How to Record PayPal Transactions In QuickBooks Online - 2023 (Part 6 Video 7) Small Biz Bookkeeping 

Thank you so much for this video! Incredibly helpful in teaching how to record PayPal Transactions in QB online.

Your videos have made my quickbooks recording so much more accurate. Thank you for the time you put in to making these videos

Best video I've found to explain how to record and mange PayPal transactions. Thanks!

Thank you for the Video. Nice and Calm it was that made it easy to understand. Subscribed !!

Super helpful and on point for what issues I was experiencing in QBO! Thank you soooo much!!

Thank you, Sarah! We'd be lost without you!!

I always come back to this video, thank you!!

Your material is great and extremely helpful! Thank you

This vide is exactly what I needed! I knew that PayPal would make my QB messy and I was really dreading it but I think I can do it now.

Sarah, thank you so much for this video. You really explained this so well. I just subscribed to learn more!

Thank you for this! I've been looking for a way to reconcile them and this video was exactly what I was looking for. Just subscribed so I remember to check out your other ones as I'm also a blogger :)

Thanks for this! It really made it easy for me to reconcile. FYI: One oddity I discovered was that my expenses in the UK, in GBP, didn't automatically get scraped into Quickbooks. I don't know if this is the case for all other currencies, but it was tricky to find as the amount displayed in my Paypal account was in GBP and the discrepancy was the $USD conversion.

I just wanted to say you have helped me become a better bookkeeper and understanding Paypal. I can finally breathe knowing the books are balanced

Thank you Sarah!!

Thanks. Sarah. THis has been a real headache. I am going to save and bookmark your QBO tutorial and come back to it after the holidays.

Thank you! This is very helpful!

That was great! So helpful. Thank you.

Hate watching videos as opposed to reading but am glad I watched this one; super helpful, thank you 🙏

Thank you! this is so helpful.

Thank you so much for your video such a life saver..more videos..

Thanks for your gentle way of explaining this! Your voice is super soothing and makes this hard stuff a bit easier ☺. Sometimes in PayPal it will have a balance and we use that first then the amount is taken from our checking account to cover the test of the expenses. My question is, proceed with the same process as you show here correct ? Bank first then match from PayPal bank?

Hi Sarah, great video, very clear and concise. I think this will help me clear up about 90% of my PP/QBO issues. However, you also the first person I've found to address the new way PP handles automatic sales entries. I have a strange situation where in my PP Register I occasionally see the "Gross" income line as you describe in your video, but also the split entries as well. So double entries in the register I don't know how to reconcile? I feel like for a period starting around Aug 2019 PP started having some weird changes/glitches?

Thank you for making this video! Very helpful

Thank you for making this video! What would you select as the category when adding the PayPal test transaction amounts? It's just a few cents, but right now I have it hitting Uncategorized Income. The bank description includes 'PAPAL DES:VERIFYBANK'.

This video is such a life saver! Thank you for making it. Quick question. How do you categorize holds and releases that paypal does? Since my account is new I am finding these type of transactions on my statement. Thank you!

I called QB for this problem, they told that I lack accounting skills to provide me with some support - I'm thinking to move to SAP business One...

Thanks :)

What a super useful and informative video - so helpful! Here is my question: The fees that PayPal takes are correctly being expensed to 'PayPal fees' expense account. However, those are showing up as amounts in Undeposited Funds. Not sure why it thinks the fees are coming from undeposited funds, where should the other side of the double entry be going to? How I can fix it and how can I persuade QBO to categorize the fees to the right place?! THANK YOU, Sarah!

oh and i just subscribed

Thank you, this was exactly what I was looking for! I've managed to record the transactions as you have explained by 'record transfer' from the checking to Paypal etc first but when I'm in the Paypal feed it never says the green '1 record found' on the matching transaction and I always have to manually 'match' and then it shows up in the list. Any ideas why that is?

