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A
AliN
February 23, 2018
Solved

PayPal Fees

  • February 23, 2018
  • 53 replies
  • 70 views

Hello,

 

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

 

Here my question and workflow:

 

 

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

 

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

 

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

 

  1. 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.

 

  1. 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

      53 replies

      john-pero
      john-peroAnswer
      Level 12
      February 24, 2018

      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

        N
        nonyanon
        September 16, 2021

        I need some help with this.  We do not create invoices in QBs.  

         

        We externally invoiced client for $100

        Paypal took out $3

         

        I don't see anyway to split - and we do want to show the $3 as an expense, tho we do not have Paypal in our books as a bank.

         

        Thanks for your help - ny

        BettyJaneB
        BettyJaneB
        Level 9
        September 19, 2021

        This is not correct because I do not have Paypal in my system as a Bank.  The deposit came into our books as $97. but the Invoice paid by client was $100.  If I make Bank Deposit of -$3, I would have to show the deposit as $100.

         

        Please help with a work around because this Paypal payment is rare and we prefer not to bring in PayPal as a bank account into our books.  Unless I can bring in all of 2021 PayPal transactions - thus may I have instructions for that please? And would it be worth it with PayPal glitches.

         

        OR is there a way I can create an invoice in QB as $100 and match it and then be able to add $97 as client payment and add the $3. as bank fee?

         

        Thanks,

        ny

        EAA


        I appreciate the details that you gave, @nonyanon.

         

        Let me provide some clarifications about tracking your PayPal transactions in QuickBooks Online.

         

        The steps shared by my peer above is the best way to handle your payment. This is to record the real happening on the invoice payment. You can use any expense account to hold the fee and clear it out after.

         

        You may consider creating a bank fee account to track your bank fees in the system. You can zero out the unnecessary entries in this account afterward. This can keep your records accurate.

         

        You can follow these steps below to create a Bank Charges account:

        1. Go to Accounting from the left menu.
        2. Choose Chart of Accounts.
        3. Click New.
        4. In the Account dialog, create an Expense account for Bank Charges, and give it a name, e.g Bank Charges or Bank Fees.
        5. Select Save and close.

        You can refer to our guide for your convenience: Add accounts in QuickBooks Online.

         

        Once done you can now deposit the payments by following the steps presented above. The negative figure that you'll going to deduct on the deposit can be cleared using a journal entry. 

         

        However, to ensure that best course of action for your business, you may consider reaching out to your accountant. 

         

        I'm also adding here some recourses that you can use in reconciling and categorizing you bank transactions in QuickBooks Online:

        I'll be right here to provide continued support if you need more help with your bank transactions. Have a nice day!

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