Can i use paypal personal account for business

From setting up your account to navigating fees, learn how to make a PayPal business account work for your small business

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If you’re reading this, I’m going to make a wild assumption and say that you probably have a PayPal account. As of early 2021, PayPal has reported a total of 377 million active accounts worldwide. PayPal has become so embedded in people’s lives that many use their personal PayPal account to conduct business.

However, by doing this, you give up the advantages that come with a free PayPal Business account.

We wrote this piece to explain why, if you’re using PayPal to do business under your personal account, you should sign up for a PayPal Business account and do business under that account instead. And if you’re not sure how to open a PayPal business account, we’ll show you how to do so.

Table of Contents

• Why Use PayPal For Business?
• Differences Between PayPal Personal & Business Accounts
• Types Of PayPal Business Accounts
• How To Set Up Your PayPal Business Account
• Are There Any Paypal Business Account Fees?
• The Bottom Line On PayPal For Business Accounts
• Frequently Asked Questions About PayPal Business Accounts

Why Use PayPal For Business?

When you use PayPal for Business, you gain access to services, both free and paid, that can be immensely helpful to any online merchant. There are three options for taking payments, two of which carry no monthly fees. You’ll get access to a plethora of eCommerce integrations, including Shopify, Magento, and BigCommerce. Offline merchants will get access to a number of POS integrations, as well as PayPal’s own POS solution, Zettle. With PayPal’s recent acquisition of Zettle, PayPal’s former mPOS solution, PayPal Here, will not be offered to new users, but current PayPal Here users will be able to continue using the system.

Other PayPal features include the following:

• Online invoicing
• A Marketing Solutions package
• A virtual terminal
• A recurring billing service
• A long list of developer tools

Of course, other payment processors sport similar tools, so what’s the advantage to using PayPal for Business? PayPal itself would point to a recent study finding that when a customer chooses PayPal as their payment method, they go on to complete the transaction 88.7% of the time — an average conversion rate 60% higher than that of other digital wallets and 82% higher than the average conversion rate of all other payment methods.

A PayPal business account makes it simple and easy to send money back and forth. Whether you’re in the business of offering online subscription services, selling your wares at “meetspace” events like crafting shows and conventions, or even collecting donations for a nonprofit organization, PayPal for Business has plenty to offer.

What Is A PayPal Business Account?

A PayPal business account is a PayPal account that lets you accept payments and gives you access to eCommerce and POS integrations, online invoicing, a virtual terminal, recurring billing, and more. Setting up a PayPal business account is quick and easy, and there are no monthly or annual fees.

5 Benefits Of A PayPal Business Account

Why get a PayPal business account? Let’s explore the reasons.

• It’s Free: As mentioned, there are no setup costs or monthly/annual fees associated with getting a PayPal business account (unless you opt to use PayPal Payments Advanced or Pro to accept payments).
• Access To Business Features: Use a PayPal business account, and you’ll gain access to features like a virtual terminal, recurring billing, a hosted checkout page, and invoicing. You’ll also be able to use PayPal Here/Zettle for mobile in-person sales.
• Sell Online Or In Person: Use PayPal for business and take payments online and offline. Accept multiple payment methods — credit and debit cards, PayPal and PayPal Credit, and mobile payment apps.
• Let Your Employees Use Your Account: Sign up for a business account and let up to 200 of your employees use your PayPal account. You can give each employee a unique login ID and level of authority.
• Integrations Galore: A PayPal business account will let you integrate with a wide range of shopping cart software. Brick-and-mortar merchants will find numerous POS integrations.

Differences Between PayPal Personal & Business Accounts

When comparing a PayPal business account vs personal accounts, know that both account types allow you to send and request money, make purchases, and even receive payments for sales you make — so long as you mark these sales as being for “Goods and services,” thus incurring transaction fees (and PayPal will check to make sure you’re not dodging transaction fees by mislabeling transactions).

But without a business account, you won’t have access to a host of commerce-facilitating features such as creating shipping methods, inventory tracking, allowing employees partial access to your account, and signing up for services like PayPal Zettle.

PayPal Business Account Requirements

The requirements to set up a PayPal business account are pretty minimal. You’ll need the following:

• An email address
• A business phone number
• Your legal business name — your own name is fine if your business is a sole proprietorship
• The last four digits of your SSN
• Your Employer Identification Number (EIN) — if you choose individual/sole proprietorship as your business type, you don’t need to provide an EIN
• Your date of birth
• Your home address
• Your bank name, account number, and routing number

This will be sufficient to start selling, though after you start actually accepting payments and making money, PayPal may request further documentation, such as bank statements. Third-party processors like PayPal and Square are notorious for their stringent scrutiny of merchants which can result in holds or terminations at the slightest hint of trouble, so be ready to provide whatever information PayPal might ask for.

Read our piece on avoiding account holds, freezes, and terminations to learn more.

Types Of PayPal Business Accounts

When you create a PayPal business account, you have three options for how you want to accept payments.

PayPal Checkout

If you want to add PayPal as a supplementary payment option to your existing website or if you already integrate with an eCommerce provider, PayPal Checkout is a solid choice. You’ll get PCI compliance (PayPal redirects customers to its secure site to complete the transaction), contextual checkout buttons, and localized payment methods for European customers.

PayPal Checkout is free to sign up for, and there are no monthly fees.

