Hi further to a previous questions about PayPal purchases I was wondering if we should set up an account with Solar for Paypal.

We purchase via PP a LOT, often paying in advance of receiving an invoice. Funds are taken immediately from out current account in favour of PP. We also get the occasional refund to our PP account which then part funds future purchases.

In all it gets a little messy - would you advise keeping all the PP stuff as a liability like a credit card?

Hi Ben,

Yes, in your situation it makes sense to create a 'PayPal account'. This should be an asset account and you can treat it just like a bank account. The the top of this page for an example:
http://www.solaraccounts.co.uk/help/how-to-record-paypal-sales-fees.php

Regards,

Thanks Mark

How does an asset account differe from a liability.

We use paypal like a credit card for payments.

Thanks again,

Ben

Hi Ben,

An asset account means that you are effectively lending money to PayPal - you give them money and they hold on to it until you make a purchase. A liability account (eg. Mastercard) means you are borrowing money - the bank lends you money to make a purchase, then you repay the loan at a later date.

Regards,

Thanks Mark

Getting there. How do I then record a refund from a supplier in to paypal?

Ben

Hi Ben,

Record a supplier refund in the usual way:
http://www.solaraccounts.co.uk/help/how-to-record-a-supplier-refund.php
...except set the Deposit Into Account to 'PayPal Account'.

Notice that the PayPal account is acting just like any other bank account. For example, if the supplier pays the refund into your credit card account you would use set the Deposit Into Account to 'Mastercard'.

Regards,