Do you use PayPal for your Business?
How do you use Paypal to send or receive money in your business?
First, create a new Bank Account called Paypal. You can use this account just like your checking account, depositing payments for payments received and writing checks (no check number needed) for purchases.
Accounting for Paypal fees? These are “bank charges” or “merchant fees” expenses. For invoices, record the payment for the full invoice amount (if that is what was paid). When depositing to the Paypal bank account, record the fee as a negative amount on the first 
empty line in the deposit window.
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** Note ** These instructions work for basic transactions in Paypal. If you have shipping, sales tax or more complex transactions this will not be the best solution for you. I am researching a few options (including some of the software mentioned below and in the comments). I will report back with a follow up.
Want to download your transactions directly to QuickBooks? After logging on to your Paypal account, select History > Download History. Choose the time frame to download and select the QuickBooks .iif file type. Download to your desktop or another easy to locate directory. Try including the date in your file name to keep things organized.
In QuickBooks, from the file menu, select Utilities> Import> IIF files. (This may very based on your QuickBooks year and version.) Locate and open your IIF file downloaded from Paypal.
Now to take a look at the transactions you just imported. Bring up the Find window with Crtl+F. Filter by Account> Paypal and Entered/ Modified> Today. This will create a list of all the new transactions in the Paypal account. Double-click on transactions to edit accounts or memos.
For an even more automated system, try SimplePort from Simple Biz Systems. SimplePort recognizes sales and transfers and creates the appropriate sales or banking transaction in QuickBooks. For a full list of benefits click here. There are some limitations with refunds and foreign currency so this may not be a solution for you if you have many of those transactions. Sign up for a 30-day free trial to see for yourself.
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Comments
I use PayPal for not only my business but for a club that I do a fund raiser for. Having the ability to export my paypal stuff to an excel spreadsheet is invaluable!
Being able to import that data into a software package like QuickBooks is awesome!
Thanks for sharing this tip!
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For a few reasons I had to move to Moneybookers. I found that Moneybookers is actually a lot more better than PayPal. I’m pretty happy with moneybookers.
Great Article - I have searching for answers on this topic. To take it a step further — would you simply transfer the funds from your Paypal asset bank account to your actual bank account in Quickbooks.
What would this transaction/next step consist of?
Thanks.
One thing I noticed with this method is that the Merchant Fees do not pull in the ‘Income By Customer Detail Report.’ Isn’t that a bit misleading - would it be simpler to enter merchant fees as vendor bills?
QBAutomation at http://www.qbautomation.com/ has QB-Import with an expansion pack that allows easy uploading for Paypal transactions. You may want to give them a try.