Paypal entries

This query is : Resolved

Vijya (Querist)
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26 October 2019 Hi,

My husband is providing services to the client outside India. He is having his own website. So people come to his website and they take subscription form the website i.e they buy hours according to their requirement. So every client pays money through Paypal. Paypal charges fees for the conversion and transfers the amount to my husband's bank. As clients are buying hours through the website my husband doesn't issue any invoice to the clients as the services are provided only when the payment has been received.
For example
Josh bought 29 hours @ 5USD. Paypal will convert this 145 USD, for this they charge 8USD and convert the 137 USD using exchange rate less than prevailing in the market. So the amount will be Rs. 9366/-

Now my query is:
1) What Journal entries he needs to do for the receipts?
2) Do he need to consider PayPal fee as well?
3) Is it mandatory that he should issue invoice to the client separately?
4) Will the journal entries make any difference if he is using quickboos instead of Tally?

Can anybody please help me? I will highly appreciate the help.

Srishti Agrawal

Srishti Agrawal (Expert)
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23 November 2019 Hello Vijya,
Since I handle online freelancer accounts so will try to answer your questions-

1) What Journal entries he needs to do for the receipts?
For ease of accounting you may book sales at the time of receipts-
Paypal (Bank) A/C Dr Sale of service Cr.

2) Do he need to consider PayPal fee as well?
Yes, since is a cost to you, it will form part of your expenses

3) Is it mandatory that he should issue invoice to the client separately?
For GST purpose yes you should.

4) Will the journal entries make any difference if he is using quickboos instead of Tally?
No, we use quickbooks for all our service clients and accounting entries remain the same irrespective of software used.

If you have any further queries, feel free to write to me on Srishti.ag11@gmail.com