If you've read our help article on Reconciling Shopify Sales & Fees – Other Payment Gateways then this help article will help you to further automate the process of reconciling your non-Shopify Payments sales and fees including those from PayPal.
👉 Looking for QuickBooks bank rules setup? They're here.
A basic overview of the process (click to skip to that section)
1) Send Shopify-Paypal invoice for the month from Link My Books
Each month Link My Books generates a summary invoice for Shopify sales through the PayPal payment gateway.
The first step is to send that to Xero:
2) Allocate all PayPal order payments to the Shopify Gateway Clearing account (via rule)
Next, set up a Receive Money bank rule matching the below:
Once saved, any payments for Shopify orders paid via PayPal should look like this on the PayPal bank reconciliation page:
All you need to do now is click OK on each of them and they will be allocated to the Shopify Gateway Clearing account.
👉 You should also set up a "Spend Money Rule" using the same criteria to capture any Shopify PayPal refund. Instead of "Express Checkout API" use "Payment Refund" as the Analysis Code.
3) Allocate all PayPal fee payments to your chosen PayPal fees account (via rule)
Next, set up a Spend Money bank rule matching the below:
Once saved, any PayPal fees should look like this on the PayPal bank reconciliation page:
All you need to do now is click OK on each of them and they will be allocated to your chosen PayPal Fees account.
👉 You should also set up a "Receive Money Rule" using the same criteria to capture any PayPal fee refunds.
4) Allocate all PayPal withdrawals as transfers to your bank account (via rule)
Next, set up a Transfer Money bank rule matching the below:
Once saved, any PayPal withdrawals should look like this on the PayPal bank reconciliation page:
All you need to do now is click OK on each of them and they will be allocated as transfers to your chosen bank account.
5) On your bank account connected to PayPal, all PayPal related transactions should go green and be easy to reconcile.
Your last step is to return to your bank account reconciliation on the bank account connected to your PayPal account (where PayPal deposit your funds) and reconcile the PayPal withdrawals you have made.
Since we implemented the rule in step 4 above and allocated all PayPal withdrawals as transfers to your bank account, they will look like this:
This should speed up the monthly task of reconciling your PayPal sales from Shopify considerably!
👉 If you have any follow up questions after reading this article then please get in touch with support via the blue message widget at the bottom right of this page.