How does it work?
taxomate sends PayPal payouts that include an amount allocated to the Gateway Clearing account. This amount will not include any PayPal Fees since we are unable to import this information from Shopify.
After you connect your PayPal bank account you will see that deposit amount is net of fees. These deposits will be allocated to the Gateway Clearing account. At the end of the each month you will need to create a journal entry to account for any PayPal fees.
STEP 1. Connect PayPal to QuickBooks
Make sure you have connected your PayPal account to QuickBooks Online. You can add PayPal as an app in your QuickBooks account here.
STEP 2. Allocate PayPal Payments to Clearing Account
When you send a PayPal payout from taxomate to QuickBooks, the deposit amount is allocated to the Shopify Clearing Account we during Quick Setup for external gateways. These total amounts will match the payments received for each order in your PayPal account.
In order to reconcile the payouts you will want to allocate any allocate any Shopify deposits in the PayPal account QuickBooks to the Shopify Clearing Account.
Note: Alternatively you can create your own clearing account in QuickBooks and map it to PayPal payments in the Account & Taxes page in taxomate (under Gateway Transactions transaction category).
STEP 3. Create Bank Rule in QuickBooks
We recommend setting a bank rule in QuickBooks that would automatically categorized any payments received in PayPal to the Shopify Clearing Account. You would then approve any deposits applicable to Shopify.
See the rule we created below as an example:
STEP 4. Run Monthly Report in PayPal for PayPal Fees
Since the payout data we receive from Shopify does not include paypal fees you will need to enter any PayPal fees on a monthly basis.
First, go to Activity > All Reports and then select Activity Download.
Select the particular month / date range and then Create Report. Download the report when it is ready.
After you download the report, calculate the total amount of PayPal fees you had for the month.
STEP 5: Allocate PayPal Fees using Journal Entry in QuickBooks
If you haven't already, create an expense account QuickBooks named PayPal Fees.
Create a journal entry and debit the PayPal Fees account and credit the Shopify Clearing account using the total amount of fees you calculated for the month.