Do you use PayPal to accept online payments in your business? Do you know how to enter
PayPal transaction fees and transfers into QuickBooks?
I recently answered a question in an Intuit forum about handling PayPal transaction fees
in QuickBooks. Here's what I wrote:
I also use PayPal to accept occasional online payments. Here's how I handle it:
- I have a bank type account set up for PayPal. I deposit the receipt to this account.
- I create a journal entry debiting Bank Charges & Fees for the PayPal transaction
charge and crediting the PayPal account.
When I request a withdrawal from PayPal, I process a transfer from the PayPal "bank" account
to another bank type account named "Pending/Clearing - Other." When the funds are deposited
to my bank account, I process a transfer from the Pending/Clearing account to my bank account.
By using this process, I can track the actual current status of the funds from PayPal to my
bank account.
Be sure you check the balances for each of the accounts in question, verifying them against
the PayPal or bank balance as appropriate. Also check to make sure that the Pending/Clearing
account reflects the proper balance.
If you have more than a few online transactions, you may need to modify my approach to fit
your needs, but the process of debiting to Bank Charges & Fees in order to reduce the PayPal
account balance should still be valid.
Note: To simplify the posting process, exclude the Pending account and just process the transfer
between the PayPal account and the target bank account. For those with more than a few online
transactions, you should explore the possibility of establishing a link between your bank account
and QuickBooks to allow automated processing.
