I'd classify "commission" as a direct expense because it's an ancillary cost of making the sale. The logic being that ebay is a marketplace rather than a bank in the way paypal is.
Maybe "sad" to some but it's interesting the way we all view things differently.
-- Edited by ADAS on Sunday 22nd of January 2012 12:44:48 PM
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
Due to ongoing problems with our online shop we have decided to sell, for the time being, any stock from the online shop on ebay.
So my problem is, when we sell something by mail order, the customer pays by credit/debit card, we receive the full amount through the bank, any charges are taken later on and accounted for. When we make a sale on ebay, we get paid through paypal who take their charges at source, so we never see the the whole amount of money paid in the bank.
My intention is to put the sales invoices through as normal, show them as paid as normal with the full amount, put the charges through as charges the same as the bank charges and when it comes to the bank rec, click on both the receipts and the charges to show the same amount that has gone through the bank.
My questions then are, Is there a better way? Should the charges go as a cost of sale rather than an overhead due to them being directly related to the sale? and Can I show ebay charges as advertising costs?
Others may have a different opinion Steve, but you do it the same way as me, except i use "paypal" as bank account in itself and t/fer receipts to the current account as and when
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
I would include the PayPal charges as bank charges in expenses, as it is a cost of administering the account rather than directly related to the product being sold.
I normally set up PayPal as a bank account, enter the full value in sales (otherwise turnover will be understated) to the PayPal a/c, and post the charges to the PayPal a/c, then any transfers to current a/c. I tend not to enter the individual sales but run the summary activity report in PayPal, and make a batch receipts, and charges entry.
I also normally enter Ebay charges as a bank charge (I see them more as commission, than advertising) but I can't see any problem with clasifying them as advertising.
