PayPal in Banking

Once PayPal is connected, HQ adds a PayPal account under Ledger › Banking › Accounts, beside your bank accounts. It behaves like a bank account that PayPal feeds instead of your bank: it shows Connected, and where a bank shows what the bank reports, PayPal shows PayPal's own balance, with the date it was read.

What posts on its own

• Sales, refunds and PayPal's fees post as one entry for each day, such as "PayPal sales, 29 Oct 2026". The entry adds the day's net to the PayPal account, with your sales, the sales tax and PayPal's fees in their own accounts. If a payment paid a Shopify or WooCommerce order you have connected, the tax comes from that order. A day is settled a few hours after it ends, so today's sales appear tomorrow.
• Every fee PayPal charges, including the fee for withdrawing to your bank, goes in that day's fees, so the transfer itself is the amount that reached the bank.

A day that was posted is never rewritten. A PayPal row that turns up late goes into a new entry for that date, or, if that date is in a locked period, on the first day after the lock.

What waits for you

Anything else on your PayPal statement is an ordinary line in Banking to categorize, with your rules and remembered categories applying as on a bank line: a supplier you paid from your PayPal balance, a purchase, or a PayPal code HQ does not know. Nothing is dropped. If a line is still uncategorized, PayPal's balance and your books will differ by that amount until you categorize it.

Moving money to your bank

A transfer from PayPal to your bank appears twice, once as a withdrawal on the PayPal account and once as a deposit on the bank account. HQ pairs the two as a transfer between your own accounts, not as income, whichever arrives first.

• A deposit you have not categorized is paired automatically when exactly one match fits.
• A deposit you already categorized is offered to you, never changed. The books-health card that counts the PayPal transfers to pair with your bank lists them; pair each one, and the deposit's category is replaced by the transfer.
• A withdrawal with no matching bank deposit yet posts nothing and waits. Transfers from your bank into PayPal pair the same way.

A PayPal day never matches a bank deposit, and it never shows as an open payout to chase. Each day's sales, fees and net are listed on the PayPal account under PayPal sales by day, and on Ecommerce › Payouts, where a PayPal day reads In PayPal.

Where PayPal history starts

You choose this when you connect PayPal: the start of your open books (the default), today, or a date between. HQ never starts inside a period you locked or a quarter you already filed a return for, because adding PayPal sales there would change a return already sent.

Sync further back. On the PayPal account in Banking › Accounts, open the PayPal feed and click Sync further back to read older PayPal history, as far as the start of your open books. On the Free plan HQ reads only the last 30 days of history, and the screen says so. If PayPal's starting balance is in your opening balances, take PayPal's line out of them first; HQ will not read further back while that figure is there. The start only ever moves earlier: moving it later would remove entries already in your books. HQ reads the added days once, replaces the PayPal opening with PayPal's balance on the new start date (for you to confirm, below), and lists any bank deposits the added days overlap (below).

The opening balance

PayPal's balance at the start of its history in HQ is the PayPal account's opening. HQ never adds it to your books by itself: you confirm it.

• If PayPal history starts the day your books start, a card says what PayPal held when your books start, with the amount and the date. Add it for PayPal in your opening balances.

• If PayPal history starts later (you chose today, or your books are closed up to a later date), a card says what PayPal held when its history in HQ starts. It explains that the amount may include sales you made before that day and never recorded (for example, sales you used to record only when the money reached your bank), and offers two choices:

  • Leave it for my accountant: the whole amount goes to Opening Balance Equity.
  • Part of it is sales I haven't reported: enter that part, tax included. It is recorded as sales and sales tax, dated with the opening, and is on the return for that period (not the closed period the sales were made in). The rest goes to Opening Balance Equity.

  The opening is dated the day before the start, or the start day itself when the day before is closed. Either way it is listed in Notes for your accountant with both figures. The card has Ask your accountant if you are not sure.

Either way the account can then match PayPal's own balance. If PayPal held nothing at that date, nothing is needed.

PayPal deposits you already recorded as sales

Before PayPal was connected you may have categorized each PayPal deposit in your bank as sales. Once HQ reads PayPal's history, the same money is also a day of PayPal sales, so it would be counted twice. A card counts the bank lines you categorized that are also a transfer from PayPal and lists them: date, amount, bank account and the category each has now. It lists only money that came INTO your bank from PayPal; a bank payment that topped up PayPal is left alone, because it may be a purchase paid through PayPal that you coded correctly. Record these as transfers from PayPal records them all in one step, replacing each category with a transfer between your own accounts, and says which ones it could not record and why. Each one can still be undone on its own in Banking. Dismiss the card to leave them as they are.

When PayPal's balance and your books disagree

A gap on the PayPal account raises the same books-health card as a bank account does. The usual causes, in order:

1. Lines waiting to be categorized in Banking (clear them).
2. The opening balance has not been entered or recorded (see above).
3. Withdrawals waiting for their bank deposit to arrive (pair them).
4. Rows left out because they are not in your home currency (next section).

HQ compares at the last day it has settled, not at this minute, so a sale made an hour ago does not cause a gap.

