Making payments with PayPal is becoming more frequent these days. Consumers are finding it easy to set up a PayPal account and then paying for their online purchases with their PayPal account. Business owners are finding it is an easy way to accept payments. In fact, a consumer does not have to have a PayPal account for you to accept payments via PayPal. Instructions on how to add a PayPal button to your invoices are found on the PayPal website.
Just exactly how does QuickBooks and PayPal work together? You can manually enter all your PayPal transactions, you can export them from PayPal as an .iif file and import them into QuickBooks, or you can use a third party application to perform the import into QuickBooks.
The first thing you will want to do is set up a bank account called PayPal. You do this by going to Lists > Chart of Accounts. Click the Account button on the bottom of the window and click on New. Name your account PayPal.
You will also want to add a new payment method. Go to Lists > Customer & Vendor Profile Lists > Payment Method List. Type PayPal as your payment and Other as the Pay Type and save. Now you are ready to receive a payment from a customer and deposit that payment.
Go to Receive Payments and choose your client, enter the payment information. Enter PayPal for the Payment Method. Click Save and Close. The amount is in your Undeposited Funds account, so that will need to be cleared out. Go to Make Deposits and change the bank to PayPal. Click on the amount you want to deposit to the PayPal account. Click Save and Close.
After you have recorded the payment you will need to record the PayPal fees. You can use the Write Check function to record the fees. Change the default bank account to the PayPal account and use whatever account you have set up for bank fees for the expense.
The above method of recording a payment is manually recording each payment separately for each client. To speed the process up, you can import all your payments for a specific date range. Login to your PayPal business account. Click on History > Download History. Enter the date range for the data you want to export. Select Quickbooks (.iff) under File Type. Click Download History. On the next page you can enter the name of three accounts; enter them exactly as they are named in your Quickbooks file. PayPal for your bank account, your income account name, and your expense account name. Click on Download Log and save it.
Open your QuickBooks file, go to File > Utilities > Import > IIF files. Browse out to where you saved the file and double click to import into QuickBooks. You will receive a message that your file has been imported. You should now see your data in your PayPal account, and either your income, expense accounts or both. This method will work well if you have a lot of sales transactions and you don’t need to match payments to invoices.
There a couple of different add-ons that will do a much better job of importing your PayPal transactions into QuickBooks. Some of the features of these products are mapping to more than one account, creates separate line items, inventory and eBay management, etc. To read more about these products check out Big Red Consulting or SimplePort.
To transfer funds to or from your PayPal account, you would do this just like you would if you were transferring funds from any other bank account. Go to Banking > Transfer Funds. And finally, before you do anything, MAKE A BACKUP!