aaarrrgggg paypal book-keeping

[Karimbo]

spent the best part of the last 6 hours doing my books so I have a perfect VAT return and end of year accounts.

Spent all that time chasing £7 of mismatched bank reconciliation and lo and behold it was [yet again] linked to paypal.

Bookkeeping for paypal is so complex and I often double post items or transfer from the wrong current account/credit card when I load the paypal account.

The payment transfers take ages so the running totals means nothing because there's all sorts of payments in transfer which do not show up in the running balance.

Is there an easier way? Any tips you peeps can share? Is the only way to just load up paypal account with a sizable amount so it doesn't need to load funds from the debit card to pay for items??

 

[kevin.doran]

Are you using software? How are you recording things at the mo?

 

[Karimbo]

i am using freeagent, i post entries manually as I have relatively low receipts and payments. receipts 4-12 a month (b2b services). Lots of expenditures per month through paypal (40-50 payments).

So it's not complex enough to do bookkeeping via software. Freeagent has a feature to import transaction data via api from paypal - but I'm scared that when I do this it will add historical data and mess things up.

The challenge is interpreting the paypal statements. They're very confusing to read. Each expenditure can have 4 activities on accounts (e.g. when making payment by loading from debit card and converting to USD to pay seller).

They don't tabulate the data either between debits and credits in different columns which makes mistakes easy to make

 

[David Griffiths]

The best way to deal with Paypal in those circumstances is to set it up as a separate bank accoutn in Freeagent. Any money paid to or from Paypal to one of the other bank accounts is recorded as a bank transfer.

At the end of the month, download the Paypal monthly summary and enter all sales as one receipt in the Paypal bank account (net of returns), and enter the Paypal charges as one figure. The bank transfers in and out should already be there, on the assumption that you've reconciled those accounts first.

All you have to do then is check the balance agrees at the end of the month.

It's easy if all of your sales are the same rate of VAT. If not you might have to split the transaction.

 

[andygambles]

If you have long delays of funds leaving your bank and arriving in PayPal or vice-versa you can also set-up a "Funds in Transfer" Bank account in FreeAgent.

Then transfer funds from Bank to Funds in Transfer then when it arrives in PayPal Funds in Transfer to PayPal. Then the reverse if the other direction. The dates on your statements will then tally up with your books.

We also have a Suspense account used when we need to make payments in different currencies. This can be used to record currency conversions and bank charges which do not always appear on statements.

We have PayPal set-up as a bank account. Also have it set-up for each PayPal currency we accept. Transactions are auto-entered in to the accounts (Clearbooks) as we have hooked in to the API. At the end of the month we run the Financial Summary report from PayPal to reconcile deposits and withdrawals then add a single charge for all transaction fees.

 

[MyAccountantOnline]

The best way to deal with Paypal in those circumstances is to set it up as a separate bank accoutn in Freeagent. Any money paid to or from Paypal to one of the other bank accounts is recorded as a bank transfer.

At the end of the month, download the Paypal monthly summary and enter all sales as one receipt in the Paypal bank account (net of returns), and enter the Paypal charges as one figure. The bank transfers in and out should already be there, on the assumption that you've reconciled those accounts first.

All you have to do then is check the balance agrees at the end of the month.

It's easy if all of your sales are the same rate of VAT. If not you might have to split the transaction.

That's exactly what I do if I'm doing any clients bookkeeping.

It's very quick and easy.