Hi, I'm having an issue with reconciling a PayPal account and hope that somebody might be able to clear up some confusion for me.
On my PayPal statements, when I made a purchase, it only shows the *minus* money amount- so if I made a purchase for $5, it only shows -$5. However, in QBO, my PayPal feed shows both the -$5 for the purchase and the +$5 that PayPal receives from my bank account when I made the purchase.
Because of this, I have 'in process' transfers at the end of the month, which leaves me with a negative balance and discrepancy. My PayPal statement only shows the subtractions for purchases, not the payments it pulls from my bank account when I make those purchases. So my PayPal monthly statement always starts with $0 and ends with $0 since I don't keep money *in* my PayPal account, only use it with my bank account.
So, I made a $5 purchase on January 31st. However, my checking account didn't 'send' the money over until February 2nd, for example. My PayPal statement *should* reflect a -$5 ending balance. However, it does not. The ending balance is $0 on every single one. Then, on my February PayPal statement, the $5 bank payment is finally processed and shows up. But because the beginning balance on my February PayPal statement is also $0, I now have another discrepancy because I have the money coming in but not going out. I hope that makes sense. :/
So I'm not sure what to do when the PayPal statements reflect a $0 balance when there is, in fact, an outstanding balance that hasn't been processed/received by PayPal yet. The statements don't seem to acknowledge this and automatically zero out at the end of the month if no money is kept in PayPal and it is just used together with a bank account.
How can I properly reconcile this if the PayPal statements don't reflect this information? The only thing I can think to do is to enter a -$5 balance as the ending balance so the discrepancy goes away and the reconciliation is correct. However, the PayPal statements show the balance as $0.
Any advice on how to handle this situation?
To add all of your PayPal transactions, you need to manually record to make it sure -5 will be added.
- Go to the +New button.
- Select Expense.
- From the expense window, you can manually input all the data provided.
Also, when using the connect to PayPal, you have to check that the transaction is a "balance affecting" transaction in PayPal and is not a hold/release. You can refer to this article for more in-depth information about Connect to PayPal: Connect to PayPal.
Keep me posted if you have other questions about QuickBooks. I'm always here to help. Wishing you the best!
Hi, thanks so much for your reply, but that isn't my issue.
The -5 does show up in QBO- it was automatically added, as I have PayPal connected to QBO. My problem is that, when I am reconciling my PayPal account, there is a $5 payment made via PayPal at the end of the month, but there is no offsetting deposit from the bank account until a few days later in February. For every transaction in PayPal, I have 'matches' on my reconciliation here- for every $3 payment made via PayPal, there's a $3 deposit from the bank account to PayPal to offset that, since PayPal is pulling money from my bank account. However, the $5 deposit from the bank doesn't get to PayPal until the next calendar month. However, the PayPal statements don't record these deposits from the bank- only the charges to PayPal.
On my PayPal statement, it only shows the PayPal payments (the *minus* amounts) and not the bank deposits (but BOTH of those things show up in QBO). So, on my PayPal statement, it shows the -$5 at the end of the month, but the ending balance is still $0, even though the 'offsetting' payment from my bank doesn't come through until the next calendar month. So I'm stuck with a -$5 reconciliation discrepancy because my PayPal statement doesn't reflect this.
So basically, the automatic PayPal feed that downloads to QBO doesn't match the PayPal statement- they appear to track the PayPal account activity in a different way, which makes it seemingly impossible to reconcile.
Thanks for the reply, @Ralphthefluffycat.
I recommend recording these transactions manually rather than waiting for your bank feed so you can properly do the reconciliations. All you have to do is create an Expense from the bank with the correct date and a Deposit to your PayPal with the correct date. No worries, I'm here to provide you the steps on how to manually create these transactions:
Create an Expense:
- Go to the +New button on the left-hand menu, then select Expense.
- Enter all the necessary information.
- Hit Save and close.
Create a Deposit:
- Go to the +New button on the left-hand menu, then select Bank deposit.
- Enter all the necessary information.
- Hit Save and close.
Once you've manually entered these transactions, then you'll be able to reconcile with ease.
Let me know if you have further questions or concerns. I'm always here to help.
Hi, thanks so much for your reply.
I'm still having an issue even after having added these manually. The problem seems to be when I match the transfer. I'm recording the expense in the PayPal account, and then I'm recording the movement of funds from checking to PayPal as a transfer, which I would typically just match up with ease and be done with it. However, recording it manually, I put the date the money was transferred into the PayPal account (1/31) on the PayPal side, according to the PayPal statement, and then I put the date the money was actually pulled from the checking account (2/3) on the checking side. If I just have the single transaction on the PayPal side, then the reconciliation looks great. But when I match it to the transfer from checking on 2/3, that transfer isn't available on my January reconciliation information anymore, still leaving me with a discrepancy. If I change the checking date to 1/31, it'll fix my PayPal reconciliation but mess up my checking account reconciliation because the information shows up on my January PayPal statement, but on my February checking account statement. :/
Thanks for your continued help, I appreciate it.
Allow me to provide some insight into reconciliations.
QuickBooks shows what happens even when PayPal zeros out the balance at the end of the month. So, if you left the -$5 at the end of the month, although the statement reflects the balance as zero, it would balance out the next month. However, I suggest running the idea by your accountant first to make sure everything is reflected correctly in your books. They'll also be able to tell you the best way to record and reconcile transfers.
Feel free to let me know how the conversation goes below. I'm always here to lend a helping hand.