Using PayPal with the Accounting Tools
PayPal Asset Account
You will need to create an asset account for PayPal if you are using PayPal as one of your financial processors. When a payment is received using your PayPal account, the monies will be held by PayPal until you transfer the money into your checking account.
Example of the process for online PayPal transactions:
Amy purchases $25 of spirit wear and makes a payment online using PayPal. This incurs an expense of $0.85 for transaction fees. (2.20% + $0.30)
- Spirit wear income budget line item is increased $25
- PayPal asset account will be increased $25 - $0.85 = $24.15
- Credit Card Transaction Fees (expense line item) will be increased $0.85
In addition to creating the PayPal account in your chart of accounts, you will need to set the Accounting Configuration for the online payments.
Configuration for PayPal Account
Go to Accounting / Configuration and identify which asset and expense accounts will be used for your PayPal transactions.
Select an asset account for PayPal deposits.
Select an expense account where your fees associated with PayPal transactions will be accumulated.