How to tag Paypal In/Out to relevant entry in current account

Accounting
1

Hi,

I’ve never had a paypal merchant account here in quickfile and I’ve used paypal for a couple of years. I’ve always accounted for everything by transfering any money thats come into my paypal straight into my bank and tagged it there. I’ve now realised this probably isn’t the best option as i need to tag a refund from a sales commission and can’t.

Do you have a quickfile/paypal for dummies giude :smile:

I’m a bit confused as to how I need to tag all the Paypal Ins/Outs and relevant bank entries.

For example, which bank account would I tag a payment for hosting or a product. Is it the paypal entry or the current account entry. Same for incomings like sales commissions.

confused :confused:

thanks

2

Hi @ianjh

Generally for every PayPal transaction in, there’s another 2 out.

For example, if a client pays me £100.00 via PayPal, PayPal then takes their cut (I believe 3.4% + £0.20 as standard), and then pays me the rest, in this case £96.40.

So, the PayPal account would have the following 2 transactions created:
IN >> £100.00
OUT < £96.40

The In transaction you would tag to your invoice as you normally would with your normal bank account (say, with a incoming bank transfer, cash in, or a cheque etc). Then your out transaction, in this case £96.40, you would tag as a bank transfer to your main bank account - this would be when PayPal deposit the money into your bank account.

Just to spice things up a bit, you’ll notice that you’re then left with £3.60 sat in your PayPal account, which you would enter as a money out transaction, and tag it to a supplier called ‘PayPal’ and to the nominal code for Bank Charges.

In summary, for £100.00 paid in to PayPal, you would have:
IN < £100.00 (tagged to invoice)
OUT > £96.40 (tagged as bank transfer)
OUT > £3.60 (tagged to purchase invoice for supplier PayPal, and nominal Bank Changes).

And that’s that.

Sales Commissions, I would do the same if they’re paid by PayPal, either create a client record for each, or a general client called “Sales Commissions”, and tag to the Commissions nominal code (4902).

Hope that makes sense :smile:

There’s also a Knowledge base guide here: http://help.quickfile.co.uk/main/1/how_do_i_handle_payments_from_an_online_payment_provider_like_paypal_.htm

3

Hi and thanks :smile:

So am I right in thinking I’ll need to detag all my current account entries which have been tagged to nominal codes such as hosting fees for example and then tag them as a bank transfer to paypal. Then tag the paypal account in entry as a bank transfer and then the out entry to hosting fees nominal code instead…?

I don’t sell any products via Paypal yet, I just get affiliate commissions which they don’t take fees from, so that element should be more straight forward.

thanks

4

I’m currently tagging up all the paypal merchant account and one thing I’ve noticed is if funds are used from the paypal account to pay part of a bill and say only 80p is took from my current account to make up the difference, then I can’t seem to see the full transatcion amount on the imported data in quickfile.

For example, one transaction of $14.18, which most of it is paid for from the paypal account balance. This left only $1.30 (80p) to be taken from my business account. If i tag this then it doesn’t marry up with the original transaction for $14.18.

I used an export all csv for the input, is there anything else I needed to do so I can see these entries? thanks

5

Hi Ian,

Hopefully I’ve understood you right.

If you PayPal balance is used to fund the rest, you can create a manual entry to fund the rest.

So, in effect, if your balance is +$12.88, and $1.30 is taken from your bank, you would still have the following in your PayPal account:
IN < $1.30 (Transfer from bank account)
OUT > $14.18

Therefore your balance goes back to $0.00.

If I’ve completely missed the point, let me know and I’ll see if I can help further :slight_smile:

6

The best way to think of PayPal is a separate bank account or ledger, in accounting terms it is no more than this.

So when you import the statement it should include the item for $14.18, whether it is paid from the PayPal balance or partially by debit card is not relevant. You would then tag the $14.18 to the purchase invoice, but you would also have a bank transfer from the current account for $1.30. So basically you have 2 lines on the your PayPal statement to reflect this transaction.

7

Thanks guys.

Rright ok, so I need to add a manual entry?
I thought it would of shown up in quickfile after the import.

Here’s the period in quickfile:

http://screencast.com/t/Y7emUC3z

And here’s the transaction inside paypal:
http://screencast.com/t/cHkViOBsNz9W

See how the $14.18 doesn’t appear, which I thoguht it would.

If all I have to do is create a manual entry then thats fine,
I just thought I should appear anyway after an import.

8

There’s quite a lot of these un matched entries from a paypal import, its very confusing.

I’ve got multiple entries in the quickfile paypal automatically titled like this…
Transfer from Internet Wisdom Ltd to PayPal (***@exposeprofits.com)

…that aren’t showing in my actual paypal account.

9

PayPal can be very complex to reconcile especially if you’re dealing with multiple currency types. The reason those imports aren’t appearing is because a bank account can only be denominated in one currency, in this case GBP. Any other currencies are effectively ignored on the import.

You would either need to have a PayPal account for each currency type or you would need to manually add those USD transactions at their GBP equivalent.

If you’re doing a lot of these sorts of payments I would just log monthly totals in GBP and not even bother trying to reconcile every transaction. By “log totals” I mean running a report on PayPal for all sales and purchases for a given period in GBP and simply entering those totals as two entries on the PayPal merchant account, you can then tag them as bulk sales or bulk purchases.

10

Hi Glenn, yeah I purchase a fair amount in $'s and all my affiliate commissions are always paid in $'s.

I’m guessing these are the entries that come in and stay in paypal without getting transferred to my current account, so there’s no conversion that goes on.

Would I have to just create 1 generic supplier and 1 customer and then tag all my current account entries to those?

I’ve just done a full 12 months accounts with the paypal merchant account as well, retagging everything :frowning:

11

You don’t need to retag anything you’ve already done. You just need to reach a logical point where you can adjust the balance on the PayPal account to match the PayPal statement, i.e. on a specific date. Going forward you can then run reports on PayPal (weekly or monthly) and grab a GBP total for a given period, then post that as “money in” on the PayPal account and tag it to a client called “Generic Commission”.

It’s fine to add your own adjustments to the PayPal account and tag it where you like. Many people tie themselves in knots trying to get the PayPal account on QF to match exactly what’s going on in the actual PayPal statement.

With PayPal there are so many adjustments and currency conversion entries it’s really a tedious process trying to get them to tie up. For accounting purpose there’s a lot of noise there that isn’t actually relevant.

12

Yeah you’re not wrong, I’ve gone grey this past week trying to sort it all out :smile:

Thanks a lot for your help Glenn

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13

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