asked this on August 27, 2012, 5:11 PM
What is the best way to record fees on credit card\paypal payments you accept from customers
I would like to know this too. For example i charge $280, $7.56 is the fee paypal takes. I can only record $272.44 as sales... i dont see a way to edit and add the fee.
Hi Ndwitt and Jared,
Thank you for your question about how to handle fees in our forum!
You will have to manually enter PayPal fees on the EXPENSES screen using the "Quick Entry" tool if PayPal is showing the total amount of the invoice and not importing the fees. You can do this once a month or on a weekly basis. Let’s suppose that the invoice is for 100.00 and PayPal fee is $2.00. When you import your transactions, you will only see the $100.00; this is what you should do:A. Match the $100.00 to the corresponding invoice.B. You will need to add a “Merchant Account Fees” category:1. Go to "Accounts" (found at the top of the screen) -> "Settings for [your business name]" -> "Accounts" - > "Add An Account" button2. Click on the “Expenses” tab. 3. Search for “merchant” and then click on “Merchant Account Fees”. C. This is how you should record these fees:1. Go to the Expenses screen.2. Click on the "Quick Entry" button.3. Enter the fee in the "Amount" field. ($2.00 in our example)4. For the “Money came from”, select your PayPal account.5. For the “Financial Category”, select the “Merchant Account Fees” Click “Add expense”, and you are finished.
If you have any other questions then don't hesitate contacting a customer support hero at email@example.com.
Thanks James. I got it!
Thank you James for your answer in adding the merchant fee expense. I have now added the expenses for all previous invoices.
However, since the merchant account fees are taken out before the deposit is posted into my account from the credit card company (square in my case) how can I reflect the merchant fees on the invoice?
For an example, I have added the merchant fees as an expense using the method you outlined above. Then, I have matched the deposit with the applicable invoice to reflect payment. However, since the merchant fee amount has already been deducted from the deposit amount, all my invoices show a remaining balance that equals the merchant account fees.
How can I reflect that the customer paid the invoice in full AND the merchant account fees were deducted from that invoice? As of now all my invoices say "partial payment".
I hope I explained this well enough. I have attached a screen shot of my income page that shows several remaining balances.
Thank you for your post. A cleaner way of doing this when the fees are taken out before the transaction is imported can be done by adding the merchant fee as a payment to the invoice. The invoice will now appear as fully paid. We now must transfer the merchant fee from the appropriate payment account to the appropriate expense account. We are going to do this through a journal entry. Please see the following video which demonstrates this process:http://screencast.com/t/VpzZwioi. I hope this helps.
I have may be a simple question regarding credit cards payment I pay.
Here is the question:
I pay all my business expenses with my business credit card and later on I pay this credit card from my business account. When I import all the transactions from my bank, the transactions' list includes the payments I made to the credit card. What should I do when asked to categorize those transactions if they were already categorized once imported into wave?
I do not want to have a double record of all my expenses.
I want to follow up to what James said, too (9/14/12.) If I add it as an expense how do I not account for it twice? That seems to be my confusion. The credit card fees have already been taken out by Square when it gets to my business account. The CC fees add up by the end of the year. I just want to make sure everything matches.
Thank you for your post. Please categorize all of these expense transactions to the appropriate expense category. When the payments are imported you are going to mark these transactions as transfers between your business payment account to your business credit card: http://screencast.com/t/ysRX8BGwrmX, http://screencast.com/t/g52493fqrbn. I hope this helps. Thanks for the great question.
If the fees have already been removed from the transaction I would recommend following this process: http://screencast.com/t/VpzZwioi. I hope this helps!
Has Wave been updated since this video? http://screencast.com/t/VpzZwioi. I was doing fine thru the create an invoice part, then the next screen is labeled "income". I thought maybe the income page had become the transactions page, but it doesn't match up. Especially when it pulls up menus that do not look like any I have seen on the site.
I still need to record my Square merchant fees. It looks like my invoices have small overdue balances on them.
Yes, Wave has been updated since this video. The Income screen no longer exists. The transactions page holds all financial transactions in Wave. If you wish to filter this page for certain types of transactions please use the drop down at the top right hand of this page: http://screencast.com/t/dEzzfikex.
