Creating Relevant Accounts for Paypal Accounting

Accounting
1

Thank you for the opportunity to post on this forum.

I would have posted my question on previous topics but they are all closed.

I noticed Quickfile had created invoices for payments to our Paypal accounts for items customers bought. Then there are untagged entries less Paypal fees.

My question is: Do I need to create a separate account to tag the entries (less Paypal fees) to?; as sometimes we leave funds in our Paypal account and do not transfer to our bank account.

(Reason I am asking is because, following the instructions in other posts I have read, when I click on “Bank Transfer between Accounts”, the drop down menu only shows current accounts, which is not the option I want. I want it to be Paypal, which is not currently in my list.)

The second question is: do I create the account as a merchant account or as a current account?

Thank you.

2

If you have the feed enabled you should see PayPal transactions gross, with a separate entry for the Paypal charge (that is usually totaled for each day, i.e. one entry per day).

I presume those items relate to other sales not processed through QuickFile, can you confirm this please?

3

I have the Paypal feed enabled and Quickfile automatically creates invoices for the transactions done on eBay via Paypal, so I could safely say they are actually all processed through Quickfile

The entries are also tagged automatically. I just check to make sure they are correct. The Paypal fees are also automatically tagged.

In the ‘Money Out’ column, there are entries for the same amounts less Paypal fees that are untagged.

These are the ones I would like to tag. I’m just a bit confused as to which account to tag them to, as the monies are still on Paypal and not in our bank account yet. When I follow steps from other posts, at the point where you click to choose “Bank transfer between accounts”, the option for Paypal account isn’t there.

My question if I would rephrase is: “Is it possible to create an account that would represent Paypal as a bank?”,

Thanks for your feedback.

4

Yes absolutely, in accounting terms it’s best to think of PayPal as another bank account (type = MERCHANT, although they all behave in much the same way).

Now regarding those outbound entries on the PayPal account, are they withdrawals from PayPal to your current account? If this is the case then you can’t tag them to your current account as in reality they probably arrived in your current account several days later.

The way to handle this is just remove them and actually tag from your current account to the PayPal account. It’s more important that your bank entries are correctly dated rather than the entries on PayPal.

You can also actually configure PayPal not to log bank withdrawals at all and in future only tag from the current account.

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See also the text in red here:

http://help.quickfile.co.uk/main/1/setup_paypal_automated_feed.htm#05

5

Thanks for your quick reply.

The outbound entries are actually still in the Paypal account, as we have to manually withdraw the money into the bank account,

The outbound entries appear along with Paypal fees in the “Money Out” column both adding up to the total in the “Money In” column.

So from what you’ve stated above, would it be best to wait till the money has been withdrawn to our bank account then tag from there to Paypal?

Thanks

6

Yes this is the correct way to handle PayPal withdrawals.

7

Thanks again for your quick reply.

Just to get more understanding:

I processed a refund of 299 on ebay/Paypal and the entries are showing in Quickfile as the following:

Money out:
299.00

Money In:
10.37 - Paypal fee reversal
288.63 - (amount from my account that makes up the 299)

Should I delete the “Money In” entries?

8

Do PayPal reverse the charge if an item is refunded? I’m not sure they do, in which case you can delete both.

I should say, it’s always worth getting a bookkeeper/accountant to look over what you’ve done. I can only provide general guidance.

9

Thank you for your reply.

Yes, Paypal does reverse the charge as they have to add it back to the amount to make it complete, or else the seller has to pay out of their means to cover the full payment.

I guess I’ll have to speak to an accountant. I just wanted as much a grasp of it as possible in the early stages of our business where we are on serious shoe strings.

I think once I grasp the full concepts of the software as a whole then I can drill down to the tiny bits.

Thanks again for the help, it has been immense.

10

Is there a way I can always seek help once this topic is closed without having to reopen?

11

It’s always worth discussing with a bookkeeper or accountant, they will be able to look at your account and understand what you’re trying to do.

Any new support topic should be posted separately, but please also search first (there are 1000s of posts here already, chances are it has been covered). We prefer to keep the discussions organised as it helps others to resolve similar problems.

12

Thanks for this.

I did actually have a look around but a few details just eluded me. I tried to message privately one of the contributors but I didn’t get a response yet, and it was urgent so I had to create a new topic.

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13

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