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Enrico-Product Champion
Content Creator

Deducting PayPal fees from Invoices

I do not know how to account for PayPal transaction fees on my Invoices.

Solved
Best answer June 22, 2020

Best Answers
Enrico-Product Champion
Content Creator

Deducting PayPal fees from Invoices

Currently, QuickBooks Online does not have an automatic method of including PayPal fees on Invoices. You will need to manually calculate the amount of the transaction fee and include the same on the Invoice. To do this, the steps are as follows:


1. Create an Expense account named 'PayPal fees.'
2. Set up a Non-inventory item called 'PayPal fees.'
3. Use the PayPal fees expense account (in Step 1) as the Income account for the non-inventory item. This will allow you to separately track the aggregate amount of PayPal fees in the Profit and Loss report.
4. Click Save and close.
5. Use the PayPal fees item (in Step 2) on the Invoice by indicating a negative amount to reduce the total Invoice amount due.

View solution in original post

10 Comments
Enrico-Product Champion
Content Creator

Deducting PayPal fees from Invoices

Currently, QuickBooks Online does not have an automatic method of including PayPal fees on Invoices. You will need to manually calculate the amount of the transaction fee and include the same on the Invoice. To do this, the steps are as follows:


1. Create an Expense account named 'PayPal fees.'
2. Set up a Non-inventory item called 'PayPal fees.'
3. Use the PayPal fees expense account (in Step 1) as the Income account for the non-inventory item. This will allow you to separately track the aggregate amount of PayPal fees in the Profit and Loss report.
4. Click Save and close.
5. Use the PayPal fees item (in Step 2) on the Invoice by indicating a negative amount to reduce the total Invoice amount due.

View solution in original post

cesar-a-campos65
Level 2

Deducting PayPal fees from Invoices

Hi Enrico,

 

Do you have to tick the option "I sell this product/service to my customers"? Do you have to apply any taxes? Please see screenshot.

 

Thanks

Enrico-Product Champion
Content Creator

Deducting PayPal fees from Invoices

Hi Cesar,

 

Yes, you will need to tick "I sell this product/service to my customers" for you to get the option to choose an Income account. You may leave the Tax field as blank because this field is optional, otherwise, choose your preferred default tax code applicable to PayPal fees.

 

I hope this answers your query.

cesar-a-campos65
Level 2

Deducting PayPal fees from Invoices

Fantastic and thanks for the prompt reply. What would be the tax rate for Pay Pal fees in Australia, if there is any?

Thanks 

Rebecca_A Product Champion
QuickBooks Team

Deducting PayPal fees from Invoices

HI cesar-a-campos65, 

 

I'm glad that helped! This is not something we will be able to provide advice on specifically. 

 

I can suggest reaching out to PayPal support as they will be able to give you more information. 

 

Thanks, 

Rebecca 

larrybud
Level 1

Deducting PayPal fees from Invoices

What I do is I have a couple different paypal "items" which apply the fee amount automatically.

 

Paypal charges 2.9% + $0.30 for each transaction. So one Item is a -2.9% "amount", and the other item is a $-0.30 amount. When I enter a sales receipt, I have to put the 2.9% under each line item to it gets applied, then at the bottom I put the 30 cent transaction. 

Both "items" I categorize them as an Expense called "Bank Service Charge".

In my case, I only have a few items that I sell on a regular basis, so I created a "group" in the item list which contains the item and the paypal fees, so when I sell that item, I can just choose the group.

Attached is how it looks when done.

 

cesar-a-campos65
Level 2

Deducting PayPal fees from Invoices

Thanks for the input Larry, it's a great help.

bbqman
Level 2

Deducting PayPal fees from Invoices

2021, would be great if quickbooks got off their backsides and implemented streamline solutions like xero, i want my customers to pay the credit charge fees not spend a day trying to figure out the best way to reconcile a lame attempt at credit card payment integration

holtwebb
Level 1

Deducting PayPal fees from Invoices

Thank you. So what's the next step? How does one reconcile this invoice now that it has a negative PayPal fee line item?

I received payment on a $195 invoice and paypal took $5.96, leaving me $189.04.

I followed your instructions and made the invoice for $195 and added a line item for paypal fees at negative $5.96, bringing the invoice total to $189.04.

When I went into Banking to reconcile and manually match the transaction to the paid invoice, I couldn't get it to match up. The first error I got was, "Partially matched: $195.00 remaining out of $189.04"

This sentence doesn't make sense mathematically, so I'm not sure what to do.

I could try to let QB automatically match the transaction, but the category and description QB automatically assigned were incorrect and require manually matching the transaction so I can change them.

Nona_O
QuickBooks Team

Deducting PayPal fees from Invoices

Hi holtwebb,

 

Thank you for reaching out to us.

 

Have you tried to create an Expense account for the bank fees? If yes, we can match the Paypal fee created on the invoice to your expense. Then create a Received Payment linked to the invoice with the amount $189.04.

 

For further assistance, we'd highly suggest you contacting our QuickBooks Online Support via Chat or Phone Support Hotline on this link: https://help.quickbooks.intuit.com/en_AU/contact

 

Thanks for dropping by Quickbooks  Community.