So, you are going to follow the same instructions as the above video for the invoice. After the invoice is paid in full please navigate to the transactions screen and enter a expense that represents the merchant fees: http://screencast.com/t/xRbb2sxjy. This way the merchant fee will be recorded properly and you invoices will show as fully paid. I hope this helps!
Seconded. I'd like to see this one in new Wave if possible?
This needs to be updated. None of the screencasts work. Specifically this one: http://screencast.com/t/VpzZwioi.
@ Kathy, IGNORE, and info....
As far as not seeing the same screens as the Wave poster and why the videos do not work is because Wave updated since those instructions and they no longer apply.
Go here: https://support.waveapps.com/entries/22964533
I know this doesn't appear to be a thread about how to handle Credit Card fees. But it gets into that and the isntructions are clear and work well. Scroll about half way down. From that point all the way to the end is about this specific topic. Its easy to handle.
Wthomas. The link you sent does not work either. I am not sure i understand the best way to manage the credit card fees within Wave. Is there a video link that Wave can provide. Thanks from the non-accountant.
I apologize, the link was for an older FAQ, but I was able to grab the pertinent comment out of the conversation (I tested all the screenshots, but if any don't work, please let me know.)
I created an invoice and added a payment so my transactions page looks like: http://screencast.com/t/cYLLxMHAf2Then, I split the Bank Deposit like this: http://screencast.com/t/1QNqvjJkkSo my transactions page looks like: http://screencast.com/t/XsFJhXR1kOThen, I merged the invoice payments: http://screencast.com/t/LyPGqrTj
Does this help clear things up?
How do get my Merchant Account fees to show up as an expense instead of a COGS?
If you would like a new Merchant Account Fees expense account instead of COGS, you will need to add this. Please select 'Accounting' on the left then 'Add an account'. Choose 'Expenses' and the Expense folder then 'Fees, Charges & Subscriptions' and you can rename 'Other fees, charges & subscriptions' to the name of the type of fee you have. I don't recommend naming it 'merchant account fees' as there will be no way to tell the difference when categorizing if it's an expense or COGS.
I hope this helps!
I've tried to click thru on all the videos shown and none of them work.
So here is what I have done and would love some help and clarification on how to record this properly. These are the steps that I have taken:
1. Import transactions from Paypal
2. The dollar amount imported from Paypal is $600.00.
3. I know that Paypal has taken a $17.70 cut from the $600 so what I am left over with is $582.30
4. I create a seperate bill for Paypal to capture the $17.70
5. I've taken the $600 income and used the "split transaction" from the drop down button the right and created two transactions from the $600, one for $17.70 and the other $582.30.
6. I then take the $17.70 transaction and change the category to an expense and associate the $17.70 with bill I had created earlier.
7. I take the $582.30 and then associate that with the appropriate invoice.
The end result is that my invoice is shown as unpaid because I only have associated $582.30 out of the $600.00.
I'm missing a step and need help to close off or record this transaction.
See attached image.
Thank you for your post. What we want to do here is known as a negative split. When the PayPal transaction of $582.30 is imported we want to split this transaction. In the first line we will select $600 as the value and the second line we will choose -$17.60. When we split this transaction it will create a income transaction for $600, which we can associate with our invoice. This split will also create a transaction for -17.60, which we can associate to our bill (http://screencast.com/t/bGYxjsWeZ).
Using this method will ensure that our invoice does not have any outstanding amounts. I hope this helps! Please get in touch with our customer support heroes if you have any further questions!
This is not what happens for me. I think you misunderstood.
The Paypal transaction that is imported is not $582.30. It is imported into Wave as $600.00. However in Paypal, it also shows as $600 as the money received on one line. On another line it shows the fee of $17.60.
Love to get your help to close off this issue for me.
Thank you for getting back to us. This is a good point. In this case we want to match the imported $600 PayPal transactions to the appropriate invoice. Now, we want to create an expense item to represent the PayPal fee of $17.60 that we have incurred from PayPal. This can be done through the creation and payment of a bill or you can enter an expense on the transactions screen. This way the invoice is paid for the full amount and the PayPal fee has been recorded as an expense.
