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Intuit
13 helpful votes

Use the Connect to PayPal app

Learn how to connect and manage PayPal app transactions.

The Connect to PayPal app lets you handle your PayPal transactions the same way as other bank transactions. You can easily edit, categorize, and match transactions in your QuickBooks Banking tab once connected.

Interested in trying out the Connect to PayPal app? Get connected.

With the PayPal app, you won't see transactions that are duplicative or intermediate statuses. This includes authorizations, temporary holds, and reversals.

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The table below will guide you on how PayPal transactions are handled within QuickBooks Online.

Transaction Type/Item Handling within QBO
Income / Sales You can create a Sales Receipt or a Deposit with each "money-in" transaction:
  • Sales Receipt: You will see the gross amount, net amount, and fees for each income transaction. Detailed line item level data will be brought over from PayPal. Each product/service on the sales receipt will be associated with its own income account within QuickBooks Online. You can also match to existing invoices and sales receipts if they have already been entered into your QuickBooks Online account.
  • Deposit: 
  • Each transaction will be listed in the “For Review” tab of the banking screen so you can select and assign the appropriate income account. Item details will not be included in a Deposit transaction and will simply be categorized into one account.
Expenses When the PayPal account is used for a purchase, an expense transaction will appear in the list of transactions on the Banking screen to allow for categorization.
Fees
  • Fees associated with sales transactions will come in as an expense transaction with the Sales Receipt.Note: Fees are included in the compound deposit.
  • You will not see the fees separately in the transaction list.
  • The fees will be categorized into a PayPal Fees account.
  • Fees are not added to the PayPal Fees expense account until a Sales transaction is added to QuickBooks or matched to an existing transaction.
Funding transactions Transfers: Money movement between bank accounts and the PayPal account will appear as a transfer.
  • It will also appear as a transfer if you pay for a purchase through PayPal that is funded with a bank account or credit card. You can create a rule to tell QuickBooks which account the transfer is coming to/from (see Use of Bank Rules section).
Sales tax If Sales tax is turned on, it is mapped upon setup. To edit:
  1. Go to Banking and select the Pencil Icon on PayPal card.
  2. Select Edit Settings, then choose a new rate.
Customers The suggested customer is shown in the bank transaction list, but if it’s not yet in QuickBooks, create the customer by using the Payee drop-down.
Vendors The suggested vendor is shown in the bank transaction list, but if it’s not yet in QuickBooks,create the vendor by using the Payee drop-down.
Items (Products / Services) Products/services will sync as line items on the sales receipt if the item name within PayPal and QBO match. Otherwise, the items will appear as “PayPal Sales” on the sales receipt line details.

  1. Log in to your QuickBooks Online account.
  2. From the left menu, select Apps.
  3. Look for Connect to PayPal.
  4. Select Get app now.
  5. Mark the box for the appropriate file, then select Install.
  6. Select Let's do it.
  7. To authorize Intuit to pull data from your PayPal account, select Give permission.
  8. Enter the email address associated with your PayPal account then,  Next.
    • If you don't have an account, you'll be prompted to create one.
    • If you create a new account, you need to go back to QuickBooks Online and restart the connection process.
  9. Sign in to your PayPal account.
  10. To authorize the sync, select Agree and Connect.
  11. Once the connection is established, select Return to Intuit.
  12. Select the PayPal Bank where you'll find your PayPal transactions, then Next.Note: Generally, this is separate from your bank account and is automatically made for you upon set up.
  13. Select the sales tax rate that will be applied to all imported sales transactions, then select Next.
  14. If you have historical transactions, select the date you like to start importing from, then select Done.Note: You can import up to 18 months of historical transactions.

You are now set up! You will see the PayPal connection listed on your QuickBooks Banking screen.

