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I have my business bank account automatically synced with QB, so that's been working ok and I've been categorising expenses and incoming payments as I go. We recently set up invoicing with QB and a lot of people pay with paypal, so we end up with large amounts of money in our paypal account, which I then manually transfer to our bank account (I prefer to make all outgoing payments from our bank account rather than using the paypal balance, so it's easier to track).
But then our paypal account on QB was massively out of sync with our actual paypal balance, as I was recording these as transfers manually from paypal to our bank account. My accountant's solution was to make a manual transfer of the difference in QB, to settle paypal back to zero (to match our actual paypal account balance).
This was ok, but seemed a bit silly and longwinded... and I only realised today that I can connect my paypal account to auto sync with QB, in the same way as the bank account, so I've done that. So now I have a whole bunch of paypal transactions that have come through and need to be categorised, which I'm doing - however, this is where I'm totally confused - my paypal balance in QB is now sky high and completely inaccurate, as I think it may be double recording transactions.
For QB generated customer invoice payments that were made through paypal, I've been 'matching' those instead of recording as a payment, as I realise there will already be a record for them in our bank account. I've been resolving the difference (due to paypal fees) by adding a minus amount into the 'add resolving transactions' section. But I don't think this is right either, as my paypal balance in QB is still wildly inaccurate.
I have read on threads that it may not be a good idea to connect both a bank account AND a paypal account to QB, as this problem can happen. Although I like them both being connected and thought it would be a simpler way of syncing everything without having to do weird manual transfers here and there.
Also, my bank balance in QB is now quite inaccurate, which I feel has something to do with the paypal syncing....
Does this make any sense?! :)
So basically I want to know how to properly categorise paypal payments, or if it's really really recommended to not have it synced, what's the best other way of managing this?
I'm utterly confused by this and any solutions I've come across sound super complicated - surely there is an easy solution?
Thank you!
Hey there, @duplikat.
Let me help you match your PayPal balance to your actual account in QuickBooks Online (QBO).
Since you already sync your PayPal account to QuickBooks, the program will automatically download up to 90 days worth of transactions from your live account.
If you made an actual bank transfer from PayPal to your other bank, then this should be categorized too in the bank register. This way, it would match the actual bank balance.
However, if you only create a dummy PayPal account and use the transfer feature to record the payment under one bank, then you need to delete each transaction in QuickBooks.
This way, both of the bank balances will be matched to your actual statement. Here's how:
Once done, this should now show the actual balance in your PayPal account.
For the downloaded PayPal transactions, you have to match them to invoices you've created inside QuickBooks.
If your customers pay their invoices using PayPal, then these are the ones you should be matched. For more details, you can check this article: How to review downloaded bank and credit card transactions and put them in the correct accounts.
In case you match the wrong transactions or categorize them into the wrong account. Don't worry. You can make changes after your review. Here's how to undo, unmatch, or move downloaded transactions to another account.
Additionally, you can reach out to your accountant for further guidance in handling your accounts in QuickBooks. This way, we can ensure your books are accurate.
Just tag my name in the comment section if you have any other concerns or questions. I'll get back to you as soon as I can. Stay safe.
Thank you @ReymondO
I have tried deleting transfers as you mentioned, however it's increasing my paypal balance instead of decreasing it....! I'm completely confused I'm afraid and don't really know what I'm doing :( Is it best for me to just delete the paypal sync instead?
Thanks for following up with the Community, duplikat.
Since you're receiving unexpected results after deleting transfers, I'd recommend working with an accounting professional. They'll also be able to assist with identifying if you should delete your PayPal sync.
In the event you're in need of one, there's an awesome tool on our website called Find an Accountant. All ProAdvisors listed there are QuickBooks-certified and able to provide helpful insights for driving your business's success.
Here's how it works:
Once you've found an accounting professional, they can be contacted through their Send a message form:
You'll additionally be able to find many detailed resources about using QuickBooks in our help article archives.
Please don't hesitate in sending a reply if there's any questions. Have a wonderful day!
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