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Pay Pal - how exciting

 
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Barefoot Andrew
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Joined: 21 Mar 2007
Posts: 22780
Location: In the 17th century
PostPosted: Wed Mar 28, 07 1:33 pm    Post subject: Pay Pal - how exciting Reply with quote
    

I've just purchased something from myself from my own website... and then refunded myself. How exciting!

To echo Pay Pal comments made previously on this forum, Pay Pal is a quick & simple means of adding credit/debit card facilities to one's commercial website.

I've added a "buy now button" to my site and it works very well. I'm pleased with the whole process. For a £33 sale Pay Pal are charging me a £1.32 fee - I don't know how this compares with formal merchant facilities from a bank, but I'd imagine favourably (especially considering how simple it is to add the facility to one's own site).

In short - recommended.
A.

PS Couple of minor niggles:-

1. As I write, the payment page is insisting that Pay Pal sign-up is required to complete the transaction. I've spoken to Pay Pal, who were helpful and acknowledged this shouldn't be the case and they'll look into it.

2. It's a shame that the "custom payment" option refers to an external banner image, rather than allowing you to upload one. The latter means that you either have to make the image available via a secure https:// connection which is a pain, or possibly confuse your customers when they see a "this page contains both secure and insecure items" type message.

Barefoot Andrew
Downsizer Moderator


Joined: 21 Mar 2007
Posts: 22780
Location: In the 17th century
PostPosted: Thu Mar 29, 07 1:34 pm    Post subject: Reply with quote
    

Further to this, here are some thoughts on how I'm planning to account for PayPal transactions, just in case it's useful to anyone else

I use Quicbooks Regular 2006 for my accounts, but I'd hazard a guess the same ideas would apply to any accounts software.

So, I sell something online for £33, and the funds appear in my PayPal account immediately, less the transaction charge of £1.32. Thus £31.68 is available for me to transfer to my business bank account.

I generate an invoice for £33 for the customer, and Quickbooks expects to see £33 coming in. Off-hand I'm not clear on how to attribute an expense to an invoice in Quickbooks, so I was pondering how best to account for the PayPal transaction fee.

I could have recorded £33 as having come into my bank account, and then £1.32 going straight out again, but this is a fudge and I wasn't happy with it.

So, simple: I've created an "other current asset" account in Quickbooks and named it as my PayPal business account. When an order comes in, I can record the payment as a "deposit straight to" said asset account, and then record an expense for the PayPal fee against that asset account. This is more accurate than recording these in my actual bank account as in the previous paragraph.

I can then record a transfer from my PayPal "asset" account to my real bank account. Unfortunately this takes 3-5 days, and Quickbooks doesn't appear to be able to handle the funds disappearing from one account and not re-appearing in another for a period of time. So I'd probably record the transfer on the date the funds cleared to my real bank account.

Just how I'm doing things... slightly faffy but it suits me and my low-volume of transactions. For high-volume online sales, a more streamlined method of associating third-party charges to invoice revenue would be needed...

A.

dougal



Joined: 15 Jan 2005
Posts: 7184
Location: South Kent
PostPosted: Thu Mar 29, 07 2:31 pm    Post subject: Reply with quote
    

Barefoot_Andrew wrote:
...

So, simple: I've created an "other current asset" account in Quickbooks and named it as my PayPal business account. When an order comes in, I can record the payment as a "deposit straight to" said asset account, and then record an expense for the PayPal fee against that asset account. This is more accurate than recording these in my actual bank account as in the previous paragraph.

I can then record a transfer from my PayPal "asset" account to my real bank account. Unfortunately this takes 3-5 days, and Quickbooks doesn't appear to be able to handle the funds disappearing from one account and not re-appearing in another for a period of time. So I'd probably record the transfer on the date the funds cleared to my real bank account. ...

I'm not an accountant, I've only suffered them. So regard my nitpicking as an attempt to save you from such fuss.

I'd suggest that you
- set up Paypal Plc (or whatever) as a supplier (for the charges)
- create a purchase record (as though an invoice) for the charge. Categorise it under "cost of sales" - "expenses" headings invite detailed scrutiny.
- reference that 'purchase' to the payment transaction (by invoice no)
- "pay" for the 'purchase' (Paypal's charges) from the Paypal "asset" account

You'll find it easier to track the Paypal-to-Bank transfers if you record those with the date of the instruction - that is normally what shows up on your printed statement (it doesn't normally show the 'cleared balance'). For any tax purpose (if you are not running on accruals) the date you get the Paypal payment is going to count as the date you were "paid".

And do set up "Asset accounts" for whatever credit cards you might ever use in connection with your business. They are "Assets" - they just happen to be either paid off (zero balance) or in overdraft.

As another 'hint', I'd suggest that you set up an 'asset' account for your cash box (even if you don't have a physical cash box), AND for a slush fund, which you should call the "Adjustment Account". Then, whenever you make or receive a tiny over- or under-payment that you want to 'write off' (ie for me, less than the cost of a stamp to return anything), you can use payments to or from the slush fund to force the transactions to bloody well balance and go away and stop bothering you.
At the end of each trading year you can make a notional transfer to or from cash to bring the "Adjustment Account" to zero.
That way trivia can be brushed aside, yet fully recorded should anyone wish to examine your loose ends.

Northern_Lad



Joined: 13 Dec 2004
Posts: 14210
Location: Somewhere
PostPosted: Thu Mar 29, 07 2:48 pm    Post subject: Re: Pay Pal - how exciting Reply with quote
    

Barefoot_Andrew wrote:
I've just purchased something from myself from my own website...


How nice for you, but you'll probably increase your sales if you add your site to your footer. (Look in your profile for the web-site box)

Barefoot Andrew
Downsizer Moderator


Joined: 21 Mar 2007
Posts: 22780
Location: In the 17th century
PostPosted: Thu Mar 29, 07 3:16 pm    Post subject: Reply with quote
    

dougal wrote:
I'm not an accountant, I've only suffered them. So regard my nitpicking as an attempt to save you from such fuss.


Ta for the comments - I'll ponder. I'm pretty much set up in a way that I'm happy with, but your extra remarks might be useful to others...

Northern_Lad wrote:
add your site to your footer. (Look in your profile for the web-site box)


I since have.
A.

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