How to correctly recognize revenue from annual Stripe subscriptions using journal entries

When a customer pays upfront for an annual SaaS subscription, the full amount cannot be booked as immediate revenue under accounting standards ASC 606 and IFRS 15. Instead, the collected cash must first be recorded as Deferred Revenue — a liability — since the service has not yet been delivered. Each month, one-twelfth of the total is transferred from Deferred Revenue into Subscription Revenue as the service is earned. Stripe's processing fees should be recorded separately as a business expense rather than netted against revenue, preserving the accurate top-line figure. Additional care is needed for sales tax, which must be held in its own liability account, and for rounding differences in monthly schedules to ensure the deferred balance clears to zero exactly at year-end.