I sell my services on Upwork under my company.
When we use Upwork, we actually sell to the client, and not to Upwork. They only act like a middleman. Payment processing goes by using Escrow (within Upwork).
This is how the transaction process looks like:
We agree on terms(me and client) → Client pays money to Escrow → I complete the project and get paid.
Upwork uses the USD currency, and I receive the payments in GBP.
Upwork also charges a withdraw fee, which isn’t seen in my Starling Bank statement.
How should I record these sales?
- Create a merchant account in QF for Escrow in USD
- I would create invoices in USD inside QF and tag them as sales
- I would create corresponding entries in my Starling business account in GBP, and tag the transfer (from USD to GBP).
Another question is that how should I tag that withdraw fee?
What you’ve suggested should be spot on.
Does UpWork charge a withdrawal fee to you, or do they deduct it before they send you the GBP value? If it’s the latter, it would be the same as any other merchant account (e.g. PayPal, Stripe, GoCardless, etc.), where you would add the withdrawal fee as a payment out in the merchant account.
The withdrawal fee plus the transfer should be equal to the invoice total for the sale, and therefore all balance out.
Typically, the fee would be tagged to a supplier invoice. With UpWork, you may want to create a new nominal code for “Online Marketplace Fees” or even more specific as “UpWork Fees”.
Hope that makes sense?
Thank you for your answer @QFMathew !
I suppose Upwork deducted their fee first, and then they paid me out. This might be the logic behind why there is only 1 entry in my bank statement.
Please take a look at the link. This what I can see on my dashboard: https://imgur.com/a/cbMXYoE
What do you think?
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