Hi Sarah! Thank you so much for creating easy-to-understand videos. It has been very helpful! I have a question. I sell digital knitting patterns on a different platform called Ravelry. Unlikely Etsy, they send customers directly to pay with Paypal when someone purchases a digital knitting pattern (and currently the only method available for pattern makers to get paid). Ravelry charges a 3.5% fee when a transaction is made, and Paypal charges c30 and 2.9% fee for a transition. I see on QB Paypal bank the total of what I get paid (and gross underneath). Could I record the transaction as in the "sales receipt" category? Should I create another method for Ravelry sale like how you did for Etsy sale before the integration?

Hi! I just found your video very helpful. However I do have a scenario where I had to use my paypal here card reader. I have a store and I typically create a sales invoice at the end of the week. My regular merchant system was down so I have a paypal here card reader as backup. Later down the days I did transfer the paypal balance (total amounts from the card reader) to my banking. How would I record all the payments from the paypal card reader to match it to my sales invoice plus matching that total from the paypal card reader was then transferred to my banking. I hope this makes sense! Please help if you could.

Sarah, thank you so much for the great videos and helpful information! I have a question - would you recommend doing the same process for PayPal transactions as you showed for the Amazon seller? Monthly basis entries based on the activity and keeping a PayPal holding account for deposits? I have a lot of foreign currency activity and am afraid to link the PayPal and QB with an app since I am not sure how that will look like. Thanks a lot!

Thanks Sarah for this video, I learned a lot but I still have some questions, hopefully you can help me with this. 1- Do I have to record and categorized every transaction? or is already recorded and just need to categorize? 2- on my QuickBooks I have only my PayPal account in it. Do I need to add the PayPal card as well to QuickBooks to match transactions?

Hi Sarah, How do I classify the transactions that are "hold for open authorization'. I classifty the reversal of general hold as sales.

Cool to see this process though... We're going to have to watch it again because there's some solid tips here that we're missing! Quick question... Is there a Stripe integration that you recommend with QuickBooks Online for recording the transactions that come through our online store via Stripe? I thought we had added one to QB, but don't see it any more.. Yikes! - Brian + Erin p.s. just downloaded your eBook! Time to start the read!

Great update to a confusing subject. What about a PayPal transaction where some money comes from your PayPal balance and the rest is charged to your credit card or bank account?

Thank you, Sarah! I'm an experienced QBO user, but new to this PayPal interchange with Checking. The chart of accounts that I inherited (I'm volunteering to help with the bookkeeping side of a foundation) was PayPal being set up as a bank (from 5/19/17 to 6/24/2020). Then I see "Uncategorized Asset" account being used for sales/transfers from 3/27/19 - 1/31/22. Ugh. PayPal Bank has a negative $8,225.54 balance (because they only use for sales/transfers to checking - no payments out of PayPal). The Uncategorized Asset balance is a negative $5,939.12. Do I need to set up a phantom Credit Card to handle what you're describing in this video? Any suggestions on how to get these balances to zero without changing the banking accounts (checking/savings) with an AJE? Thank you, again!

Great explanation! How do I record a transaction when using your bank account as the payment method? You explained every scenario but that one. Thanks!

Sarah, Do you have any recommendation or suggestion when Transferring Money in PayPal and Matching the transaction in bank checking when you get "many" multiple matches? Businesses often sell products at the same price so the transfer from PayPal to Bank may be the same dollar amounts repeatedly. There can be thousands of transfers quarterly from PayPal to Bank with the same 2 or 3 dollar and change amounts. When the transactions are Recorded as Transfers in PayPal, a dozen matches for each amount can show up in the checking bank in QBO and dates may not align in the match. Or does it not matter if the exact transactions are matched to the PayPal amount as long as they are indeed all matched to transfers? (It'd be easier if QBO allowed matching to Bank Memo instead of only dollar and change amounts as the PayPal shows up with a unique link to the original transfer transaction). I was thinking of excluding all of the PayPal transfers as they will be in the Bank anyway and classify the Bank as a transfer so there's a record and they don't show up as Sales doubling the PayPal sales revenue in the books. The PayPal transfers are just redundant. However, I'm unsure if then you cannot reconcile PayPal statements in QBO if transfers are excluded in the books? Any advice? I suppose transferring only 1x daily from PayPal each night would help but still not a solution. Thank you sincerely.

