One of the biggest problems using PayPal as a payment gateway is keeping the records up to date. I, like many other eBay sellers, have thousands of transactions going trough on a monthly basis. Previously I would import all PayPal transactions using the kashflow automatic importer and though this would be perfectly fine for those who don’t do a lot in PayPal, for me it started to become nightmare. The problems occurred when the system would be missing a transaction and I would need to reconcile through thousands of records to make the accounts balance. This would be extremely time consuming and could often take up 2-3 days a month, 2-3 days I could of spent focusing on other aspects of my business!
After speaking with my accountant she suggested another method of PayPal bookkeeping that would save me no end of time; Summarizing my PayPal logs. Though I was aware of PayPal logs I had looked at them in the past and not really understood what was going on. PayPal history logs are available to anyone with a PayPal account and show a complete history of transactions that took place on your account. The logs come in CSV format which you can open in Excel and save as a normal spreadsheet. To download a report simply login to paypal and go to History > Download History, select a date range and make sure the file type is set to “Comma Delimited – All Activity”. This will generate a report that will show every single transaction that went through your account in the set period. What I usually do is download a report at the start of each month to account for the records in the previous month.
The first time you look at your log you may feel a little overwhelmed with all the data it contains, I was too. Upon closer inspection, and making use of Excel “filters” it really isn’t that complicated. Now, each month I download my log and simply create columns within the log for “Sales”, “Purchases”, “Fees”, “Transfers from bank”, and “Transfers to bank”. I usually edit the “Gross” column to “Sales” as majority of my transactions are sales, Fees already has it’s own column so it’s then simply a case of moving the purchases and bank transfers to their respective column.
In doing this you can do a SUM() function at the bottom of each column to give you the total value of all sales, purchases, fees and transfers. I then enter my total sales for the month and total fees into KashFlow and record purchases separately (as some are subject to VAT and others are not). I will then log the bank transfers by moving the amount from my PayPal account to Current Account or vice versa.
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