I posted my question after asking my accountant. She knows accounting, but not how best to do this in QuickBooks Online. I also did multiple searches trying to understand the implications of the difference between classifying the bank entries as either payments or transfers, but wasn't able to find an article. So are you saying that I need to find a QBO account instead of my account to get help?

My accountant has been using QuickBooks (the desktop version) for well over a decade. But what isn't clear is the difference in how QBO will treat payments vs transfers differently between two "banks" in the same QBO account. I'm guessing is that marking the checking account PayPal transactions as Transfers to the PayPal Bank would be better than marking them as a payment to PayPal (a vendor not connected to my PayPal Bank in QBO). Is that correct?