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Dec 11, 2018 1:15 AM UTC
Solved

What account do you assign Shipping to when you shipped an order online and you have received payment for the shipping and handling charge? Is this an expense or income account?

I have sold a product online and charged a shipping fee.  When I create the invoice and the last line item is the shipping fee, I am not sure what account to assign this to.  Is this an income or an expense?  I, of course, have initially received this shipping fee from the customer, then I pay it out to the shipper when the order ships.
Dec 11, 2018 1:16 AM UTC
The shipping is income and expense.

On your invoice set up your Shipping Charge Item and link it to an Income Account.

When you pay the shipper, set up a Shipping Expense Account and use that as your expense.


15 replies

Dec 11, 2018 1:16 AM UTC
The shipping is income and expense.

On your invoice set up your Shipping Charge Item and link it to an Income Account.

When you pay the shipper, set up a Shipping Expense Account and use that as your expense.


Dec 11, 2018 1:16 AM UTC
THANK YOU KINDLY!!!
Nov 18, 2021 5:31 AM UTC

Shipping is an interesting character in the bookkeeping world.  Yes you can use the income account on your invoices to show where you charged for the shipping.  Then you use the expense accout to show where you paid Fedex, UPS, US Postal, etc.  Both these accounts show on your profit and loss statement reflecting any profit made from shipping.  (Such as I billed 20.00 on the invoice and paid Fedex 10.00 - I made 10.00 profit)  That profit is taxable and is included in the bottom line of the Profit and Loss.  ALL CORRECT AND GOOD.

HOWEVER, what it I want to be able to see an actual amount each month of what my shipping sales were?  The shipping expense (the amt I paid out)  doesn't reflect under the shipping income leading me to think I had more income than I actually did.  Rember, it shows correctly in the bottom line on the Profit and Loss,  BUT...what if I pay someone a percentage of sales.  (The true amount of the sale is shipping income less shipping expense)  I can't make shipping expense a sub account of shipping income.  Sub accounts have to be the same type account as the "Parent" account.  I only want to pay the commission percentage on the profit (or loss) from the shipping.   ANSWER:  1.  Record shipping on the icustomer invoice with it linked to an  income account.  2. When you pay the bill, code it to the same account,  (This will reduce your shipping sales income by the shipping expense all in one account and show under your sales.  The outcome on the bottom line of the profit and loss statement is the same and everything is still good for tax purposes.

Jan 5, 2022 8:01 PM UTC

Your answer sounds great! But how do you link it to an income account and code it?

Feb 8, 2022 9:38 PM UTC

I would also like to know how to handle shipping fees collected - and how to segregate in the Sales Tax Liability report.  My shipping fees are included in my total sales and they are not taxable, so I have to notate what is the total shipping fees collected.