PayPal is an international e-commerce business allowing payments and money transfers to be made through the Internet for a fee. Millions of companies use PayPal and if you are one of them or are considering becoming a user you may be wondering how to get the information from PayPal into QuickBooks.
Depending on the volume of PayPal transactions you have, manually recording PayPal transactions in QuickBooks may not be an option. One way to record a PayPal transaction manually would be to generate an invoice and record the payment individually for each sale. Luckily, PayPal activity can be exported to an Intuit Interchange Format (.iif) file and easily imported into QuickBooks.
Unfortunately there are a variety of transactions that will not import through the .iif but this article will address what those transactions are and some options for getting them into QuickBooks.
Setting Up QuickBooks to Import from PayPal
To set up QuickBooks in preparation for the .iif import:
- In QuickBooks, create a new Bank account named ?PayPal Account?
- Create an Expense account named ?PayPal Fees?
- Create an Income account named ?PayPal Sales?
Using the .iif File
PayPal activity both adds to and subtracts funds from your PayPal account balance. Customer payments increase your balance and PayPal fees decrease your balance. When you import the activity using the .iif, the increases in your balance are recorded into a single income account and decreases in your balance are recorded in a single expense account.
During the import process QuickBooks will try to match customer names being imported with existing customer names in QuickBooks. If a match isn?t found, the customer name will be added to the Other Names List.
Important: Always backup your QuickBooks file before importing the .iif file!
Download Your .iif from PayPal
- Log in to PayPal account.
- My Account tab > History
- Choose Download History.
- Select a date range.
- Under File Types for Download, opt for a QuickBooks file (.iif).
- Click Download History.
- When prompted to enter account names, enter them exactly as they appear in your Company's chart of accounts:
- Name of PayPal Account.
- Name of Other Expenses Account.
Note: Even though PayPal defines this as ?Other Expenses? account it can be a regular Expense account in QuickBooks. It doesn?t have to be an Other Expense type.
- Be sure that the expense account being used is not a sub-account of another expense account or it will be turned into a bank account when it is imported into QuickBooks.
- If Accounts Payable balances are being paid by PayPal transactions, you can enter the name of your Accounts Payable account here, but the Vendor names in PayPal must match the names in QuickBooks.
- Name of Other Income Account.
Note: Even though PayPal defines this as ?Other Income? account it can be a regular Income account in QuickBooks. It doesn?t have to be an Other Income type.
- Be sure that the income account being used is not a sub-account of another income account or it will be turned into a bank account when it is imported into QuickBooks.
- If Accounts Receivable balances are being paid by PayPal transactions, you can enter the name of your Accounts Receivable account here, but the Customer names in PayPal must match the names in QuickBooks.
- Note: You will have to fill in all of the boxes, or you will receive a message from PayPal stating: You must complete the above fields to download your log.
- Save the .iif to the desktop.
- From the QuickBooks File menu, select Utilities > Import > IIF Files.
- Select the iif file located on the Desktop.
- Click Open.
Once this is complete you should have almost or all of your transactions imported into QuickBooks.
Only "completed" transactions are imported.
PayPal transactions with one of the following statuses will not be imported:
- Partially Refunded
Additionally, any Transaction of the following Types will not be imported:
- Add Funds from a Bank Account
- Withdraw Funds to a Bank Account
- Cancelled Transfer
- Cancelled Fee
Using the CSV File
If you are interested in manually entering the transactions that did not import you should export your PayPal history into a csv file. You can then sort the file to show you the transactions that did not import.
- Log in to your PayPal account.
- Click the My Account tab, then click the word History
- Select Download History.
- Choose your date range, either Custom Date Range or Last Download to Present from the drop-down list.
- Choose File Types for Download, file would be Comma Delimited ? All Activity
- Click Download History.
Sometimes the size of the transaction history file does not download immediately but PayPal will e-mail you when your ?log? (transaction history file) is ready for download.
When you open the CSV file you will see a number of columns. The two that you will sort by are the Status and the Type columns.
First sort by Status. Anything that was not Completed will not import and needs to be entered manually.
Next sort the Completed transactions by Type because some of these did not import as previously mentioned.
If it is to much work to enter each of these transactions manually you can summarize your entry by adding all of the bank transactions into one sum. Any transactions having to do with your fees like Cancelled Fee can be added into one sum and booked to the PayPal Fees Account. Any transactions having to do with your Customer sales like Refunds can be added into one sum and booked to the PayPal Sales Account.
All transactions should now be in QuickBooks and you can start to reconcile. Reconcile the PayPal account as you would any other bank account. You can get your account balance as of a certain point in time directly from PayPal.