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Accounting for postage expenses


I run a small publisher. We sell books through our website and take payments via PayPal. The PayPal transactions are fed into a merchant account in QuickFile. Each sales transaction generates a purchase invoice to cover the PayPal fee and a sales invoice. The sales invoices have two line items: one for the book price and a second to cover the postage and packing costs.
I use project level P&L calculations to keep track of each book’s sales and expenditure and to calculate royalty payments. To avoid overstating the revenue from PayPal sales, I need to deduct the P&P charge from the sales figures. I do this by generating purchase records for the P&P charges. These then show up on the P&L calculation for each book/project.
When real purchases of stamps, envelopes etc. appear in the current account, I tag these against any outstanding P&P purchase records. The actual costs incurred are sometimes lower than the P&P charge I make to customers via PayPal. The net effect is that there are quite a few unpaid purchase records for P&P charges sitting around in my QuickFile account.
I wonder if there is a more efficient (and correct in accounting terms) way of handling these PayPal P&P charges.


Shouldn’t you just treat the P&P charges you make to your customers as income (probably on the “distribution and carriage” sales code) and then do normal purchases for what you actually spend on stamps (“postage and carriage”) and envelopes (either P&C as above or “stationery”)? That way the difference between what you charge out and what you spend becomes part of your net profit in the normal way.

(I find it confusing that there’s three different carriage codes in the default QuickFile CoA but I understand “carriage” is for what your suppliers charge to post stuff to you, “postage and carriage” is what you spend posting stuff to customers, and “distribution and carriage” is what you charge customers to have things posted to them)


Unless there is an additional nominal for limited companies I can only see two.

“Carriage” is a cost of sale while “Postage and Carriage” is an overhead.

I end up understating cost of sales if I put stamps on a single order rather than as part of a bulk mailing as the stamps are charged as “Postage and Carriage” while the invoice from the bulk mailing service is “Carriage”. (I could do an adjustment but it isn’t worth it for a £1.26 large letter)


@FolkLondon “Distribution and carriage” is a sales code (4905 in my chart of accounts)


I only see the two that I listed in my orignal post, 5100 and 7501. I have a sole trader accout.

Unless you created it as a custom code it must be restricted to limited companies.


I’m a partnership, but I know there was a change a couple of years back to not create so many codes by default - I’ve been using QuickFile for about 4 years and I know my account pre-dates this change.


A couple of years ago we did allow some of the non-essential codes to be removed. Those codes can be removed from the CoA here:


Regarding the differences between the carriage codes there’s some discussion on this topic here:


I think you’re right, but the book sale and the P&P charge are bundled into the same invoice that’s generated by the PayPal feed. I can’t see a way to attribute different parts of an invoice to different nominal codes.


If you edit the invoice that is created you can add a second line and post each line to a different nominal.


Thanks, I’ve tried that and I can use that method; very helpful.