So you are using square register and you are also using Quickbooks online, Wave, or Xero. Because square pays themselves from your total sales amount (gross sales or gross receipts) square is depositing the " net sales " amount in your bank account. This amount will show up as External Deposit Square Inc. and have your sales tax collected in there. So how are you supposed to know how much you made?
So you probably already know that you should split the sales tax out of the deposit because that is not really yours to keep. However, you don't see the problem with just leaving the fees in the deposit because you are going to deduct them anyways, right?
What you should do is make an adjusting entry to " gross up " your receipts. I hate this term gross up because
1. It took me a while to understand and use correctly.
2. It sounds like "throw up".
Basically, with this adjusting entry you are adding the fees back in to the amount that square deposited so that the total income matches correctly with the same one that will be reported to the IRS by square (a third party payment network provider) on a 1099-K.