Thank you for this video. I have been really confused by this. I'm even paying for the QBO Live Bookkeeping service and they could not even help me understand what needed to be done and I am paying them a lot of money each month to reconcile my account.

The main thing about PayPal autopay for me is that it's very easy to set up with customers, you just send them a link and bam payments every month. So I want to try to keep that simplicity with my clients, make is brainlessly simple for them as possible. So, if I send them an invoice every month with QBO, when the PP autopay charges them, I just do the receive payment as cash from my PP business account, and then secondly I record the transfer of funds to my business checking?

Wonderful video! Quick question - we have a 1099 vendor who is paid through PayPal and we use our checking account to fund the payment. We enter a bill in quickbooks online. Should the payment account for that bill be PayPal or checking?

Hello Sarah, I am really trying to understand why qbo is taking what they call gross amount less paypal fee when the gross sale is not exactly that. It you go to paypal and look up the actual sales that took place the sales could be gross sale plus shipping less a discount. Then paypal calls the sub total gross sales. I need to have a true sales of my product otherwise my income is understated. What about sales tax as well when that amount is on the paypal receipt. I have yet to find anyone concerned about this. I'm very confused by the actual sales amount not being the true sale amount per paypal. Wouldn't we want to record the discount and the shipping amount and not have a netted gross? Please help with this.

Sarah -- Would you handle a transaction through Square the same way you would handle a payment throuh Paypal as discribed in this video? The $$ come into my bank accountt, from Square, minus the transaction fee. Would I have Square set up as a 'bank'? How do I address the transaction fee? I'm entering these transaction manually, BTW. Thanks for you help.

Thanks, I realise I have made mistakes already! I do have a massive issue that once Ive categorised everything, my QB balance and my 'paypal balance' are hugely off. Is that because ive recorded transactions wrong? Id love to know what to do in the case its taken some from my paypal balance and some from my bank account.

Hi, there are a couple of "Uncategorized Income" items on your example. What do you do with those? These are small amounts, and are suspiciously like paypal fees. Any suggestions?

Gem of a video! I am really struggling with reconciling a whole year of pp transactions for my client. My biggest issue is they have many (about 7-8) different lines of payment associated with their pp account. Multiple bank accounts and credit cards. It’s like a wild goose chase trying to find which account “paid” that deposit into the pp account. Neither QB nor the reports available through pp have a notation as which account the funds came from. Any suggestions?

Thank you for your awesome videos! So, my amazon holding account is now showing a negative balance ($1304.86). HELP! I assume this has to do something with the months I owed amazon and my credit card was charged and then we paid from the actual bank account.

I watched you video and I had a ray of hope for the first part transfer from bank then go to paypal match then add...However when I go to run a statement of activity report the transaction is twice. Can you help me with this thank you so much.

Thanks for your info on this, Sarah. I have a question about the use of credit cards to transfer funds into my business PayPal account. If I transfer funds to my PayPal from a personal (not business) credit card, do I need to have an account listen in my PayPal register that shows a personal credit card? Or is that transaction treated as an owner paid-in capital? I'm not sure how to categorize this!

I think there have maybe been more updates in QBO or maybe this one was simply not covered in this video. I see the transactions with the gross in parenthesis below. But then on some of them, there is another much smaller transaction next. After a little checking on Paypal, I found that this amount is the sales tax collected by ebay. How do I record/enter/assign that?

Do you have a video showing how to record the paypal transaction expense but the expense is for items with inventory so you need to receive inventory at the same time?