  1. Log in to your QuickBooks Online Accountant Firm, then open your client's books.
  2. Go to https://qbo.intuit.com/app/paypalconnect.
  3. Enter your client's PayPal credentials.Note: You must use the Main Admin's PayPal credentials. The Main Admin is the only one who can grant permissions for the app to connect to the PayPal account. If you are an accountant invited as an additional user, your credentials won't work.
  4. Connect to your client's QuickBooks Online account.
  5. Once connected, the PayPal account appears on your client's Banking tab.

Transactions processed through PayPal appears in the For Review tab of the Banking screen within 2 hours. The app updates every 15-30 mins.

Note: The Update button on the Banking screen won't update the PayPal account.

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A Product/Service item within QuickBooks is tied to an income/expense account. This allows you to attribute different line items to different accounts.

When importing transactions from PayPal, Connect to PayPal matches the items on a transaction with products/services within QuickBooks. The match criteria is based on item name.

  • If it matches: it uses the matched product/service.
  • If it doesn't match:  it uses the default item called PayPal Sales and updates the line description with the name of the item provided by PayPal.

In certain cases, even when the item name matches, it can't use the item on a transaction for one of two reasons:

  • Reason 1: The matching product/service in QuickBooks is not selected as a sellable product/service—if the I sell this product/service to my customers checkbox for is not selected, Connect to PayPal would fail to import the sales transaction.
  • Reason 2: The matching product/service in QuickBooks is not a product, but a category. Product category is a feature used to group a list of related products/services. Even if the name matches with the PayPal transaction, it can't be used as a product item within a Sale transaction.

In these cases, you'll see the default PayPal Sales line item and the description with the item name from PayPal. This way, the transaction is still imported with details provided.

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To avoid seeing the PayPal Sales item appear on your Sales Receipts, see Transactions showing products and services as PayPal items.

Frequently Asked Questions

Yes. The Connect to PayPal app supports the connection of multiple PayPal accounts to QuickBooks Online.

Yes. You can enable the Auto-Add feature to allow the app to import your PayPal sales transactions without having to review them.

Enable Auto-Add feature

  1. Log in to your QuickBooks Online company.
  2. From the left menu, select Banking.
  3. Locate the PayPal bank card, then select the Edit (pencil) icon.
  4. Select Edit Settings.
  5. Under the Other section, mark Auto Add Transactions.

You can utilize Bank Rules to save time on categorizing transactions. Suggested rules for PayPal include:

  • Bank Transfer: If the bank detail contains Added funds from a Bank Account or Withdrawal to bank account, create a transfer and set the account to bank account. Make sure to specify the credit card account to which you will move the money from PayPal.
  • Credit Card Transfer: If the bank detail contains Added funds from a Credit Card, then create a transfer and set the account to credit card account. Specify the credit card account to which you will move the money from PayPal.

PayPal expenses paid with a bank account show up on both your connected PayPal account and your connected bank account. The best way to handle these transactions is to:

  1. Add both transactions on the PayPal account, then
  2. Match the transaction with the transfer on the PayPal account.

Add the transaction from the PayPal side first to get more detailed information, such as vendor name and address, into QuickBooks.

PayPal expenses paid via credit card show up on both your connected PayPal account and your connected credit card account. The best way to handle this is to:

  1. Add both transactions on the PayPal account, then
  2. Match the expense on the credit card account with the transfer on the PayPal account.

Add the transaction from the PayPal side first to get more detailed information, such as vendor name and address, into QuickBooks.

Settings for the Connect to PayPal app aren't handled like a traditional app connected to QuickBooks Online.

  1. Sign in to your QuickBooks Online account.
  2. From the left menu, select Banking.
  3. Select the Edit (pencil) icon on the PayPal Bank account.User-added image
  4. Select Edit Settings.User-added image

  1. Sign in to your QuickBooks Online account.
  2. From the left menu, select Banking.
  3. Select the Edit (pencil) icon on the PayPal Bank account.
  4. Select Edit Settings.
  5. Select Disconnect PayPal.User-added image

No. At this time, the Connect to PayPal app doesn't support multi-currency (currency conversion) transactions and reconciliation.

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