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I tried to figure this out but can't seem to do it. Here's my thinking:

income:eBay - €10 from eBay (true)

Then this money goes to:

bank:PayPal €9.75  
expenses:PayPal fees €0.25

Then the PayPal account shows as if it only receives €9.75, but in reality it receives €10 and then it takes away €0.25 FROM the PayPal account as fees.

Alternative I tried:

bank:PayPal €10

goes to in two separate transactions (which makes it look really messy):

income:eBay €9.75  
expenses:PayPal fees €0.25

This option makes it look messy but it works properly.

Is there a way to do it using a split transaction (or another option that makes it look less messy, no double transactions), in which it is actually as it appears on my PayPal - which is, PayPal gets €10, then it takes away €0.25 as fees, and therefore the income from eBay is €9.75?

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  • What's the problem with the one you're suggesting (10 credit to income, 9.75 and 0.25 debits to asset and expense)?
    – glibdud
    Jan 10, 2021 at 18:42
  • What about making it four lines: 10 income, 10 paypal, 0.25 paypal, 0.25 fees?
    – AakashM
    Jan 19, 2021 at 10:06
  • Your first attempt was correct, as confirmed by the answer below. The problem lies with a statement you make in the question: "Then the PayPal account shows as if it only receives €9.75" - this is incorrect. The PayPal account shows a balance of 9.75, after receiving 10.00 and deducting 0.25 for fees.
    – Derek_6424246
    Feb 9, 2021 at 22:48

1 Answer 1

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I have to say that I am just beginning to learn gnucash but I am also just beginning to understand double-entry accounting. (This was occasioned by my having been asked asked to be the treasurer of a non-profit organization I belong to.) So please make sure you double-check my answer below with someone more knowledgable.

You cannot consider €9.75 to be Income and €0.25 to be Expenses:Fees, because for reporting and equity purposes, Net Income will be computed as Income – Fees, which would come out to €9.50, whereas it should come out to €9.75. Since Net Income will be used to compute taxes at some time in the future, you will be under-reporting Net Income and therefore underpaying your taxes. both of which are bad for business, albeit in different ways.

So I'd do a split transaction something like this:

Income:Sales increases by €10.00 (Credit)
Expenses:Fees increases by €0.25 (Debit)
Assets:PayPal:Cash increases by $9.75 (Debit)

Of course, I don't know exactly how you break down your accounts, so you might have different names for some of the subaccounts.

By the way, I've found the official Gnucash.org "gnucash-users" mailing list to be extremely helpful. This link gives instructions for joining. You can then get much more expert responses on both Gnucash issues and accounting issues by posting your query there.

I hope the above is helpful.

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