How do I record payments that are net a Venmo or Paypal service fee for a business?

Question

I need to know how to properly record sales for my business when it is net a service fee from Paypal or Venmo.

Example:

I create an invoice for $100. My client pays me with a check $100. Easy, I record the payment.

Here is my question?  I create an invoice for a $100.  My client pays me $100 through Venmo.  Venmo takes a fee out of $3. I transfer the $97 to my bank and into Quicken.  How do I get the $3 to record as a fee, with the $97 to match the $100 sale

Mark1104 · Answer

you would record the cash receipt of $97, then reflect that the client paid you $100 (reduce the invoice by $100), and then record a transaction fee of $3.

Jim_Harman · Answer

I assume you want to credit the full $100 to the client.

In that case, you could create a Category for the fees if you don't already have one. Call it "PayPal fees" or whatever, with an appropriate tax line item such as "Schedule C:Legal and professional fees".

Then you would enter the $97.00 deposit as a split transaction. The first line would be for $100.00, using the Category and Tag you would normally use for the payment. The second line would be for the $3.00 fee, using the PayPal Fees Category and entered as a negative number.

Disclaimer: I am not a tax advisor. You should consult your tax advisor or a reliable source regarding how to record these fees as business expenses.