Perhaps I am missing something. But I wouldn't imagine creating an invoice here to match the $600 is a good solution. Sure, if they $600 was for one sale/customer/invoice. But often, you get imported transactions from PayPal that are the combination and total or multiple sales, etc. I don't think creating one invoice for that makes any sense. Also, many services or businesses do not use "invoices" for each job or sale. So creating invoices for something that doesn't use an invoice doesn't make much sense either. Any suggestions?
I do have invoices that I've created and invoice to my client for $600. The Paypal import is also $600. What isn't accounted for is the $17.60 expense. I've created a bill that is from Paypal for $17.60. How do I attach a payment to this bill of $17.60.
The reality is that when I get money deposited into my account from Paypal it is only $582.40. The missing step here is to account for that billing and payment of that $17.60.
This transaction among others happens to me quite a few times every month so I need to get this straighten properly.
Hello Samuel and Wthomas,
Thank you for your posts. These are good points. In this scenario we must simply create an expense for these PayPal fees. This can be done in two ways:
1.) Bill: We can create in Wave for $17.60 and pay this bill manually from the account where this money was deposited.
2.) Manual Entry: On the transactions screen we can enter an expense for $17.60 manually through the add an expense button. For this expense choose the payment account to equal the bank account where this money was deposited.
I am sorry for this confusion. If you have any further questions or concerns about this issue please feel free to reach out to our customer support heroes. Thanks!
Thanks Tyler. I've done #2. I also realized that I could save myself this headache by using Stripe. It is automatically downloaded and accounted for. Nice!
So this topic needs updating again...
The Paypal payments from my customers arrive with the Paypal fee already subtracted. Example: customer sent $70, Paypal took $2.33, Wave imported the deposit as $67.67.
So there are two problems: the payments won't match the invoices, and I can't track the expense of Paypal fees. I tried entering them manually, but Wave won't let me tag them as anything but "Uncategorized Expense".
Associated question: why can't I add expense accounts under the Accounting tab?
I'm also having this issue. I can't log the fees correctly so both my revenues and expenses are now incorrect. Need this resolved ASAP or I'll have to resort to a paper method
It's a lot less confusing when one thinks about the accounting first and the software second. Using the last posted example: customer sent $70, Paypal took $2.33, Wave imported the deposit as $67.67.
Depending on your payment processor, the import may be $70 or $67.67. Regardless, the customer paid $70, you have income of $70, fee expense of $2.33, and cash-in of $67.67.
If your payment processor reports gross amounts, then you do a negative split to create the fee expense. If the payment processor reports an amount net of fees, then you create an additional payment equal to the fee and then journal the fee expense.You can always write a macro to calculate these adjustments for you and import them.
If you are a high volume business, then select a payment processor which exports their numbers in a manner that minimizes your administrative efforts or write a macro. If you only process a few payments a month, then suck-it-up and enter the few adjustments manually.
Either way, the good news is that you got paid!
I came across this while researching to make sure I've been doing it correctly.
Currently all of my PayPal imports show the fee as a separate transaction from the invoice amount paid through PayPal. So for example it will show:
Jon Doe [Payment, Completed]: $65.00
Fee for PayPal transaction Jon Doe: $3.00
I have not had a need to split the transactions to bring out the fee.
The payment goes against my income account and I mark the PayPal transaction as a bank service charge. This puts it against operating expenses and not against COGS.
I could create a separate account called "Credit Card Fees" but I believe if my business ever gets an actual credit card then those financing fees would become confusing.
I've read through the thread and unfortunately I think I'm more confused than I was before I read it. I'm not sure if there's a recent update to this process. I just want to know how to manage an invoice that gets paid thru PayPal i.e. where and how to reflect the fees in my expenses. The amount paid into my account doesn't match the total amount of the invoice because of the PP fees.
Hi there, I thought it might be suggested here, but is it possible to account for the fees through journal entries? So taking the $600 sales example, with the $587 incoming accounted as sales, and a monthly tally/summary of the paypal/stripe merchant fees recorded as a journal entry to reflect sales which are then taken as fees, so that it doesn't affect the bank balance? Is that a legitimate thing to do? It seems that many 'online' business are using wave, and one of the key things wave customers are looking for is an accounting tool that 'gets' the way online business function in respect to income through paypal and credit card merchants who take funds and deposit the rest. we need a standard way to account for this. thanks.