Sarah, your videos are a lifesaver for me! Quick setup question I'm trying to find an answer to. I have an LLC with 2 DBAs that each have a PayPal and Etsy component. Would you recommend creating separate income and expense accounts for each DBA, or categorizing all Paypal under a single Paypal account for example. Thanks!

After I enter the paypal payment from my credit card account do I then need to do more from the paypal side? Like matching or adding???

hi i have a question, what if there is transactions in paypal that is not related to your business? does it really needs to match the bank statement in paypal and you balance in QBO? thanks

Sarah - How do I link a sales receipt (for the gross amount) that my client generated in QBO to the paypal deposit amount, since the fee has been taken out behind the scenes and therefore the net deposit is less than the gross sales. Also, my client records receipt of payments manually, made through Paypal against sales receipts and has chosen undeposited funds as the deposit to account. How should this be processed? Thank You!

What if I would like to code the fees separate? Say the example you gave of $21.06 but I would like to code the fees not just to paypal fees but break them out by class? Is there a quick efficient way to do this? We have about 30 transactions per month so trying to figure the best way to do this.

Hello Sarah! In my case, I purchased something via Paypal using Credit Card as the funding source. However, I noticed that Paypal didn't recognize the received amount (general credit card deposit) in QBO. So, there's only spent transaction in both Paypal and my Credit Card. What I did was recognize that transaction as a transfer in Credit Card and Expense in Paypal account. Is this okay or should I also add manually the general card deposit in the Paypal account since it's not showing up there so I could match the transaction from Credit Card to Paypal?

What about sales tax collected from invoices? It appears to be included in the gross amount, but not broken out like the paypal fees are. How to figure that out?

Do we the same thing with our Etsy Bank to move money from there to our actual bank account? I'm at a lost after I record what I made from Etsy. How to I show the money in my bank account?

Could you pls explain how to record Paypal foreign transaction on QBO?

How's the process if Paypal is just a landing page paying employees (wfh)? Paypal is NOT yet connected, nor even had an account in QuickBooks. The bank feeds showed a series of payments (both bank & credit card) paying someone using Paypal. Can you please help me with this?

Hi Sara, I'm supposed to manually input a refund from paypal. What I usually do is encode it to credit card credit. Unfortunately I can't do it because PayPal is not included on the dropdown list. I check on my PayPal it is in active account. Thank you in advance

How do you handle General Holds and the Release of funds?

Thank you Sarah, I have used lots of your videos now to do Quickbooks, but I am having a little problem with this one. When I pay the postage company I pay with PayPal, but the funds come from my bank. I have both PayPal and my bank connected in Quickbooks. I can do the transfer fine, but when I go to the PayPal match, it isn't showing a match, and when I try to do it manually there are still no matches at all showing. When I look at the transfer in PayPal Bank in the chart of accounts above it is says '1 online banking matches' and an unmatch box next to it. Does this mean that it is already matched and is the reason why I can't find the match? I am frightened to touch anything because I unmatched some entries before and Quickbooks deleted them!

For some reason my bank shows an expense and then I got to paypal and there is an expense as well there for the same amount. Not sure what to do since there is no deposit into the paypal account.

All your videos are so helpful! Thank you! I do have a question. My last Pay Pal transaction (deposit) via bank feeds went directly into my QB Business Bank account rather than the Pay Pal bank account first. I thought maybe I had just forgotten (my mind slips often these days) and have to transfer the amount from my QB business bank account to QB pay pal account, like I have to do with Etsy, but I am pretty certain that is not the case. Any idea why the bank feeds would have it deposit to my QB business bank account and not QB Pay Pal account? I've checked to make sure I'm connected to Pay Pal, and I am.

