What's the best way to setup and reconcile PayPal transactions?

Question

I use PayPal for many online transactions. BUT, I find it really time consuming to reconcile both the PayPal and associated credit card transactions in Quicken Classic. I'm looking for a "best practices" (and easier) approach to reconciling PayPal transactions.

Currently my process is this:

* Make Online Payment via PayPal
* Transaction is recorded as a PayPal payment, but it includes a transfer to/from the attached non-PayPal credit card.
* When I reconcile, I need to reconcile both my PayPal account, as well as the credit card attached to that PayPal account for each transaction.

Is there an easier way to reconcile PayPal payments without needing to reconcile both my PayPal AND my credit card accounts? My short term solution is to use Google or Apple pay… this at least means that all I need to reconcile is my credit card accounts, but most of my online vendors do not accept Google or Apple Pay.

Is there a more efficient way to reconciling PayPal payments without needing to reconcile two seperate accounts per each online payment?

Bob@45 · Answer

I'm not sure why you find it time consuming to balance your PayPal and also credit card accounts?  I have PayPal set up as a checking account in Quicken. I pick and choose which credit card will actually make the payment when I do my online transaction. If I remember and enter the transaction in Quicken before they hit the download, I enter PayPal>Payment>Amount, with desired payee, category, and memo. I then enter for the credit card: CC > Charge > amount, with payee = "PayPal Funding" and Category = [paypal]. If I don't enter these before they post and download, then I do it as I reconcile. It doesn't take me any longer than reconciling any other transaction. Yes, it's 2 records to enter and 2 accounts to reconcile, but when I'm doing a dozen or more transactions a day, I don't see that it increasing my time spent significantly.

Additional note: I do often have a balance in my PayPal account, since I to receive money into it as well. I also use PayPal to transfer money to family members for birthday gifts and such, in which case the gift payment is in the PayPal account and the funding category is the bank checking account that I fund the gift from. I have the same setup for Venmo and for Wise (international transfers), and I've had no problems with it.

Jim_Harman · Answer

I have PayPal set up so that it charges the payment to a credit card. I do not have a PayPal account in Quicken.

When I make a payment with PayPal, I wait for the transaction to download to my credit card account in Quicken. The Downloaded Payee is usually in the form of PAYPAL* followed by the actual payee name. I edit the Payee in Quicken to match the actual Payee.

I don't know what would happen if I had multiple PayPal transactions in the same day.

splasher · Answer

I ignore the PayPall portion of this issue which then makes it like Apple Pay which I also use.  I know that if I make a PayPal charge, it will show up in my Discover Card account and categorize that transaction appropriately.

This process works great as far as I'm concerned, but if you also receive funds via PayPal, then this process wouldn't work.