Bookkeeping

How to categorize or record the Paypal payments on Hold?

I have taken a client who is an eCommerce seller and he uses PayPal for his payments from the store, so there are few payments in his Paypal which are on hold and those are not part of the available balance.
What can be the best way to record these payments in qbo?
Should I exclude those payments?
Or Do I need to record these payments as receivables?

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Answer

  1. 29 Answers

    If you prepare your clients books using accrual accounting, you can treat these payments (reconciling items) as deposits in transit on QBO and record the sale. These will be book (records) to PayPal Account (think of it as a checking account) differences if they happen when you are closing out the month. For reference, deposits in transit are amounts that are received and recorded by the business but are not yet recorded by the bank. They must be added to the bank statement. You will clear these once you see the cash hit your account. These amounts typically clear in a few days, but they can take up to one week, and at most 21 days.

    Here is a link to funds on hold from PayPal for additional reference: https://www.paypal.com/us/brc/article/funds-availability

    If you are preparing your clients books on cash (tax) basis, then you will only record the sale once the cash is received.

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