I have a PayPal business account, but it gets used for both business income and expenses as well as personal expenses. How do I handle PayPal transactions in Quickbooks?

Thanks for joining us here in the Community, thewiz1.

I'd be glad to lend a hand so you're able to get your PayPal transactions entered in QuickBooks Online.

My recommendation to record your personal and business PayPal transactions would be to enter them manually. Doing so will allow you to keep track of the expenses without connecting your PayPal account. You can also add notations within the entry to refer to later that will tell you it was a PayPal transaction and whether it was personal or business related. Here's how to make a manual entry:

1. Click the Gear icon in the top right corner, and select Chart of accounts.
2. Locate the account register you want to view.
3. Choose View register from the Actions column.
4. Select the drop down menu at the top of the page to choose the transaction type you'd like to enter.
5. Complete the necessary fields.
6. Click Save and close when you're finished.

The following link provides these steps and additional info about manually adding transactions to account registers in QuickBooks Online.

I also recommend speaking with your accountant about the best way to handle business and personal transactions in your QuickBooks account. If you don't currently have an accountant you can find one trained specifically for QuickBooks in your area by searching the ProAdvisor site. 

Please don't hesitate to reach back out if you have any other questions. I'll be here to help.

Thank you for your response. So, if I am understanding you correctly, you are saying that I should enter all my PayPal transactions into Quickbooks, regardless of whether they are business related or personal? This seems counterintuitive, as I am using Quickbooks to keep track of business related income and expenses.

You understand correctly, @thewiz1.

Thank you for your prompt response. I understand that it defies logic and is a bit of a hassle on your end. For the time being, the most efficient solution is to manually enter transactions into QuickBooks Online (QBO).

I concur that linking your PayPal account to QuickBooks will cause data corruption. Because of this, we advise doing manual entry to ensure that your business and personal transactions are categorized appropriately. To do this, I'd recommend following the steps provided by my peer MorganB above. 

If your transaction is too numerous, you can enter them into Excel first. Then, import and categorize them into QBO right after. For complete steps, see these links below:

• Format CSV files in Excel to get bank transactions into QuickBooks. 
• Manually upload transactions for accounts not connected to online banking.

Don't forget to reconcile your bank accounts to ensure they match your bank and credit card statements. 

In addition, I've included some articles below to assist you in correcting some upload errors and handling business/personal expenses in QuickBooks:

• Mixing business and personal funds
• Fix bank upload errors in QuickBooks Online

If you have any additional questions concerning tracking PayPal or any banking activities, please write a comment below. I'm always willing to lend a helping hand. Don't work too hard. 

@thewiz1   What they aren't actually answering, is that NO, do not enter your personal expenses.  That's why you would do a manual entry, so that those are separate from your business transactions.  

Thank you for the quick reply. So, when I am manually entering personal transactions in the Quickbooks PayPal register, do I create a category called something like "Personal Expenses", and Quickbooks won't include them in anything business related?

What does that mean, "do a manual entry"?

---

@MichelleBh wrote:

You understand correctly, @thewiz1.

 

Thank you for your prompt response. I understand that it defies logic and is a bit of a hassle on your end. For the time being, the most efficient solution is to manually enter transactions into QuickBooks Online (QBO).

 

I concur that linking your PayPal account to QuickBooks will cause data corruption. Because of this, we advise doing manual entry to ensure that your business and personal transactions are categorized appropriately. To do this, I'd recommend following the steps provided by my peer MorganB above. 

 

If your transaction is too numerous, you can enter them into Excel first. Then, import and categorize them into QBO right after. For complete steps, see these links below:

 

• Format CSV files in Excel to get bank transactions into QuickBooks. 
• Manually upload transactions for accounts not connected to online banking.

 

Don't forget to reconcile your bank accounts to ensure they match your bank and credit card statements. 

 

In addition, I've included some articles below to assist you in correcting some upload errors and handling business/personal expenses in QuickBooks:

 

• Mixing business and personal funds
• Fix bank upload errors in QuickBooks Online

 

If you have any additional questions concerning tracking PayPal or any banking activities, please write a comment below. I'm always willing to lend a helping hand. Don't work too hard. 

 

I didn't get any response. Did you see my reply yesterday? When I am entering personal transactions into Quickbooks, do I simply create a category called something like "Personal expenses" and will Quickbooks know that these are not business related?

---

What does that mean, "do a manual entry"?

Adding a personal expenses category will work, @thewiz1. 

I have other suggestions on how to manage your PayPal data. Thus, QuickBooks can identify your business and personal transaction accordingly. 

Manual entry entails entering all of your business and personal transactions into QuickBooks by hand. This way, they are categorized accordingly. Before that, I'd recommend creating a parent and a sub-account to classify your transactions.

If you used the new account panel, proceed with the following steps:

1. Go to the Accounting tab on the left and select Chart of Accounts.
2. Choose New and pick a Credit card.
3. In the Save account under and Tax form section, pick Credit Cards. 
4. Enter an Account name and Description.
5. Hit the Starting date and opening balance drop-down, then enter the balance. 
6. Click Save. 
7. Repeat the Step 1 to 6 but ensure to pick the parent account in the Save account under field. 

If you still use the old panel, check out this article for the complete procedure: Add an account to your chart of accounts in QuickBooks Online.

After that, manually enter the transactions and ensure to put a Memo or Description every time you record. This way, you can quickly identify them when you run reports and reconcile accounts. 

To review your data, I'd suggest running the QuickReport. Complete these steps:

1. Go to the Accounting menu and choose Chart of Accounts. 
2. Locate your account in the list. 
3. Click the small drop-down arrow beside the View register and select Run report. 
4. Hit the Customize button and filter the necessary data you want to show. 

When it’s time to reconcile, you only need to reconcile the parent account because all transactions in the subaccounts roll up into it. For a step-by-step guide, see How to reconcile accounts. 

Moreover, check out these articles below to learn more about sub-accounts and pay down credit card feature in QuickBooks: 

• Record your credit card payments
• About bank or credit card subaccount setup

Please know you can continue to reach me here if you have additional questions about your transactions. Thanks for coming to the Community, and wishing you continued success.

Thank you for the reply. I think I understand how to do it now. I have another question. When I am purchasing a non-inventory item intended for resale, what tax category is applicable for the purchase? It can't be inventory asset, so just misc. expense? Then, when I sell it, how will the expense to purchase it be tied to the sale?

I have another question, related to this issue. I don't always keep money in my PayPal account. but I still continue to use my PayPal Debit card as I get 1% back on all purchases. When there is no money in the account, it is linked to my personal checking account and transfers money from this account to cover purchases. How do I account for the money transferred to the PayPal account when the card is used?

Why am I not getting any response to my query?

I appreciate you getting back here in the Community, @thewiz1. I'm here to share some details about your PayPal concern. 

Your previous replies in this thread were tagged as Accounting Advice. For it talks about the specific categories to use in recording purchases and accounting for a transfer transaction in QuickBooks Online (QBO). Please know that we're unable to provide advice for accounting-related concerns, so I recommend checking with your accountant for further guidance on this. This helps make sure your transactions are accurate and well accounted for. If you're not affiliated with one, you can use our Find an Accountant tool to look for one near you. 

I've added this helpful resource that you can use as a reference to know the different account categories you can assign for a transaction in QBO: Learn about the chart of accounts in QuickBooks Online.

If you have any other questions about navigating your QBO account, feel free to post again here in the Community. I'm always ready to lend a hand. Have a good day ahead and take care.