I finally get it!!!!!!!!!!!!!!!!!!!!!! And I think I have finally found a way that is very clear cut and easy to understand!!!!Right..........I am fairly new to wave and have spent the last few days trying everything out on it and finding ways to make everything work as well as reading endless forum posts to see how things work. This is one that was partically bugging me until now. This is what I have done......I use a company called Izettle to accept card payments from my customers. The customer pays on the card machine and the total amount is put into an Izettle account, a few days later the amount is transferred into my bank account minus the processing fee's that Izettle charge. Obviously as everyone else above has been questioning how on earth do we get around this on Wave..... Well here is what I have done and it works. 1. Go into the "Accounts" tab, select "Add an account", select ASSET - then - BANK - then - BANK & CASH - then - OTHER BANK ACCOUNT and call it what ever the provider you use is (in my case I have called it Izettle Card Payment.2. Go back into "Add an account" and this time go to EXPENSE - then - EXPENSE - then - Fee's, Charges & Subscriptions - then - click show other and select - Other Fee's, Charges & Subcriptions ...... This time call this one Payment Processing Fee's or something like that. I have called mine Izettle Trans. Fee's
now you have an account for the money to come into when a customer pays, and somewhere to record the fee's that are taken from the transaction. Now for it to all make sense. When I receive a payment the first visible sign I get of it is when it appears in my bank minus the fee's, what we have to do now is create the bits in between that I don't see. 3. Go to the Transaction tab and click the "Add income button", put the date that the customer made the payment via card, add a description (maybe the customers name or invoice number), put in the full amount that the customer paid on their card, leave the Category section for a minute and go to the "Account" field at the end and select (In my case) Izettle Card Payments. If you haven't already please create your invoice for the customer and now use this transaction as the transaction to put against the invoice. This will ensure that the invoice is paid in full leaving no outstanding balance. So now we have the full customers payment in the Card Payment account, so all we need to do now is transfer the amount into your current account minus the fee's. So lets get rid of the fee's first......4. In the "Transactions" tab this time select the "Add Expense" button. Using all the same details as you did in step 3 for the first 2 fields this will start to create your fee's section. Put the "Amount" as the amount you got charged for the Transaction...... This time the Category you need to select is your "Transaction Fee's" expense category that we made earlier in step 2. Make sure the final field is the Card Processing account your made in step one and that is it. Your fee's are now accounted for.....So all that is left to do is create a transfer from the "Card Processing Account" into your current account.4. Finally here we go, create another expense in the "Transactrions" tab same as we did in the previous step, using all the same details again. Don't worry about selecting a category and make sure that the "Account" is the card processing account we made in step one. Make sure the amount is the exact amount that was ACTUALLY transferred into your bank account. Lastly click the little tick box to the left of this expense transaction that you have made and find the transaction where the money was deposited into your bank account and select the tick box on that one as well. Now click the "Transfer" button at the top next to the merge and delete buttons and that's it. All done.......You have accounted for the FULL payment coming in
You have matched the full payment with the invoice
You have accounted for the transaction fee's
You have made a transfer of the actual amount into your bank account....
I HOPE THIS HELPS AT LEAST ONE PERSON HERE AND STOPS THEM FROM HAVING TO GO THROUGH THE PAIN OF ENDLESS READING........
Let me know if this has helped you :)
Why can't the developers just simply associate an adjustable "transaction fee" input with the initial setup of the PayPal account?
You KNOW its going to be a percentage (2.9% - varies with volume) PLUS .30¢ PER transaction; (this has been the case with them since inception).
Just add two additional input fields on the setup screen to account for this transaction fee. Then have the system automatically subtract the calculated amount AS transactions are imported from PayPal... SIMPLE.
This way, none of your Customers are jumping through hoops trying to figure out how to log simple income.
This should be easy for your developers to implement; as its on the 'front-end' and 'back-end' of a routine; nothing in the middle needs to be touched.
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