Hi I sold something for my brother which gave 47.50, Take away Fee 2.43 and final value fee, He had taken £27 home So i transferred £27 to personal drawing and i transferred it to him from papal.
What is the correct way to tag this, just as a drawing again?
If you’re a sole trader, anything personal taken from your business bank account should be tagged to the proprietors drawing account (PDA). If you use the same PayPal account for both the business and this transfer, I would do the following:
PayPal money out to your brother - tag to PDA
Transfer from bank to PayPal - take as transfer to PayPal
So essentially the transfer from your bank to PayPal would cancel out the money out transaction (giving you a balance of £0.00).
I hope I’ve understood you correctly and hopefully it’s clear enough. If not, please feel free to ask further questions
In addition, would the charges and fees not need some special treatment as they aren’t a business expense?
Yes unsure on that lurch,
When you say Transfer From Bank to Paypal Can you clarify further
So make a new transaction with money out to Aaron. with PDA tag?
Just confused about second.
As the payment was made to paypal.
Having re-read your post this morning, I wondered if you could confirm the following for me please?
You sold something for a member of your family for £47.50. There was a selling fee of £2.43 + final value fee. You keep a share of the profit, but £27.00 goes back to the member of your family. Is that correct?
Is your brother being treated as a client?
Is the money coming in being treated as a sale for your business?
I didnt keep any profit, take away all fees, postage etc he cleared £27 he sold it on my account on Ebay but its not part of my income i had taken none of the sale
If the overall net effect is 0.00 and it was more of a personal transaction, you could in theory just completely disregard the whole transaction and delete the entries relating to it.
The alternative would be to tag everything to/from the Proprietors Drawings account - money coming in is a transfer from, and money going out is a trader to. If it’s a personal transaction and there’s no profit, the overall effect should be zero.
However, I’m not an accountant so it may be worth double checking on this
In particular the associated fees are not a business expense, so they should be treated as drawings as well, you shouldn’t create a purchase invoice for them.
I think the correct thing is to tag all 3 transactions to drawings