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MikeyFL
Level 1

Entering Paypal fees paid by client

I have a client that pays their invoice via Paypal. As part of that invoice, the Paypal fee is added. As of now, I have the fee that Paypal charges as part of the Bank Service Charge expense item. I have the reimbursed fee as a "Paypal Incoming Fee" as part of regular income. 

Is this right or should the reimbursed fee be under "Other Income" instead?

1 Comment 1
Regina_Lend_A_Hand_Accounting
Level 9

Entering Paypal fees paid by client

I would create a product and service item for "PayPal Merchant Processing Fees" and map it to the "Bank Fees" Expense account (as opposed to an Income account). Then I would add this service item to each customer invoice that is to be paid by PayPal as a negative amount equal to the PayPal fee amount (typically 3.1%). Then I would receive payments to "Undeposited Funds" so that I could create a deposit from the "Undeposited Funds" that matches the total deposit amounts I receive each day that come into my bank feed. Let me know if you have questions.
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