Working in Both QuickBooks and PayPal; The BudgetEase Broadcast (Episode 38)

Описание: When you're trying to do the bookkeeping for your PayPal account, it comes with some additional challenges, especially when trying to coordinate it with Quickbooks. We review how to use these two applications together in today's BudgetEase Broadcast (from 8/4/22).

BudgetEase provides bookkeeping services for small businesses in Cleveland, Ohio that help take the pain out of bookkeeping by providing part-time services. Whether you need an outsourced bookkeeper to fill a permanent or temporary role, or just need to have your QuickBooks reviewed, our talented team of professional bookkeeping experts can help. Visit us at www.budgetease.biz to learn more!

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Transcript:
Hello! This is Kathy Dise with the BudgetEase Broadcast, and today we're going to talk about PayPal. PayPal is considered a very secure way to pay other vendors, our friends, but in this case, we're only going to talk about business applications. It's also a way for you to receive money from your customers. PayPal is often used if you're an e-commerce business or have a website and you're getting paid that way.

The challenge with PayPal is that in a way it's considered as a bank or a merchant service or both. And so, when you're trying to do the bookkeeping for your PayPal account, you have some additional challenges. For example, the reporting that you get from PayPal on any of the money that's coming in or going out of your account, is not very good. It's hard to find reports in PayPal. In a way, PayPal is like a bank but you're not going to get a bank statement at the end of each month which is very easy to reconcile, and it's easier to understand what happened with each transaction. With PayPal, it's hard to find the report, and then in addition to that, it's sometimes challenging to see what's happening in PayPal.

So you really have two choices: what do you do? You've got a PayPal account, you're using it as a bank. Let's take a worst case example: you're using it as a bank and then you're also using it as a merchant service account. So a merchant service account is where you accept credit cards for payments and you get charged a fee for each one of those payments. So with PayPal, those fees come out with each payment that you receive. If you're a not for profit, you're getting money in for membership, possibly for something you sell on your website, possibly for event sales. And so you want to make sure that that information gets into QuickBooks for each one of those buckets. And so how do you do that?

Either you need to look at each transaction, which may be ridiculously hard if you've got a thousand transactions a month, it's really impossible! Or what you want to do is you want to put all of the transactions into a clearing account and then move them out of the clearing account, with probably a zero balance check (which I can go over in another video). So you've got a clearing account set up, it's going to be a bank account, and that's where all your PayPal transactions will go into, and then you need to transfer money out into your bank account. So anytime money comes into your bank account from PayPal, it's just a transfer from PayPal to your bank account.

Then what you're doing is you're doing all of the nitty-gritty categorizations of the accounts, of the transactions in the PayPal account only. So when money goes into your bank account, it's not a sale. It's just a transfer. The next thing is you have to decide, if it's a merchant service account, how are you going to figure out what is your actual sale, what is the money that's actually coming in. Because what's going into the PayPal account could be a net amount, part of it is the merchant services fee. That means that if you receive ten dollars from someone, the amount that's going into the PayPal account is seven dollars and thirty cents. And so the difference between that is the fee and you want to keep track of what your actual sales are for an event, or a donation, and then deduct the merchant service account. So what you're going to do in these cases is you're going to have a clearing account, you're going to enter transactions from it as sales receipts zero balance checks that represent what's really happening in that PayPal account. The other challenge with PayPal is that sometimes they give you--you have ten dollars that they took from someone, they give it to you but then they hold back two dollars and thirty cents. They have this and then the next day, they give you the two dollars and thirty cents, but then you earned an additional hundred dollars but then there's a new hold back. So how do you keep track of this minutia....