PayPal “bank statements”
Paypal is notorious with accountants. Getting decent transactional information out of it can be, frankly, a bit of a disaster.
You see, whilst Paypal looks like a bank, it isn’t actually a bank. Its excellent for what it was built for, but it doesn’t report well for accounting purposes.
What is particularly difficult is establishing the balance on account at the year end. As accountants we do a number of checks at the year end on bank accounts, and other similar accounts, such as Paypal. We need to be confident that we have accounted for all the transactions; one of the ways we do this is through the bank reconciliation. To do this you need the balance at the start of the year, at the end of the year, and all the bank transactions throughout the year. The problem with Paypal is it doesn’t give you a running total, a balance, like a bank statement does.
Here at The Accounting Studio we have done a little digging to try and find a report in Paypal that mimics a bank statement. This is what we found:
https://www.paypal.com/uk/cgi-bin/webscr?cmd=_history&nav=0.3
You need to do the following:
- Set the date range to your year (it might be helpful to set it to 1 month before and one month after)
- Click on all activity (with balance)
- On the right hand side – under currencies – change this to GBP
Run the report and then download to csv.
Once the report is run you need to remove any “memo” lines from the transactions. Memo lines are for information only (we’ve particularly seen “Github” payments from triggering memo lines). These can be found under the column “Balance Impact” (on coulmn AQ in our sample data). Most entries in this column are either “debit” of “credit”.
Alternatively
Some online accounting software connects with Paypal and imports all the transactions to the accounting software. We know of Xero, Quickbooks and a few others that have this capability, but I’m sure plenty of others do as well. Many accounting systems calculate what they think the balance should be.
At The Accounting Studio, we would normally still go through the checking process, to reconcile what is in the accounting software with what is in the Paypal bank statement
Finally
We’ve assumed during this post that your Paypal account, is infact in the company’s/businesses account. This is important to establish as if there is a balance at the year end, that balance at the year end belongs to the company. We do see quite often individuals’ Paypal account being used for business purposes, in which case, you only need to extract the relevant transactions
Paypal really is quite fiddly for the uninitiated. We suggest if you are using Paypal for business you do the following
- Set it up in the business’ name
- Use good quality accounting software that accepts direct feeds from Paypal
- Download the above report at the end of the year
We can take care of the rest when it comes time to prepare your year-end accounts and tax returns.
