As a QuickBooks ProAdvisor, we often hear feedback from clients and ProAdvisors that it’s difficult to reconcile books when a client uses PayPal. On April 23, 2018, Intuit launched a new Application that addresses these issues. The new PayPal integration tool is available in QuickBooks Online. PayPal is a tool that can be used to collect from your customers and pay your vendors, and it can use your bank account, credit card accounts, and your PayPal balance. This makes it unique but challenging when this information is pulled in as a feed. It causes a lot of confusion because of the unique flexibility PayPal offers.
Your first step is to go through the steps to add: Connect to PayPal App for QuickBooks Online. It’s pretty self-explanatory to do the connection.
During your setup process you will see this screen:
We recommend you accept these settings and click next. Each month you will reconcile your new PayPal Bank in QuickBooks with your PayPal statement. The next step is to decide how far back to go. Importing transactions in the initial setup, you can go back up to 18 months.
Similar to reviewing transactions in your bank account, your next step is to go to your PayPal account to edit the transactions and then add to QuickBooks O. You can enter deposits straight to a specific account, or you can enter them as a Sales Receipt. Here is an example of a deposit, someone paying via PayPal where you can code it directly.
The next example is a sales receipt. If one doesn’t exist, it automatically enters PayPal Sales. However, correct the receipt to match your codes for QuickBooks support and click save.
The new feature in this app is the fact that details come over in the bank feed. When PayPal charges a fee, the amount is automatically recorded to “PayPal fees” and shown in the details of the transaction. The total sale is one line item; the PayPal fee is a deduction and the two items net to match the actual deposit. Ultimately this makes reconciling smoother than before as the net deposit will now reconcile to the PayPal statement without manual adjustments.
Below is the actual deposit of the sale above but net the fee.
This fee is automatically coded to a new expense account called PayPal Fees. If you want to change the name, just edit it in the chart of accounts.
Here is how the above transactions will be reflected in a Profit and Loss Statement:
If you have already entered an invoice, it will also try to find and match to an existing entry.
Finally, when PayPal is transferred into or out of your bank account or Credit Card account, treat it accordingly, as a transfer in QuickBooks Online.
This new application provides detailed information into the feed including gross sales, transactions fees from PayPal, and net sales. Previously this information was missing and had to be inputted manually. Before you accept the information, you are given a chance to review and edit the data before you record in QuickBooks, similar to how you handle other banking transactions. However, unlike regular bank connections, the details from PayPal will be available, such as what you sold through PayPal and what you paid for, as well as PayPal transaction fees. All this results in more detail and accuracy for your transactions in QuickBooks.
You’re all set and ready to go! If you’d like further details on managing your PayPal transactions using new Connect to PayPal app, check out the Connect to PayPal FAQ.
Hi Carrie, Thanks for informing us about this update and this is a great move by Intuit as it will ease the payment procedure.
Yes it is a time saver!!
Hi Carrie,
This is a very interesting new feature. Paypal has long been a pain point for us bookkeepers and accountants.
Can you explain in more detail which Paypal account info I should be using when setting up this app? Do I need to get the client involved in using her email and personal information? It’s not clear in my mind how this ‘connection’ works.
Thanks
You will need the client’s PayPal login. It may require a two-step verification process so I would suggest having your client work with you during the setup. Perhaps have a video conference call.
Hi Carrie, I already have this set up on a client but it is still separating out the PayPal fee as a separate transaction. Is there anything within PayPal that needs adjusted?
Nothing needs to be done with pay pal. You will need to make sure it’s coded where you want it to show up in QuickBooks as I discuss in the article. Best way to see it is use it, and run reports.
Hi Carrie,
In order to reap the rewards of this upgrade to the PayPal connection, do we have to disconnect and reconnect our current PayPal connection? Or did it automatically update our QBO files and connections when it came out?
You need to disconnect all your old setup and start over. Just be careful with your cut off of old app and when you have PayPal start in new app.
Thanks for this useful information.
You are welcome!
Thanks so much! A time saver for sure.
You are welcome, it is a real time saver.
Hi Carrie
I understand that the Paypal feed to QBO does not include stock detail, is this correct?
Are you aware of a solution to this?
Thanks
Paul
The new paypal app tool solves for the issue of recording the fee.
As far as figuring out the VENDOR: The memo will contain notes and the reference number so that you can look it up in Paypal. The payer comes across in the description.
As far as figuring out the CUSTOMER: they provide a hyperlink to the detail so you can enter the invoice and match it or simply record the sale in the deposit.
Hi Carrie,
I’m new to QBO. When amounts come thru on PayPal Bank it states “add” and not “match”. I had already received the payment and deposited into checking. Why does it not state “match”? And, if I “add” it, the transaction list for the customer shows a “sales receipt” and adds the amount to the customer’s total. What do I need to do? I don’t want the sales receipt or the customer’s total to be increased.
Thanks!
Mary Jane