Importing PayPal transactions into QuickBooks for Mac

PayPal is everywhere. Over eight million businesses use PayPal to process their credit card transactions and the numbers keep growing. Manually recording PayPal transactions in QuickBooks for Mac can be time-consuming and tricky, especially for businesses that want to keep track of customer data in their company files. Typically you must manually enter all customer data into the company file, and then generate invoices and record payments individually. However, PayPal offers a utility to import these transactions directly into QuickBooks using Intuit Interchange Format (.iif).

Although a bit limited, the utility is useful if you just want to keep track of your revenues and deposits. If you need a more robust utility that includes customer and item detail, check out www.simpleport.net or www.bigredconsulting.com. Both of these companies charge a fee for their software and/or services.

How does it work?

Here’s what’s happening in a nutshell: A customer pays you through PayPal, increasing your PayPal account balance. On the PayPal website, you download the data to an .iif file for a specific date range. Then you import it into QuickBooks. QuickBooks- records a deposit for each transaction using a single income and expense account.

Where possible, QuickBooks tries to match customer names in the imported transactions with existing customer names in QuickBooks. If it can’t find a match, it
adds the customer name to the Other Names List.

Here’s how you do it

Here’s how to get your PayPal data into QuickBooks for Mac:

1. In QuickBooks, create a new bank account named “PayPal Account” and a new expense account named “PayPal Fees.”
2. In PayPal, go to the My Account tab. On the History menu, choose Download History.
3. Choose the transaction dates for the data you want to import. Then choose “QuickBooks (.iif)” from the pop-up menu. You won’t be able to download shopping cart detail, so don’t click the checkbox next to this option. Click the Download History button at the bottom right of the page.
4. On the Download Log page, enter your account names EXACTLY as they appear in QuickBooks. Click the Download Log button.
5. Save the file to your desktop or another location where you can easily find it.
6. BACK UP YOUR QUICKBOOKS FILE! Do this so that if the import doesn’t work as planned, you can step back and restore your company file.
7. In QuickBooks, choose File > Import > Import IIF File. Browse for your .iif file, and click Open.
8. Check your chart of accounts to make sure the data was correctly imported. If you see new bank accounts at the top of your chart of accounts, you didn’t enter the account names correctly. To fix this, edit the PayPal-generated accounts and change the type and name to match the correct account. Then, merge the accounts.
9. Open the Profit and Loss report and change the dates to match the dates of your import. Double-click the “PayPal Fees” Expense account. Review the transactions for accuracy and make corrections. Memorize this report (Edit > Memorize) for future use. You’ll need to change the dates each time you use the memorized report.
10. Record your transfers from the PayPal Account to your Bank Account by choosing Banking > Transfer Funds. You can check your transfers against the transaction history report in PayPal.

Advice on smooth importing

Here are a few tips on make the import go smoothly:

• Add a “PayPal Account” to QuickBooks. If you’re using PayPal, you’re probably transfering funds from your PayPal account to your bank account daily or weekly, so it doesn’t make sense for you to map the .iif file to your QuickBooks bank account. Instead, set up a separate QuickBooks bank account for the PayPal transactions called “PayPal Account.” This way, the .iif file imports all of the transactions to the PayPal Account and acts as an “undeposited funds” account. Then, when you actually make the transfer to your actual bank account from PayPal, you can record the transfer in QuickBooks from the PayPal Account to your Bank Account. This makes reconciling both your PayPal and bank accounts a snap!
• Watch your typing. Be sure that you enter your QuickBooks accounts in the download history screen in PayPal EXACTLY as they are spelled in QuickBooks. Otherwise, the .iif file causes QuickBooks to create a new bank account and post all transactions to it. If this happens, you can easily edit the newly created PayPal account, change its type and name to match the correct account, and merge the accounts together.
• It’s all or nothing. One downside to using the utility is that all sales and expense transactions post to one account. This means that if you’re paying for goods or services through PayPal, all of these transactions will be posted to the PayPal Fees expense account. This is also true of customer refunds. A workaround for this is to open the .iif file in Excel as a tab-delimited file, change the account names in Excel (or add a class), and save the file. You’ll see a window warning you that the file may not be compatible with text. Just click No and save the file as is. This process allows you to split out the transactions into multiple accounts or handle those nasty refunds! You should review this account and make changes as necessary. I recommend creating a memorized report to identify these transactions so that you can review them after each import. And, as is ALWAYS good practice, BACK UP your company file before you import the data!

So that’s how you import PayPal data into QuickBooks for Mac. Give it a shot, and let us know what you think.