How does one account for PayPal fees?
I marked my invoice as paid by method ‘PayPal’ and this tags the invoice to a payment.
But the bank entry is untagged, and doesn’t match the invoice anyway, because of the fee.
If anyone can explain this as they would explain it to a 12 year old, I’d be very grateful.
Many thanks
The way PayPal transactions should be accounted, is similar to other payment processors (such as GoCardless, Sage Pay, etc.).
What you need is basically a holding account which represents the funds they hold which has been collected from your clients.
If you haven’t already, take a look at this guide, which may help: Accounting for income from a payment service provider
Paypal is one of the most expensive ways around for accepting card payments. The trouble is that the public know the name and use a PP link to pay by card even when there is a link that says “pay by card” right beside it. I would always do my best to direct clients to a more cost effective service such as Stripe.
Processing for all card processors is the same. Create a holding account, pay the full amount of the invoice to there and then create a purchase for the charges. I do one consolidiated entry for charges at the end of the month. Stripe and GoCardless procide monthly invoices but, unless there is a report that I have yet tio find, I have to download a history report from PP as a CSV and total the charges column.
Thank you - much appreciated!
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