Managed Payments and Creating a Buyer's Tax Invoice | Selling

waddingtonfirstaid · 2020-08-19T05:06:11.697000Z

I thought I'd note how the Managed Payments fee can be treated on tax invoices. If others are doing it differently and/or take issue with the process I'm about to explain, then we can all help each other out. It's taken us (my son is doing a double degree in finance and marketing) a while to try and work through this. A method needs to be mindful if eBay might adjust their payment service fee in future if buyers use a fee-free payment option which would increase the seller's income for the sale. When you invoice a buyer, you usually have to provide a tax invoice for the whole sale but you don't want to record the sale (and be taxed) by a total which is not indicative of the actual money you receive from eBay (your actual income from eBay). Let's use an eBay $49.95 sale example with managed payment Fee of $6.87, which results in $43.08 appearing in your bank account about 5 days later (if you're on a 1 day eBay turn-around plan - LOL). Create a Tax Invoice under a general "eBay Customer" account with the actual eBay buyer's details in a reference field and/or shipping fields. First add the product sold, with an amount minus the eBay managed Payment Fee - $43.08. this will then show for the cost of the item under GST on Sales. The Tax Invoice Total has to show $49.95 as expected by the buyer and what they paid eBay. So we need to show separately the $6.87 fee on the tax invoice. In your software accounting chart of accounts (we use Xero), you need to implement a "Merchant Fees" expense account (in the chart of accounts). Then set up a "Service/Product" account called "Fee eBay Managed Payments" - GST on Expenses that can be added to the tax invoice. On the buyer's tax invoice, add the "Fee eBay Managed Payments" $6.87 (shows as GST on expenses "Merchant Fees" account). When the $43.08 finally comes through to your bank account from eBay, it then has to be off-set (reconciled) against the tax invoice for $49.95 but manually, you have to add the $6.87 fee component, using the Merchant Fee account. The Merchant fee account will then have a Debit and Credit for $6.87 cancelling out. We use Xero accounting so it shows minus the GST by default. I'm assuming eBay is paying GST on the fees they take. As a further note, I wrote to eBay management about how they should have an 'eWay' style reconciliation portal plugin for doing these bank feed line and invoice matching off-sets automatically. Maybe others have another way of doing this? So far, this is what we're doing. Luckily, if something needs to roll-back or be edited down the track, we can do that using Xero accounting.

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Managed Payments and Creating a Buyer's Tax Invoice | Selling | eBay Australia