Starting an online store today is easier than ever thanks to platforms like Shopify, WooCommerce, and Magento. However, to run a successful business, you must offer your customers the most convenient, fast, and secure payment methods available. This is exactly where modern fintech giants step onto the stage – platforms like Stripe, PayPal, and Revolut.
For the customer, the process feels like magic: they select a product, enter their card details or scan their face with Apple Pay, and the payment is completed in seconds. Behind the scenes, however, for the store owner and their accountant, this magic often turns into sheer accounting chaos. Funds are delayed, platforms deduct hidden fees, and at the end of the month, the bank statement does not match the total sum of sales made on the website.
How do you tame this chaos, avoid fines from the National Revenue Agency (NRA), and automate your financial processes? In this comprehensive article, we will cover everything you need to know, explained in accessible and clear language.
1. Why do modern payments create „accounting chaos“?
With a traditional bank transfer, things are simple. A customer buys shoes for 100 euros, transfers 100 euros from their bank, and you receive exactly 100 euros in your company bank account. The accountant sees the income, matches it with the issued invoice, and the month is closed.
With payment gateways like Stripe and PayPal, the process is fundamentally different. When a customer pays 100 euros, that money does not go directly to your bank. It enters your virtual account within Stripe. At that exact moment, the platform deducts its transaction fee (for example, 1.5% + 0.25 euros). Thus, about 98.25 euros remain in your account.
A few days later, Stripe makes a „Payout“ to your actual bank account. But the platform does not send the money for each order individually. It bundles dozens or hundreds of payments from the past few days and transfers one lump sum to you – for example, 4,560 euros.
This is where the chaos begins: the accountant sees an incoming bank transfer of 4,560 euros, but the store’s system shows issued invoices totaling 4,640 euros. Where is the difference? How should it be accounted for?
2. The Golden Rule: Revenue is always the gross amount
The most common mistake among beginner merchants is to report only the net amount that actually landed in their bank account as revenue. This is absolutely illegal and can lead to severe penalties during a tax audit.
If you recall the rules from our article Freelance Profession and POS Terminal: Rules, Types, and Accounting, the principle here is exactly the same. You sold a product for 100 euros. You must issue an invoice to the customer (or a standard receipt, if applicable) for the full 100 euros.
The fact that Stripe or PayPal deducted 1.75 euros is a matter of your business relationship with these platforms. This deducted amount represents a bank fee (a business expense), not a reduction in your revenue from the customer. Before the state, you must declare 100 euros of income and 1.75 euros of expense for payment services.
3. The VAT Trap: Why you need a special registration
The fees that Stripe, PayPal, and Revolut deduct from you are not just virtual numbers. They represent a real service (payment processing) that you are purchasing from these companies. Since the European headquarters of these platforms are located outside of Bulgaria (Stripe is in Ireland, PayPal is in Luxembourg, and Revolut is in Lithuania), you are essentially receiving a service from abroad.
As we explained in detail in the article Accounting for Ad Budgets in Meta and Google: Taxes and Invoices, the Bulgarian VAT Act is definitive: before you start receiving services from abroad, your company must have a mandatory VAT registration under Art. 97a.
- You must register under Art. 97a before accepting your first payment through these platforms.
- Every month, you must „self-assess“ the 20% VAT on the fees deducted by Stripe and PayPal.
- If you forget to do this, fines from the NRA start at over 250 euros, and you will separately owe the unpaid tax retrospectively, plus interest.
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4. Specifics of the individual platforms
Stripe: The King of Automation Stripe is preferred by most online stores because of its seamless integration and invisible checkout process for the customer. From an accounting perspective, Stripe is very reliable. Every month, usually by the 5th, the platform generates an official Tax Invoice for all the fees it deducted from you during the previous month. This invoice must be provided to your accountant along with the Payouts Report, so they can reconcile the transferred amounts with the invoices issued to customers.
PayPal: The Virtual Bank PayPal is a more peculiar case. Unlike Stripe, which automatically „pushes“ the money to your bank, the funds in PayPal stay in your digital wallet until you decide to withdraw them. It is crucial to know that before the NRA and the Bulgarian National Bank (BNB), your corporate PayPal account is treated as a foreign bank account.
- You must provide your accountant with Monthly Statements directly from PayPal.
- All balances in this account at the end of the year must be officially declared.
- Every transaction is accounted for as soon as the money enters PayPal, not when you transfer it to your local bank.
Revolut Business: The Modern Alternative Revolut Business is often used not just as a payment processor, but as the company’s primary bank account. Their Revolut Pay feature allows customers to pay directly. Accounting-wise, Revolut is the easiest to manage, as it provides clear bank statements in euros and other currencies. However, the processing fees (Merchant fees) must still be accounted for as an external service expense, not as a reduction in the order value.
5. Reconciliation: The secret to a good night’s sleep
The word that every e-commerce accountant loves and hates at the same time is „reconciliation“ (matching payments). To avoid falling into a situation where you have hundreds of transactions and do not know which amount belongs to which order, you must implement a clear process:
- Use connector software: Systems like Dext, Zapier, or the built-in integrations of WooCommerce and Shopify can automatically send information to your accounting software.
- Export the right reports: Do not just give your accountant a list of orders. Download specialized reports like „Balance History“ or „Payouts Reconciliation“ directly from the platforms. They show exactly which orders are included in a specific bank payout and the exact fee deducted for each of them.
- Synchronize currencies: Since we now operate in euros, currency risk is minimized. However, if you sell in dollars or pounds, platforms will perform a currency conversion before paying you out. Exchange rate differences must also be reported as financial income or expenses.
Conclusion
Payments through Stripe, PayPal, and Revolut are not scary as long as you understand their core logic. Never report only the net amount received in your bank. Always invoice the full order value, collect the fee invoices from the payment processors, and remember that using them requires a mandatory VAT registration before you start selling. Work closely with your accountant and establish a routine for downloading monthly reports – this will save you dozens of hours of manual labor and potential fines during tax audits.
