Help.. paypal in current liabilities?

Accounting
1

Hi, I pay a lot of suppliers via paypal (mostly for ebay business purchases) and have bank tagged these from my paypal and they are now showing up in my current liabilities… These are for business purchases and when you click on the invoice it states they have been paid… could anyone please explain why this happened? and what I can do to change it… This is money coming out of my business but not money I owed. I am very new the Quickfile so if someone could explain in simple terms I’d be very grateful.

Many thanks

2

The final balance (as of 5th June) on your PayPal account is negative so it will show as a liability on your balance sheet. It may be that you need to enter an opening balance on this account or perhaps it is missing some transactions.

You can enter an opening balance for any Quick File managed account in the bank management area by going into the account settings.

3

Ok so if I put the opening balance as the same amount as whats in the current liabilities that will rectify it??? or not?

4

If your true PayPal balance is zero then yes this would result in the account no longer showing as a current liability.

5

I just did as you suggested and It’s now gone in to my suspense account… is there anyway I can reverse the opening balance… or should I just delete the paypal account… Can I also mention… when I tag a transaction and it’s to pay a supplier… should i click PAY SUPPLIER or another option… I think this is why I am having so many problems as it might not be tagging in the right way??

6

Sorry for all of the questions but I am finding this quite difficult. Thanks for replying, it’s much appreciated

7

For every accounting entry there are two records (This is where the term double entry accounting comes from). When you create an opening balance for a bank account (which in accounting terms is how PayPal is treated) the counter entry will always go on suspense. Suspense is just a way of saying the origins are not yet known for that particular entry. Normally you would journal this out of suspense and move it to sales, purchases etc, whatever explains where that opening balance came from.

I know this seems complex at first, setting up is always tricky. I’m not an accountant myself and there’s only limited guidance we can give you but I would recommend getting the help of an accountant or bookkeeper just to set things up.

Also you don’t really need to worry about the suspense balance unless you’re filing accounts, you can always come back and sort out the suspense account later. I see many accounts with suspense balances on there, usually your accountant will journal it at the year end.