Hello, I have a question about PayPal Fees and how to record them properly. Here my question and workflow: Customer calls and places an order (invoice) or places an order directly via online store (bigcommerce). For an item that cost $100.00. (Example) I or BigCommerce record this sale with the customers full set of details, Invoice for manual order, sales receipt for bigcommerce automation. Customer pays via PayPal Invoice or Automatically during BigCommerce PayPal Express checkout. We login to PayPal and see that we have $97 per transaction (-$3 less PayPal fee) and transfer the funds over to the bank on a per transaction basis. 2-3 days later our bank shows each fund has been recieved and quickbooks online syncs the payments for $97. 6. Recording the PayPal Fee per Transaction is the issue, how do you match these amount to the Invoice or Sales receipt and account for the PayPal fees in Quickbooks online? I've seen others with the same question but i don't believe the solutions provided are uptodate and or the appropriate way of accounting for the fees.

A

AliN

Solved

PayPal Fees

Forum|Forum|8 years ago
February 23, 2018
1 reply
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Hello,

I have a question about PayPal Fees and how to record them properly.

Here my question and workflow:

Customer calls and places an order (invoice) or places an order directly via online store (bigcommerce). For an item that cost $100.00. (Example)

I or BigCommerce record this sale with the customers full set of details, Invoice for manual order, sales receipt for bigcommerce automation.

Customer pays via PayPal Invoice or Automatically during BigCommerce PayPal Express checkout.

We login to PayPal and see that we have $97 per transaction (-$3 less PayPal fee) and transfer the funds over to the bank on a per transaction basis.

2-3 days later our bank shows each fund has been recieved and quickbooks online syncs the payments for $97.

6. Recording the PayPal Fee per Transaction is the issue, how do you match these amount to the Invoice or Sales receipt and account for the PayPal fees in Quickbooks online? I've seen others with the same question but i don't believe the solutions provided are uptodate and or the appropriate way of accounting for the fees.

Best answer by john-pero

Does not matter if it is QB online ir desktop, the procedure is exactly same, correct and up to date.

1. Sell item for $100

2. Record received payment of $100 posted to Undeposited Funds

3. Create deposit selecting the $100 item (or all that are in one deposit as is case with Square)

4. Add line item negative processing fee for $3

5. Save net deposit of $97

6. Accept green match

Works every time AND IS proper and accepted accounting

john-peroAnswer

Level 12

Does not matter if it is QB online ir desktop, the procedure is exactly same, correct and up to date.

1. Sell item for $100

2. Record received payment of $100 posted to Undeposited Funds

3. Create deposit selecting the $100 item (or all that are in one deposit as is case with Square)

4. Add line item negative processing fee for $3

5. Save net deposit of $97

6. Accept green match

Works every time AND IS proper and accepted accounting

B

Breezy17

When I follow these steps I am getting a double entry.

I guess I am not understanding the steps.

I create an Invoice

The customer pays through PayPal and I deposit the funds in the Undeposited Funds account.

Money is transferred to the business account.

I create a bank deposit less the PayPal fee and associate this with the correct account for the P&L to categorize it.

This is where I am seeing entries into both the AR and categorized account, thus creating the double entry of income.

Also, the transfer of funds from PayPal to the bank account are also creating a double income issue.

I have tried to learn through the multiple responses and I am just turning in circles trying to get this completed.

Any help would be great as I have tried to locate a step-by-step and have come up empty.

Thanks so much.

B

Breezy17

I've got you covered, Breezy17.

I'm here to provide some additional insight on your question regarding the double entry.

I appreciate the details that you provided. However, I just want to clarify if you used the funds you deposited in the Undeposited Funds account when you transferred the money to the business account?

If you didn't, then that would be the most likely reason why your income is doubling. To fix this, we'll need to delete this entry and recreate it using the right accounts. The steps below will walk you through the steps on how to do it:

To delete the deposit

From the List menu, select Chart of Accounts.
Double-click the account where you created the deposit.
Find the entry and double-click it.
Once it's open, click the Edit menu, then select Delete Deposit. You can also press Ctrl + D.
Hit OK when the Delete Transaction window shows up.

