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I sell a class with a PayPal payment option. When they attend the class, they get a free copy of a book from our inventory. When people book the class, they pay immediately. Here are the pieces I need to account for:
I do not have a separate business PayPal account as this is rarely used. Typically I just put these small amounts showing as owner withdrawals, but I can add an account to QB if I must.
Anyone have a reasonable solution?
Back int he 90s, Quickbooks provided a super simple solution by allowing a negative line item on an invoice (for the PayPal fee), but from what I can tell, the only way around this COMMON issue is a multistep nonsense process with invoice, deposit to undeposited funds, and deposit to bank account. But that won’t work in this case because I am limited in the deposit accounts I can select.
In addition, I cannot see a way to do a journal entry that includes products or services.
Help?
Hello, ProSapien.
I'd like to share some steps about your concern.
Before doing so, please consult with your accountant to see if they have a preferred method of recording these transactions.
First, let's add an expense account that we can use later on to track the free copy of books.
Here's how:
Next, create an invoice for the item. This will reduce the item count in your inventory.
Once done, record a journal entry. This helps to remove the income, credits the customer in Accounts Receivable, and credits Cost of Goods to record the Expense. Please take note that in a journal entry, you can only select the affected accounts and not the items.
Here are the steps:
Finally, apply credit in the Receive payment page.
For reference on the steps above, you can read this article: Write off inventory items given as promotional samples.
If you have any additional questions about the steps above, please let me know by adding a reply below. I'll be around to answer them. Take care always.
Thank you so much for the detailed explanation.
This is what I had tried to do earlier, until the second step #3:
"Enter the class registration fee and PayPal fee as a negative amount."
1- To clarify, you meant to enter the class registration fee as a positive and the PayPal fee only as a negative, correct? (That can be read to apply to both or only the PayPal fee.)
2- I cannot see a way to enter the PayPal fee on an invoice. Typically it would be added as "Commissions and Fees," but I cannot choose expense items to add to an invoice. To correctly account for the transaction, I need to show the full registration payment AND the expense due to the fee in the proper category.
Does that make sense?
I have another way on how you can add the fee, let me guide you on how to do it, ProSapien.
For your first question, yes you're correct. You can enter the class registration fee as a positive and the PayPal fee only as a negative. On the other hand for the second question, you'll have to create a service item first. Then change the income account to PayPal fees. Once you create an invoice, enter the fee as a negative amount. To do this, follow the steps below:
To create a service item:
To enter the fee on the invoice:
Go through this article for more information: Add Product And Service Items To QuickBooks Online. On the other hand, QuickBooks downloads the latest transactions automatically. To know more about matching transactions, I've added this article for your reference: Categorize And Match Online Bank Transactions In QuickBooks Online.
Reach out to us if there's anything else you need help with PayPal fees. The Community is here for you 24/7.
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