I just love the QBO Banking Center! As long as your bank is supported, you can connect your account(s), download and review transactions, and with one click add them to the account register. However, while you can connect your PayPal account, QBO doesn’t handle PayPal transactions properly in that it only downloads the net amount, not the fees (which you need to record as an expense because you need the tax deduction).
On the Apps website for QBO (Apps.com), there’s an app called Sync With PayPal. It’s written to download both your PayPal gross sales and fees, creating customer(s) and sales receipts as necessary. Unfortunately, what I’ve heard on all the Facebook and LinkedIn accounting groups to which I belong, is that this app simply does not work. Reading the reviews on Apps.com confirms these rumors.
So then how do you seamlessly import PayPal transactions into QBO? The answer is, you can’t. Unfortunately, the only way to accurately reflect sales by customer and your PayPal fees expense in QBO is to follow these steps:
- Make sure you have two accounts setup on your QBO Chart of Accounts: The PayPal account, and a PayPal Fees expense account.
- If the customer isn’t already in QBO, add them.
- If the sale hasn’t already been recorded in QBO for that customer, add the sales receipt using the gross amount of the sale. Post it to Undeposited Funds.
- Go into Undeposited Funds and make a bank deposit to your QBO PayPal account. Put a checkmark next to the customer transaction in the upper portion of the screen. Then in the lower portion, post the PayPal fee to your QBO PayPal Fees expense account, entering the fee amount as a negative number.
- The last step is to transfer the funds from your QBO PayPal account to your bank account(s). (This step assumes you’ve already transferred the funds on PayPal.com to your bank account.)
Following these steps is the only way you can accurately reflect both (a) sales by customer, and (b) your PayPal fees expense, in QBO.