Recording PayPal Fees

by John
(Newort, Oregon, US)

Two options for recording PayPal Fees

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?

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Hi John,

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.

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Mar 24, 2017
Automating PayPal statement process
by: Tomi Räsänen


Valuable information!

Using the monthly statement is definitely the better way.

I have a question related to downloading and using the PayPal statement: Can this be done automatically?

We are thinking about automating this, if that cannot be done automatically yet.

Would be happy to hear if this kind of automation would be valuable for entrepreneurs and accountants.

Apr 05, 2017
QBO-PayPal Sync
by: Lake


Check out my article on the QBO-PayPal sync explaining how the QBO integration currently works ... not well :0(

Click here to add your own comments

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