it deposits funds into your bank account. The email shows the gross amount collected, the Stripe fee deducted, and the net payout. ExpenseBot scans these emails automatically and extracts all three figures.
The fee shows up as a separate expense entry tagged to "Payment Processing" — the correct Schedule C Line 10 category (merchant fees). If you want to tie the fee to a specific client project for rebilling purposes, add the client's project tag alongside the Payment Processing category.
Once tagged to a client project, the Stripe fee appears in:
- Your per-client expense report (billable costs for that project)
- The profit-by-client view (as a cost against that client's margin)
- The reimbursable expense invoice builder (ready to add as a line item)
For the Schedule C deduction side: the fee remains deductible on Line 10 regardless of whether you rebill it. The deduction is for the expense you incurred; the rebilled amount is income.
Three Ways to Rebill a Fee on an Invoice
There's no single right structure — the method depends on your billing cycle and client relationship:
- Explicit line item: "Payment processing surcharge." Add a line below your services subtotal: "Credit card processing fee (2.9% + $0.30) — $145.30." This is the most transparent method and the cleanest for the client's accounts payable. Include it in your proposal or contract so the client expects it.
- Baked into the rate. Increase your effective rate to cover the Stripe fee. Instead of $125/hr, bill $129/hr when you know the client pays by card. This works for retainer clients with stable billing but is harder to explain if the client asks about the rate increase.
- Separate reimbursable expense invoice. Issue the project invoice at your normal rate, then issue a separate reimbursable expense invoice for the Stripe fee after payment is received. This works in agency contexts where expenses are billed on a different cycle than labor — use ExpenseBot's reimbursable expense invoice to generate the second document.
Option 1 is cleanest for most freelancers. Option 3 is common in agency billing where different approval workflows apply to labor vs expenses.
Legal Considerations
Surcharging rules vary by jurisdiction and transaction type:
B2B invoicing in the US: passing Stripe fees to business clients is generally permitted in all states. Disclosure requirements vary, but showing the fee as a named line item on the invoice satisfies disclosure in every jurisdiction. The practical rule: name it, show the amount, and don't hide it.
Consumer transactions: some states restrict or ban credit card surcharges on consumer purchases. If you're billing individuals rather than businesses — therapists, tutors, personal trainers — check your state's rules. Most restrictions target at-checkout surcharges for consumer goods, not professional service invoices.
Canada: credit card surcharging for B2B is permitted federally following a 2022 settlement. Quebec has provincial restrictions on consumer surcharges. For business-to-business invoicing, disclosure on the invoice is the standard.
Stripe's ToS: Stripe permits surcharging with disclosure. You cannot charge more than your actual processing cost, and you must disclose the fee to the payer before the transaction. For invoiced billing, this means the line item must appear on the invoice before the client pays — not added retroactively to a paid invoice.
The Accounting Side — Revenue or Pass-Through?
This is where many freelancers get confused. Here's how it works on Schedule C:
The Stripe fee you paid: deductible on Schedule C Line 10 (commissions and fees / merchant fees). Let's say you paid $145.30 to Stripe. That's a $145.30 deduction.
The fee you collected from the client: income. If the client paid the $145.30 surcharge, that $145.30 is ordinary business income. It goes on Schedule C Line 1.
Net tax effect: zero. The deduction and the income cancel out. But both must be recorded — if you record the deduction without the income, you're understating income. If you record the income without the deduction, you're overpaying taxes.
To avoid double-counting: don't record the Stripe fee as an expense AND subtract it from the gross payment when recording income. Record the gross payment as income, then record the Stripe fee as a separate expense. This gives you accurate gross revenue (important for loan applications, 1099 reconciliation, and GST/HST thresholds) while correctly reducing net income through the deduction.
ExpenseBot handles this automatically — gross payout email income is logged separately from the fee expense, keeping both sides clean on your Schedule C worksheet.
Building a Reimbursable Expense Invoice in ExpenseBot
If you're using the separate reimbursable invoice method (Option 3 above), here's the workflow in ExpenseBot:
- Tag the Stripe fee to the client project. When the payout email is scanned, find the fee entry and add the client's project tag alongside "Payment Processing."
- Open the reimbursable expense invoice tool. Go to Reimbursable Expense Invoice, select the client, and choose the date range for the billing period.
- Select the Stripe fee as a line item. All expenses tagged to that client in the date range appear as selectable line items. Check the Stripe fee.
- Generate and send. ExpenseBot generates a properly formatted invoice with the fee as a line item and your invoice number. Download as PDF or send directly.
The same workflow works for any other rebillable expense — hotel costs, software purchased for the project, subcontractor fees. Tag to client, pull into reimbursable invoice, send.
For full invoice and billing management, including billing clients for expenses across projects, see the bill client feature. For Schedule C deduction details on merchant fees, see the Schedule C expense guide.