To transfer the money to the business account with the PayPal fee

From the Banking menu, select Make Deposits.
In the Received From field, enter the name of the customer.
When the Payments to Deposit window shows up, select the correct transaction in the Select Payments to Deposit section.
Click OK.
On another line, fill in the appropriate details in the following fields:
- From Account: Enter the expense account where you record the fees.
- Amount: Make sure to enter the fee as a negative amount.
Click Save & Close.

For more information about this process, I recommend following this article: Understand how the Undeposited Funds account works

In addition, I also recommend getting in touch with an accounting professional for a personalized opinion. Every business is unique and they can make suggestions for handling these entries. Our Intuit Find-A-ProAdvisor site allows you to find certified professionals in your local area that are sure to have the answers you're looking for.

Please let me know if this helps you correct the double entry, it's my top priority that this gets resolved. Thanks for reaching out, I look forward to hearing from you.

Thanks for the insight, here is where I am:

Hi Breezy17,

AldrinS (QuickBooks Team) posted a new reply in Banking on 01-11-2019 05:28 PM:

Re: PayPal Fees

I've got you covered, Breezy17.

I'm here to provide some additional insight on your question regarding the double entry.

I appreciate the details that you provided. However, I just want to clarify if you used the funds you deposited in the Undeposited Funds account when you transferred the money to the business account?

The accounts were set up prior to me coming on board and that is part of the issues. They transferred from a different accounting program half through the year and DID NOT transfer/reenter the invoices. As I have been working through the process I am finding missing invoices (deposits and not invoice) or invoices but no matching funds, even though it has been marked as paid. They set Paypal up as an account which is where the information is downloaded to. If I understand what you are saying, for each deposit in Paypal, it needs to be accepted as a deposit to PayPal (the same as I am accepting the Square payments to the chequing account, as Square shows me which transactions are involved with each of the ‘transfers’. As I have been working diligently (struggling really) through this mess, I think I might be getting a slight, very slight handle on things.

If you didn't, then that would be the most likely reason why your income is doubling. To fix this, we'll need to delete this entry and recreate it using the right accounts. The steps below will walk you through the steps on how to do it:

To delete the deposit

From the List menu, select Chart of Accounts. Double-click the account where you created the deposit. Find the entry and double-click it. Once it's open, click the Edit menu, then select Delete Deposit. You can also press Ctrl + D. Hit OK when the Delete Transaction window shows up.

To transfer the money to the business account with the PayPal fee

From the Banking menu, select Make Deposits. In the Received From field, enter the name of the customer. When the Payments to Deposit window shows up, select the correct transaction in the Select Payments to Deposit section. Click OK. On another line, fill in the appropriate details in the following fields:
- From Account: Enter the expense account where you record the fees.
- Amount: Make sure to enter the fee as a negative amount. Click Save & Close.

Sometimes when I try and assign the Undeposited Funds to the account I get an error ‘Select a bank account for this deposit’ this is one of the confusing things I encounter. I then choose Uncategorized Income and it accepts this. How can this error be fixed?

For more information about this process, I recommend following this article: Understand how the Undeposited Funds account works

I tried this many times, and needless to say, I was not very successful at getting the answers I need. I understand the purpose for this account and now that I have been working through the process with the Square account I am seeing how this might bring my P&L to show the proper information, but other than that, the article did not help me.

In addition, I also recommend getting in touch with an accounting professional for a personalized opinion. Every business is unique and they can make suggestions for handling these entries. Our Intuit Find-A-ProAdvisor site allows you to find certified professionals in your local area that are sure to have the answers you're looking for.

As I work through and learn more about this program I will continue to read the articles and TRY and follow the examples (though they are not very informational). I appreciate you taking the time to help me with these issues. I am a learn as I go kind of person and it has been many years since I last worked in QB and it was the desktop version. Needless to say, this has been a bit of a struggle as I am not able to ‘go back’ like before.

Please let me know if this helps you correct the double entry, it's my top priority that this gets resolved. Thanks for reaching out, I look forward to hearing from you.

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