Recording PayPal Fees
(Newort, Oregon, US)
Two options for recording PayPal Fees
How to deal with payment processor skimming?
I'm at a non-profit organization. If somebody donates, say, $10 through PayPal I have to issue a $10 tax deductible receipt, but I only get $9.48 and PayPal keeps $0.52.
Do I record a simple $10 donation and then do a separate transaction for the $0.52 to a banking fee account. Or do I split a single transaction as a $9.48 donation/$0.52 fee?
While this site is actually geared to small business owners working from home and doing their own books, recording PayPal fees is a standard bookkeeping task so this should work for a non-profit organization as well.
The $0.52 represents banking service charges so it is not skimming. IF you read your service agreement with PayPal, they are very upfront in how they charge.One option
for recording PayPal fees is to do it for each individual transaction as that is how PayPal processes a receipt. Using your example, the entry would be as follows:
Debit PayPal Bank Account $9.48
Debit Bank Service Charges $0.52
Credit Donations $10.00
However, that said, I find it tedious to input the service fee with each sale.My preference
is to enter all PayPal sales/receipts gross before service fees have been deducted. In other words, I ignore the PayPal fees when booking the sales.
When I go to do the bank reconciliation for the PayPal account, I enter the total service fees for the month in the reconciliation window.
You get your total fees for the month by downloading the pdf copy of your monthly PayPal statement. This second option not only makes data entry faster, it also makes account reconciliation a breeze!
While we are on the topic of recording PayPal sales, depending on your volume, you can also choose to enter your PayPal sales / donations in a lump sum using a daily, weekly or monthly sales summary instead of recording each individual PayPal transaction.