Business Payments: How to Reconcile your PayPal transactions in QuickBooks

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How to Reconcile your PayPal  transactions in QuickBooks

This guide will give you a clear picture of what needs to happen in QuickBooks Online after you have synced your transactions using Business Payments.
  • Accountants’ favourite way to reconcile PayPal payments in QuickBooks.
  • Before you start the reconciliation, make sure you do not currently have PayPal connected in QuickBooks banking or via other apps, as this could lead to duplications.

Summary:

  1. Sync
  2. Transfer
  3. Reconcile  (Standard QBO reconciliation process)

Step 1

Sync PayPal transactions into PayPal buffer account. By syncing your transactions into the buffer account, you will have the starting point to then transfer the amounts into the checking account, thus reflecting the actual money-flow.
*We recommend to use a buffer account and not your actual bank account, because bank account will not include the fees you pay to PayPal, therefore your balance will be off by the amount of fees you paid.
Find out more about Business Payments settings and buffer accounts here.

Step 2

After the synchronization is done, you are able to run a reconciliation in QuickBooks. Your current bank statement will need to reflect the funds you have withdrawn from PayPal, so that the records of sales, fees and expenses that we pulled over to QuickBooks and your bank statement align – this is a prerequisite for a clean reconciliation. Make sure your withdrawals are up to date and open the For Review list in QuickBooks banking section for your checking account.
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Once in For Review tab, click on each PayPal deposit, select Transfer to record a transfer of the data that we synced. Select your buffer account from the drop down list and press transfer.
 
Your aim would be to reach equal amount on both: your Bank balance and QuickBooks balance.

Step 3

When you are all set in Banking, you can reconcile your checking account to match the transactions on your monthly bank statement with the transactions we synced into QuickBooks Online.
To reconcile an account in QuickBooks Online, click the Gear button. Then click on “Reconcile” under the “Tools”.
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Use the “Account” drop-down as pictured on the screenshot to select an account. Have your bank statement handy to specify the “Ending balance” and “Ending date”.
Click on Start reconciling
  1. In the “Reconcile (Account name)” window that opens, the account transactions appear on the “Payments,” “Deposits,” and “All” tabs.
  2. To mark transactions as “cleared,” click the small circles at the right end of the transaction rows.
  3. The information that was synchronized from the account statement appears at the top of the window.
  4. To change the information from the account statement, click the “Edit info” button in the upper-right corner of this window to open an “Edit the information from your statement” panel at the right side of the window. Save all changes or cancel.
  5. To finish after successfully reconciling an account, click “Finish now” to save it.
  6. To save your work and finish reconciling later or to leave to investigate an account discrepancy, select the “Save for later” option to save your work.
  7. After you successfully reconcile an account in QuickBooks Online, a reconciliation report becomes available.
  8. To view the report in the “Success! You reconciled your account.” window that appears, click the “View report” button.
  9. Otherwise, click the “Done” button in this window to close it.
  10. To view your Reconciliation statement later, click on “Reconcile” under “Tools” heading in the drop-down menu to open the initial “Reconcile” window again and click on “Reconciliation history” in the upper-right corner of that window. The account’s previous reconciliation reports then appear in list below. To open the report for the desired period, click the “View report” link under the “Action” column. To print it, if needed, click the “Print” button in the upper-right corner of the report.
Ideally, we are looking for a $0 difference, which will balance your QuickBooks balance with your bank statement. We recommend to repeat this process regularly, which will be accessible thanks to Business Payments.
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Congratulations! You are all set.
By syncing into a buffer account using the flow recommended in this guide, all of your online Sales and Expenses will be matched with your current bank account.
Bank balance and QuickBooks balance will be even and you will be able to easily keep track of your online Sales and Expenses.
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