Hello Sarah, I was wondering do you have a Video that shows how to add PayPal Credit into Quickbooks Online? I notice you had it in the Video above

Hello! I really need help. Are you for hire for quicklook assistance? I purchase many things for my business on line and rather then being listed as "payments" in my business checking account in quickbooks they are all being listed as transfers. I do not have PayPal set up as a bank account on my quick books. I have never had it set up as such and in previous years these transactions all showed up as payments, not transfers. How do I change them to payments? Do I have to connect my PayPal fist and make it a bank account and then follow the steps in your video? My PayPal is not solely for biz, I have both my personal and business accounts linked to it and when I buy things I just choose which account I want it to come out of, so if I connect my PayPal account then Ill have to deal with all those personal purchase as well, right? At the same time, all my clients who pay me via venmo are now showing up as transfers instead of income. I am so confused

What is the best way to record PayPal transaction that includes total sales, paypal fee and now tax collected by eBay on quickbooks online?

I'm looking for help on the currency conversions in Paypal, do you have something on that?

So when i ran my profit and loss for end of December, paypal sales shows as well as the individual transactions, making my total income twice as much which is incorrect . Am i recording wrong?

I'm hoping you or someone can help me here. My client paid off an invoice of $11k through paypal. The paypal fee was about $357. I already recorded the transaction as a transfer from PayPal bank to my checking account. My problem now is that QBO doesn't let me "match" the paypal transaction to the actual invoice that it paid off. Please advise

You haven't shown how to set up the PayPal connection. I've viewed both videos multiple times as I have Simple Start, also.

How does the Reversal of general account hold work?

WHEN YOU pay for a purchase through PayPal but use funds from a checking or credit card, shouldn't the "payee" be listed as the vendor rather than PayPal??

Hi Sarah, how do I handle a transaction where I purchased something using PayPal account but there wasn't enough of a balance to cover the whole purchase so PayPal transferred the remaining money needed to cover the purchase from my bank account?

What About the Taxes Ebay Collects, but is showing on the total Gross Receipts

Sarah, when I uploaded my PP transactions it uploaded the individual sales with the sales and the gross sales amount. How should I categorize these sales transactions? The drop down options include Sales Receipt, Deposit and Transfer. I think it's sales receipt, but I just want to triple check so that I don't have to undo all the work! :)

I accept credit card payments from my customers for my services throughout the day. I receive at least 10 transactions a day. At the end of the day, I then transfer all that money into my business bank account with Wells Fargo. Both my paypal account and my wells fargo account are linked to my Quickbooks. How do I categorize these three transactions? The first transaction is receiving the payment/income from a customer for services. The second transaction is me transferring out money to my bank account. The third transaction is the incoming money from paypal to my Wells Fargo account. Therefore how do I categorize it so it doesn't look like I am being paid twice (once in paypal and the other in Wells Fargo)?

How would you handle a return? Just got quickbooks today and trying to put all the information in.

How do you have that view for quickbooks online?

What about when you have bill me later credits.

Is Venmo the same scenario like PayPal?

How to record when invoice amount received from customer to the owner's personal paypal account and then transfer to the business bank account. How to match this bank transaction with the same invoice?

Are foreign currency gains/losses unavoidable? Im a US LLC so my home-currency is USD. If I have foreign-currency activity without converting to USD will I always have gains/losses? Let me explain: Say I have a GST liability account (CAD). I make a sale in Feb and collect $1000 GST. The CAD/USD exchange is 0.80 so my balance sheet will show a GST liability of $800 USD. On Apr I remit this $1000 GST to the CRA, but the CAD/USD exchange is now 0.70 so my GST liability is now $100 USD. I'd have to DR GST liability $100 & CR curreny gain $100 and pay tax on it. In this scenario, I recieved and remitted $1000 CAD to the CRA. I am being taxed on a gain I never realized. Is this simply unavoidable for transacting in foreign currency?

In relation to 5:30, I have a question. What if you paid an expense under Paypal account but you don’t have any balances from that account? How do you account the transaction?

I'm not seeing the fee part deducted automatically. We have just started to do paypal payments.

Could you do a video about Venmo???

Any tips to actually get the Connect to PayPal app to actually connect? It just spins.