How to Classify Outright PayPal Fees

1. Determine the exact nature of each individual PayPal fee on a transaction by transaction basis and group them together as processing fees or monthly subscription or feature fees.
2. Total each group of fees and compare them to the statement on the PayPal account as well as the totals from your accounting system to ensure all fees are listed.
3. Record the transaction fees as bank service charges, just like you would record a fee at an ATM machine for withdrawing cash or an ACH merchant fee from accepting a credit card.
4. Record the recurring monthly fees as banking expenses, just like you would record a bank fee for overdraft protection.