If you are like many small business owners, Paypal is a great fit to get you up and running with online payments. Paypal offers you a way to send branded invoices and either let your customers pay with Paypal if they already have it or use a charge card through Paypal’s interface.
When Paypal keeps a percentage of what you charge your customers, your business has incurred an expense. Some people incorrectly treat what they receive when it hits their Paypal account as their “true” income. The actual income is what your your customers pay and Paypal’s fee is an expense that reduces what you net on that transaction.
FINSYNC makes it easy to handle Paypal accounting. Paypal is a bank and syncs with FINSYNC just like any other. Follow these steps to sync your account:
1. Click the banking tab.
2. Hit the “+” symbol in the left nav above your already synced banks accounts.
3. Choose synced bank account.
4. Type “Paypal” in the search field and hit the magnifying glass.
5. Choose the correct Paypal account. Note: you can repeat these steps if you have multiple accounts.
6. Input your credentials and finish the wizard.
Now FINSYNC will automatically import your Paypal transactions just like other bank transactions.
As money hits your Paypal account, you’ll see the net of each transaction in much the same way a credit card processor takes their fee first and sends you the balance. To accurately account for Paypal’s fee, you need to do a little bit of work with the “Split Transaction” function in FINSYNC.
You’ll create two transactions out of each deposit: 1) Paypal’s fee and 2) your income from your customer.
These the two components of the split will equal the deposit: invoice amount – paypal fee = deposit amount. That’s it! Your accountant will be much happier that you are recording Paypal’s fees.
Here’s the full walkthrough of how to split Paypal’s transactions: https://finsync.desk.com/customer/en/portal/articles/2529800-paypal-how-to-account-for-paypal-fees