Do you need to track my Paypal account?
If you only use Paypal for purchases, and never for accepting money, we don’t need to track your Paypal account, as when you make a purchase, the money will come out of one of your “Funding Sources”. So we will record the transaction when we see it in that funding source. An exception is when the description on the Funding Source statement is not clear (for example, it only says “Paypal Inst Xfer”). In this case, we do need to track the Paypal account so that we know what the purchases are for.
If you accept any money at all through Paypal, we do need to track your Paypal account as a separate account. This is because you will at times have money in your Paypal account. Paypal first uses this balance to pay for purchases, which means the purchase will not show up anywhere else, and we therefore won't be able to record it. Once the Paypal balance runs out, Paypal will then draw funds from the Funding Source.
It’s our sincere goal to make your bookkeeping service as affordable as possible. See this article for how we record your Paypal activity an an effort to try and save you as much money as possible.
In order to further reduce your costs, here are 4 suggestions for reducing the volume of transactions in your Paypal account:
- Try to use Paypal less whenever possible. For instance, if you can, pay for expenses with a credit card. Unfortunately, because of the way Paypal is designed, it makes the bookkeeping complicated. We can, of course, handle the complexity, but it usually results in a higher cost to the client due to the additional transactions Paypal creates through all of the transfers back and forth between your bank and/or credit card accounts.
- Auto Sweep is an optional Paypal feature that every day will automatically transfer any Paypal balance you have to your bank account. Make sure this feature is not enabled, as this will create a transaction every day that needs to be recorded. Instead, transfer the money manually as needed. To turn this feature off, in Paypal, go to Profile > My Money > Paypal Balance > More. If you don’t see the option listed, you don’t have it turned on.
- Make sure to leave a balance in your Paypal account to cover your purchases. If you don’t have enough money to cover a purchase, Paypal will initiate a transfer from one of your “Funding Sources”. We will then have to record this transfer in addition to the purchase, resulting in two transactions instead of one.
- If you accept personal as well as business payments in Paypal, it will cause a bit of extra work for you. In order to avoid this work, we suggest opening a second Paypal account to use strictly for personal purposes.
We hope you find these suggestions useful.