I am really struggling to see if the PayPal integration works and/or how it works. Also just to confirm withe bank account it is linked too, any income/expenditure needs to transfer to the PayPal account? and how does this pay off the invoice/pay for the bill?
The way to see if paypal is connect is if you go to the banking tab, it will show boxes of what accounts are connected within your quickbooks so there should be one that says paypal. To pay off the invoices or bills if you just choice the bank account then can just match it in the banking page and then just exclude any paypal transactions that come in.
You are correct that you would then be unable to reconcile this account in QuickBooks, without keeping note of the transactions excluded.
If you mark sales income in the PayPal feed as a transfer to the bank account in QuickBooks, this will show as a match in the bank account feed. Selecting 'Match' here will then record this as a transfer deposit of money into the bank account, instead of recording this as a sale.
If all money is transferred from and to the bank account you would not need necessarily need the PayPal account connected, as you would add (or match to relevant invoice/bill) all transactions from here.