For several years I haven’t been handling paypal correctly - I’ve been doing the tagging in the main account to either sales or purchase invoice respectively and not tagging anything much in the Paypal merchant account itself.
This now means I have a rather large negative balance in my suspense account and I really want to get everything to balance before I go back and run all the outstanding end of years. Is there any way I can do this?
In case it affects the solution - we have been VAT registered for some of the time so have VAT reports run quarterly.
Just a few questions to ensure I understand the situation correctly.
I’m assuming you’re also running the PayPal feed into a holding account which is causing the suspense account to fill up. Is that right?
If that is correct, are they sales, purchases or a mixture?
What’s the typical tagging process for a PayPal transaction at the moment? For example, for a purchase, rather than tagging a transfer to the PayPal account and tagging it as paid from there, are you just tagging it as paid from the current account and skipping the holding account altogether?
Ok, there is some good news here then. With the purchases, as the amount from your current account to your PayPal account and onwards to your supplier, is all the same, then tagging them from the current account is perfectly fine. The only issue in this case is that your PayPal account in QuickFile won’t reflect your actual PayPal account.
On the flip side, with the sales, there’s another element to this which is the PayPal fee. For example, if you take £10.00 from a client by PayPal, PayPal then takes a slice (let’s use £1 to keep it simple), and then gives you the remaining £9.
Has the fee been accounted for anywhere at the moment?
I also need to get the suspense account to zero so P&L reports show correctly with out suspense account showing a balance as need to use them to prove income and getting queried over what the suspense account is for and what is included under it.
The build up in the suspense account is likely to be from untagged entries. I would certainly ask your bookkeeper for advise on how to correct this as it’s not something we’re really able to help with on an individual basis.
However, from the outset, I would suspect:
You would need to firstly tie off your PayPal fees and ensure these have all been accounted for.
If you’re tagging entries from your current account rather than the PayPal account, there are likely to be duplicates in the PayPal account itself, so remove these to reduce the suspense balance
If you haven’t got a bookkeeper or an accountant, let me know and we can point you in the direction of a few who are familiar with QuickFile
The last 2 steps from my post above should set you off in the right direction hopefully. Reconciling the PayPal account against your actual transactions and ensuring all the invoices have been accounted for will help too.
Of course, if you need any QuickFile help, then please don’t hesitate to ask.