If you do not account for each transaction individually, the easiest way is to look at the net amount received from PayPal (after fees have been deducted) as your "revenue" amount.
This way, the PayPal fee is already deducted from your sales and does not need to be accounted separately.
By the way, for Canadian sellers purchasing/selling in US$ and using the annual average to convert their US$ amounts (revenues, purchases and expenses), the official conversion rate for 2012 as offered by the Bank of Canada is:
US$1.00 = Cdn$ 0.99958
In other words, you can convert at PAR and save yourself the calculations. 🙂
"The amount that is transferred form Paypal to a personal account is the start for calculating taxes"
Not really.
The PayPal transfers to one's bank account are net of purchases and expenses paid with PayPal. Using the amounts transferred would ruin one's bookkeeping!
Also, many (most ?) sellers do not pay their eBay fees with PayPal. and not all Canadian sellers have eBay bill them in US$. In fact I suspect the majority of Canadian sellers pay their eBay fees in Cdn$.
It is best to take one step at the time and keep three registers:
1) sales (revenues including shipping and handling charges)
2) purchases (to determine eventual cost of goods sold)
3) expenses (eBay fees, shipping costs, packaging materials, etc...)
I forgot to add that paying eBay fees with a credit card is by far superior to paying with PayPal. More so if you use a credit card offering you rewards such as AirMiles (credit cards are available in both Cdn$ and US$).
Over the years, I have earned thousands and thousands of AirMiles on my eBay fees. 🙂
While your bookkeeping method may work for you, as you do not use PayPal funds to purchase goods either personally or for resale and all your sales, purchases and expenses are in the same currency, it is not advisable for most users.
Basic bookkeeping requires segregation of funds and operations, the old KISS system.
Personally, to minimize paying conversion fees (I am frugal), I have used MasterCard in both Cdn$ and US$ to pay bills in their respective currencies. Both give me AirMiles. 🙂
It should be noted that eBay gives sellers the option to bill in US$ or Cdn$. What many sellers do not realize is that eBay does not charge the typical 2.5% spread (conversion fee) when converting fees from one currency into another.
For example, if the transaction was in US$, the FVF are US$10.00, and the billing currency is in Cdn$, the seller would be billed (at today's rate) Cdn$10.27 (not including any conversion spread), not Cdn$10.53 which would include the usual 2.5% fee charged by PayPal and most credit card issuers.
It is only a penny here, a nickel there, a dime here, a quarter here.... If you watch the pennies, the dollars will take care of themselves. 🙂
