Facebook Marketplace Selling Fees

ASiegel15

Recently just starting using Quicken Home and Business. Currently selling items on Facebook marketplace. Facebook is collecting the sales tax and their selling fee and sending the remaining funds to my business account. I am having a hard time linking the downloaded banking transaction to the invoice I generated in quicken. The invoice is still open due to the sales tax and selling fee amount. It there a way to balance the transaction so the invoice is paid in full? The invoice automatically setups up the sales tax account. Do I need to setup an expense account of the Facebook selling fee? Any help would be greatly appreciated.

Frankx

Hi again @ASiegel15,

It is interesting that FB Marketplace is taking responsibility for the sales tax but they are not producing the invoice to the customer.  Presumably they have provided instructions to you on the rate(s) that you should use.

So, given this additional information, I still think you have a choice to make.  You can account for each sale as you have posted above - where you produce the invoice in Quicken and - after the fact - edit  the Quicken entries to remove the sales tax and add the FB commission fee.  Or, you could produce the invoice outside of Quicken - for example by using an MS Word template or another similar application. And then you'd only need to enter the data that applies to you (the actual deposit, the FB commission fee and the sales income you receive) for each transaction.

I believe either option will work.

Frankx

Tom Young

Conceptually. accounting for this process isn't too hard, but the devil's in the details and I don't know what capabilities Quicken Home & Business has in this area, having never used the product.

The issue is that you're creating an invoice that presumably results in an accounting entry of:

Debit (increase) Accounts Receivable Account   $106
Credit (increase) Sales Revenue Category           $100
Credit Sales Taxes*                                                   $   6

* This could be either an Account or a Category, but since the money never really passes through your checking Account and should always zero out (ignoring timing differences) it could be either.

But then you're receiving a deposit of ($106 - $6 -$4) = $96, so how do you erase a receivable of $106 with an actual deposit of $96?  A pure accounting approach that would be a one-shot entry (and I have no idea if Quicken's "invoicing/receivables" mechanism can accommodate this), would be a split entry when the $96 is deposited along the lines of:

Debit (increase) Cash in Bank Account                $96
Debit (increase) Facebook Expense Category     $ 4
Debit (decrease) Sales Taxes                                  $ 6
Credit (decrease) Accounts Receivable Account $110

So mechanically you'd enter the $96 deposit, split the entry, enter the Facebook expense as a negative number, enter the Sales tax as a negative number, and the "remainder" of $110 would clear the Receivables Account.  As I said, I don't know if this approach is possible given whatever programing Quicken has done in the area of collecting against an invoice. 

Frankx

Hi @ASiegel15,

Congrats on being a Facebook partner/entrepreneur!!

Based on Facebook's process as you have described it, you will not be the one (entity) that is responsible for collecting nor remitting the sales tax on items you sell.  That, I expect will be a relief for you.

Here's a summary of a sample transaction, just to give you an idea of the things you will need to track in Quicken (as well as what you won't need to track).

                                        Facebook's Responsibility  |  ASiegel15's Responsibility

Sales Price:             100.00                                                                           X
Add: Sales Tax            6.00                      X
Add: FB's Fee             4.00                      X                                                   X
Total Amount Due    110.00                      X

Collection Allocation 110.00                   14.00                                           96.00

So, the good news is that you do not need to track, collect, remit, or account for - in any way the sales tax parts of sales transactions.  Those are all being assumed by FB. 

You will need to track the Sales Price (which is your Sales Income) and the FB Fees (which are your Expenses of Sales or Commissions Expense).  You will not need to (and I would actually say you should not) track the sales taxes, because you have no responsibility for charging or collecting those. I understand that Quicken can calculate and track sales tax for businesses, but that does not apply to you, in my view.

You only need to record the following transaction in Quicken, for the above example transaction:

                                                 Debit                 Credit
Checking Acct. Deposit            96.00
Commissions Expense               4.00
Sales Income                                                    100.00

Hope this helps.  Let me know if you have any followups.

Frankx

ASiegel15

@Frankx, Thank you for your response. The concept you described makes sense. I am using Quicken to create an invoice since FB Marketplace will not do this. Because I am going this route, I have to list the sales tax on the invoice since the buyer is making payment through FB Marketplace. It sounds like I will have to create the initial invoice in Quicken showing the sales tax cost. After that invoice is printed, I will need to adjust to invoice to remove sales tax and add commission fees. I believe this would get me to balance out. Seems like more work than necessary to get the transaction to work. Can you see some other way of doing this?

Frankx

Hi again @ASiegel15,

It is interesting that FB Marketplace is taking responsibility for the sales tax but they are not producing the invoice to the customer.  Presumably they have provided instructions to you on the rate(s) that you should use.

So, given this additional information, I still think you have a choice to make.  You can account for each sale as you have posted above - where you produce the invoice in Quicken and - after the fact - edit  the Quicken entries to remove the sales tax and add the FB commission fee.  Or, you could produce the invoice outside of Quicken - for example by using an MS Word template or another similar application. And then you'd only need to enter the data that applies to you (the actual deposit, the FB commission fee and the sales income you receive) for each transaction.

I believe either option will work.

Frankx

Tom Young

Conceptually. accounting for this process isn't too hard, but the devil's in the details and I don't know what capabilities Quicken Home & Business has in this area, having never used the product.

The issue is that you're creating an invoice that presumably results in an accounting entry of:

Debit (increase) Accounts Receivable Account   $106
Credit (increase) Sales Revenue Category           $100
Credit Sales Taxes*                                                   $   6

* This could be either an Account or a Category, but since the money never really passes through your checking Account and should always zero out (ignoring timing differences) it could be either.

But then you're receiving a deposit of ($106 - $6 -$4) = $96, so how do you erase a receivable of $106 with an actual deposit of $96?  A pure accounting approach that would be a one-shot entry (and I have no idea if Quicken's "invoicing/receivables" mechanism can accommodate this), would be a split entry when the $96 is deposited along the lines of:

Debit (increase) Cash in Bank Account                $96
Debit (increase) Facebook Expense Category     $ 4
Debit (decrease) Sales Taxes                                  $ 6
Credit (decrease) Accounts Receivable Account $110

So mechanically you'd enter the $96 deposit, split the entry, enter the Facebook expense as a negative number, enter the Sales tax as a negative number, and the "remainder" of $110 would clear the Receivables Account.  As I said, I don't know if this approach is possible given whatever programing Quicken has done in the area of collecting against an invoice. 

ASiegel15

@Frankx and @Tom Young . Thank you for all of the advice. I believe between the too suggestions I should be able to make this work. Thank you both for the advice. I greatly appreciate it.