What is left out: other currencies

In this version PayPal is kept in your home currency. A row in another currency, including both halves of a currency conversion, is held off your books and named on a card that counts the PayPal rows not in your books. HQ never records a foreign amount at par. Record those rows by hand if they matter for this year; until then PayPal's balance and your books can differ by their amount.

If a customer pays a store order straight to PayPal

When a customer pays a Shopify or WooCommerce order by sending money to your PayPal and you mark the order paid by hand, the order's sale and tax are already in your books from the order. A PayPal payment from the email address on that order, for exactly its amount, within a week of the order's date, becomes a line on your PayPal account that settles the order, so it is not counted again as a PayPal sale. The order shows Matched on Ecommerce › Externally Paid, with your PayPal account as its deposit. When HQ can't be sure which order it paid, it stays in that day's PayPal sales.

If you marked the order paid after PayPal's day was already settled, the sale is inside that day's PayPal sales and the order is also waiting in Externally Paid. Open the order there, expand its row and choose Paid through PayPal?: the sheet shows what will move, and Yes, move it takes the sale out of the PayPal day and settles the order with it, so they count once. The order then shows Undo. A PayPal payment line that is waiting on the PayPal account in Banking and may pay such an order says "Waiting for" the order and links to Externally Paid; it doesn't offer Not an invoice payment. If the line isn't that order's payment, categorize it on the PayPal account. A refunded order or sale can't be moved: HQ doesn't handle the refund of a store order paid straight to PayPal automatically yet.

If a client pays an HQ invoice through PayPal

HQ books the payment once, against the invoice, never as a PayPal sale too.

• You marked it paid from PayPal's email. Open PayPal's "You received a payment" email in Mail and use the banner to mark the invoice fully paid. HQ reads PayPal's Transaction ID from the email and holds the payment in Undeposited Funds. When the same payment arrives from PayPal, it becomes a line on your PayPal account, not part of that day's PayPal sales, and HQ matches the two for you. PayPal's fee on it still goes into the day's fees.
• PayPal shows it first. A payment from your client's email address, for exactly what one of their invoices still owes, becomes a line on your PayPal account and waits. Open the invoice and choose Match deposit: the PayPal payment is on the list. Until you match it, the PayPal balance card counts it as a line waiting.
• A PayPal payment was counted as a PayPal sale, but it paid an invoice. Open the invoice and choose Paid through PayPal? (it shows only when HQ finds a PayPal payment that could be the one). Each payment is listed with the payer's name, the date and the amount. Pick the payment. The sheet says what will happen before anything changes: the sale comes out of that day's PayPal sales, the invoice is paid with it, and the invoice's own sales and tax stay, so they count once. If that PayPal day is in a closed or filed period, the correction is recorded on the first open day and noted for your accountant; the sheet says so. Choose Yes, this paid the invoice. The invoice's payments then show Paid through PayPal with the date, the amount and the PayPal day it came from, and Undo.
• Starting from the PayPal day. Open a PayPal day from PayPal sales by day on the PayPal account, or from Ecommerce › Payouts. Its sales are listed with each payer. This paid an invoice lists the invoices that sale could have paid; choose one and the same sheet opens. A sale already moved names its invoice instead.
• The invoice was paid by matching a bank deposit that is really your PayPal transfer. The same sheet names the deposit and asks. Choose Yes, that deposit is my PayPal transfer and HQ un-matches the deposit, records it as a transfer from PayPal, and pays the invoice from the PayPal payment. Choose No, it is not to keep the deposit as it was.
• Some PayPal payments may be invoice payments. After the first PayPal history read, and after each Sync further back, the PayPal account in Banking › Accounts can show a card with that title. Each row is a PayPal payment that looks like the payment of an invoice you have already recorded, with the payer, the amount and why HQ thinks so. Rows confirmed by both PayPal's own email and the client's email address are recorded together with Record these as invoice payments. Rows that match only by the payer's email address and the amount are recorded one at a time with Record this. A row that could be several invoices has a picker; choose the invoice first. None of these closes the whole list, and Not an invoice payment closes one row. Nothing is posted by closing a row, and it is not offered again. A row HQ cannot record shows the reason beside it.
• A PayPal payment is waiting in Banking but is not an invoice payment. Open the line on the PayPal account in Banking and choose Not an invoice payment, then Yes, not an invoice payment. It goes back into that day's PayPal sales. If that day is closed, it is recorded on the first open day and noted for your accountant. HQ refuses, and says why, when the line is already matched or categorized (undo that first), when an invoice payment already carries that PayPal payment, or when the sale paid a store order. It also refuses when a store order of the same amount, from the same week, is still waiting for its payment in Ecommerce › Externally Paid (when PayPal recorded who paid, only an order from that customer counts): if the line is that order's payment, match it there instead. If it is not, categorize the line on your PayPal account in Banking.

If a PayPal payment was counted as a sale and you cannot find it under Paid through PayPal?, the invoice's amount, date or client does not fit it. Ask your accountant how to close the invoice against that day's sales.