Ebay, PayPal & iZettle Fees - Accountant advice

Accounting
1

Good morning

I was wondering if there are any accountants that can confirm if i am recording my Ebay, PayPal & iZettle Fees to the correct nominal codes?

eBay Fees = Sales Commissions
PayPal Fees = Sales Commissions
iZettle Fees = Bank Charges

Thanks in advance.

Ash

2

No they arnt sales commissions.

They are fees for processing transactions.

If you want you could create your own nominal somewhere near the bank charges code.

3

Thanks Paul, is that for both eBay & PayPal fees? Does the iZettle one look correct? There are various opinions online and unsure what is actually correct :slight_smile:

4

If it were me I’d stick izettle and PayPal in a nominal similar to bank charges.
Ebay I guess would be a commission fee of sorts but I don’t think it goes in the nominal QF has as standard

The best option would just create a new nominal and call it ebay fees.

5

Thanks Paul, do you know if the eBay fees category would be a Direct Expense or Overhead?

6

I would put it as a “cost of sale” but I am not an accountant.

7

Thanks FolkLondon :slight_smile:

8

A cost of sale is an item used to produce or proform a service in order to make a sale. Fees are not cost of sales. However they can go in overheads

9

PayPal and iZettle fees are processing fees - so similar to bank charges in a way. They can go in overheads or you can include them in direct costs if you prefer as they are directly related to sales.
eBay fees are a bit different as they are listing fees (which you could argue is advertising) and then a final fee related to the sale price (sales commission). As @Paul_Courtier suggested, I would create a new nominal code for eBay fees and include it as a direct cost, rather than a cost of sale.
At the end of the day, it will make no difference to your tax - the presentation of the accounts is really for you to use as a business tool.
Are you a sole trader rather than a limited company?

12

Hi cbstephensaca, thank you for your response. Based on all advice I have created a nominal code for ‘iZettle Fees’ & ‘PayPal Fees’ under Overheads and ‘eBay Fees’ under Direct Expenses.

I run a Limited company but its very very small. i could have been a sole trader but being a limited company to me was a safer option for a business commitment. The business is a sideline to a day job with the intention of developing to quit the day job once and for all :slight_smile:

Could i be cheeky and ask you one other question?

13

Yes of course you can.

14

thank you so much and sorry for being cheeky. Part of the business trades in a market stall style environment so we have to pay ‘Pitch Fees’. I cannot find a suitable nominal code for this unless you can suggest one? Alternative do I create a new overheads code for it?

15

No problem at all. I would create a new code for it, but include it in Direct Expenses. Overheads are more like Admin costs which are the general costs of running a business, like office expenses, telephone, that type of thing. They are not specific to any particular type of business.
Direct Costs are costs that are directly related to the process of selling your products or services, but which don’t fit into cost of sales. If you stopped selling them or switched to something else, you wouldn’t have to incur those costs, whereas you would still have to pay telephone bills etc.
Cost of sales are simply the costs incurred in bringing your product to market, so generally speaking they relate to goods and are either the cost of buying goods in for resale, or the costs of manufacturing or processing those goods to get them ready for sale.

Feel free to message me directly if you have any other questions.

2 Likes
16

Hi, that explaination was really helpful thank you. i am getting ready for year end so there may well be a question or two coming your way. Thank you again. Ash

1 Like
17

No worries, fire away!

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