At the beginning of this year, I wrote an article concerning
how to book PayPal transaction fees and transfers into
QuickBooks.
This article concerns how to book electronic purchases into QuickBooks
when PayPal, debit cards, etc. are used to make the purchase.
One of the nice things about QuickBooks is that you often have options in how you book
transactions. For instance, the transaction fees discussed in the earlier article could have been
booked using the bank reconciliation tool instead of going directly to the journal entry window. The
results would have been the same.
Remember that standard PayPal accounts should be set up in QuickBooks just like any other drafting
bank accounts. This fact alone should guide you when booking transactions affecting
those accounts.
Purchase transactions using a debit card, PayPal, or any similar process all have one thing in common:
an electronic withdrawal of funds from a drafting account. This is not so different from a purchase
using a paper check.
A purchase using paper checks would be posted to QuickBooks by opening the Write Checks window and
selecting the appropriate bank account before entering the details of the transaction. So would a
purchase using an electronic withdrawal.
As when you record a manual check, you would uncheck the "To be printed" checkbox. This prevents QuickBooks
from printing a new check and auto-assigning an incremental check number. It also allows you to
manually specify the check number (in the case of a manual check).
In the case of an electronic withdrawal of funds, you
could enter the transaction number indicated
by PayPal or a similar entity for the check number. This presents problems, however, since
QuickBooks will
try to auto-increment the number the next time you select the bank account in the Write Checks window.
The best approach is to simply replace the check number with the acronym "EFT" (for electronic funds
transfer). Then add the PayPal or other transaction number to the memo field and/or the description
field in the QuickBooks Write Checks window. Then record the check.
