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Adeola1
Level 1

How do I manually split an ecommerce transaction between product sold, shipping cost, and handling?

I'm selling online in WooCommerce which is synced to Square. Square in turn syncs to QuickBooks Online. The transaction comes into QBO as a total Square Customer invoice. A portion of the funds received is for product. The balance is for shipping and handling. I pay the shipping cost out to a vendor and retain the handling. What accounts need to be modified to keep cost of goods sold correct and shipping expenses correct?
2 Comments 2
Rustler
Level 15

How do I manually split an ecommerce transaction between product sold, shipping cost, and handling?


@Adeola1 wrote:
I'm selling online in WooCommerce which is synced to Square. Square in turn syncs to QuickBooks Online. The transaction comes into QBO as a total Square Customer invoice. A portion of the funds received is for product. The balance is for shipping and handling. I pay the shipping cost out to a vendor and retain the handling. What accounts need to be modified to keep cost of goods sold correct and shipping expenses correct?

none of what you call out in the description is COGS

The sale is income, you can split it to sales of product income and pre-paid shipping income if you want

 

handling is income too

 

shipping you pay is an expense, it is not cogs, and the merchant (square) fee is an expense and not COGS either

I_dislike_making_up_screen_names
Level 1

How do I manually split an ecommerce transaction between product sold, shipping cost, and handling?


@Rustler wrote:

shipping you pay is an expense, it is not cogs,


Hello @Rustler ,

 

(The last paragraph is directly related to the quote above. The first two paragraphs are related to the post.)

 

I am new to QuickBooks Online and to accounting in general. I am selling online and importing sales into QBO. When running a profit and loss report I was expecting to see shipping income separate but it appears to be lumped in with "Sales of Product Income". I think I see how I can separate the shipping income by assigning a different income account to the shipping item but I got hung up an the account type.

What type of account would you suggest assigning to shipping income? I believe the account type would be the same as what I use for "Sales of Product Income" but give it a different name. (The shipping item is setup as a non-inventory item in case that matters at all.) I think I have this taken care of.

 

What got my attention was when I was looking at the "Income account" drop-down I saw there was an account named "Shipping, Freight & Delivery – COS"

Account type: "Cost of Goods Sold"

Description: Use Shipping, freight & delivery – COGS to track the cost of shipping products to customers or distributors.

At first I thought that will be the account to use for the expense account for actual shipping cost paid (once I figure out how to get QBO to use the imported data from ShipStation). Then I came across this post where you say "shipping you pay is an expense, it is not cogs" and now confused about how to assign shipping expense.

Edit/Add: I understand the shipping paid to USPS or whoever is not an actual cost of the item(s) sold since a shipping charge was collected and even if it were free shipping the shipping paid would not directly be part of the cost of the item especially if there were more than one item. I guess a percentage could be allocated to each of the items sold. I must be misunderstanding why there is an account already created for shipping assigned to COGS.  ¯\_(ツ)_/¯

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