PayPal Payments Advanced

PayPal Payments Advanced is a more fully-featured payment solution than PayPal Checkout. For $5/month, Payments Advanced offers the same eCommerce integrations as PayPal Checkout while also letting your customers check out directly on your website. This is done through the use of hosted checkout templates, and these templates allow you to avoid the PCI burden by having the payment information pass through PayPal’s servers instead of your own. You’ll also get a healthy dollop of additional features:

• Accept credit and debit cards (your buyers don’t need a PayPal account)
• Accept PayPal payments
• Send invoices online for fast payment
• Accept payments in 25 currencies from 202 countries
• Simplified PCI compliance
• No long-term contracts, setup, withdrawal, or cancellation fees
• Nonprofit discount available for PayPal transactions
• Toll-free phone support
• Offer special financing on purchases of $99 and up

PayPal Payments Pro

PayPal Payments Pro costs $30/month to use. It’s for merchants who want complete control over the checkout process. It’s also the only PayPal business plan that gives you a virtual terminal (which you can implement without Payments Pro, but it’ll still be $30/month).

Here’s what you’ll get with PayPal Payments Pro:

• Hosted Checkout page: With Payments Pro, you can keep your customers on your website throughout the entire checkout process and customize the design of your checkout page (this is what distinguishes these pages from what you get with Payments Advanced). If you want to provide your customers with the most seamless checkout experience possible, Payments Pro is the way to go. However, this means that you’ll have to take care of PCI compliance yourself, though you can use the optional Transparent Redirect feature to help achieve PCI compliance.
• Virtual Terminal: PayPal’s virtual terminal allows you to accept payments via phone, fax, or mail. Once you have your customer’s card number, you can key in those numbers from a browser window. It’s definitely a handy feature, and it always helps to be able to take payments by as many means as possible. However, competitors like Square and Shopify offer access to a virtual terminal without having to pay any monthly fee whatsoever.
• Recurring Billing: If you’re in the business of selling subscriptions, Payments Advanced and Pro both offer recurring billing tools to power your sales. Unfortunately, recurring billing will cost you an additional $10/month. Oddly enough, PayPal Checkout offers recurring billing tools for no cost whatsoever.

How To Set Up Your PayPal Business Account

Looking for some setup guidance? Here’s how to create a PayPal business account.

Initial Signup

• Click on the “Sign Up” box in the top right corner of PayPal’s page. If you’re already signed in to your personal PayPal account, PayPal will prompt you to either sign out of your current account and set up a separate business account under a different email address OR delete your current PayPal account and set up a business account using the email address previously associated with your old PayPal account. I assume most of you will go with the former option.
• Next, you’ll be prompted to enter some information about your business. Enter the legal name of your business contact, the name and phone number of your business, and your business address.
• You’ll then be asked to describe your business type. The options you’ll have to choose from are as follows: Individual/Sole Proprietorship, Partnership, Corporation, Nonprofit organization, or Government entity.
• Next, you’ll be asked to further describe your business. You’ll be asked to choose the product or keyword that best describes your business, your estimated monthly sales, and your website (this one is optional), and you may also be offered the chance to receive a PayPal Business Debit Mastercard after you receive at least $250 in payments. If your business type is anything other than Individual/Sole Proprietorship, you’ll also be prompted to enter your Employer Identification Number (EIN).
• You’ll then be asked to supply some more personal information: the last four digits of your SSN, your date of birth, and your home address.

If you’ve completed these steps, you now have a PayPal business account.

Feature Setup

• At this point, you’ll be asked whether you want to request or send money and whether you want to send out an invoice (which will start the process of setting you up with PayPal Invoicing, a free service that allows you to create and send customized invoices)
• After that, you’ll be prompted to select other PayPal services you may want to use. You can choose which online payment package you’d like to set up for online sales. If you’re in the business of offline sales, you’ll be offered the chance to set up a PayPal Zettle account. And if you want to sell goods through online marketplaces, you’ll be offered the chance to connect to such a marketplace.
• You can always return to the set of signup options listed above by hovering over the “More” option on your PayPal toolbar at the top of the page and then selecting “Business setup.”
• Click on “Set Up Online Payments” and you’ll be presented with the choice of processing all your payments through PayPal or adding PayPal as a supplementary way to get paid.
• Depending on which option you select, you’ll then choose how you want to sell online. Choose “Process all payments through PayPal” and you’ll be offered two further options. With Option A, you work with an eCommerce solution that’s already integrated into PayPal. Option B lets you add HTML buttons to your website yourself. Below both options, you’ll see a “Compare options” link. Click it to see the comparison shown in the first “Compare options” screenshot below.
• If you chose “Add PayPal Checkout as another way to get paid”, the two subsequent options will be different. Option A will be “I want a pre-built payment solution” while Option B will be “Use our APIs to add PayPal Checkout to your website.” Clicking “Compare options” displays the comparison shown in the second “Compare options” screenshot below.
• After you establish your payment setup, you’ll find an “Account setup” tab next to the “Payment setup” tab. Click on that to finish setting up your account.

From there, follow the links to confirm your email, link your debit card for Instant Transfers to your bank if you wish, link your bank account, make your business name clear for customers, and, should you so desire, get the PayPal Business Debit Mastercard.

Depending on the payment options you selected earlier, you’re going to need to choose between the three available payment packages for accepting payments online, which we discussed in the Types Of PayPal Business Accounts section earlier.

Bear in mind that to implement many of the features on offer with a PayPal business account, you’ll need a developer to help you do the heavy lifting.

PayPal Zettle

Another feature you can sign up for on PayPal’s website is PayPal Zettle, a suite of POS services that allows you to accept offline payments via a mobile POS app and a PayPal card reader of your choosing. You’ll find the PayPal Zettle page under the Tools drop-down menu in the toolbar on your PayPal dashboard.

After signing up for PayPal Zettle, you can choose between four different ready-made POS store kits along with a selection of supporting hardware. And for mPOS functionality, you can order the Zettle mobile card reader ($29 for the first reader, $79 for each subsequent one) and pair it with the free Zettle POS app.

Note that while new in-person sellers will be directed to PayPal Zettle, current sellers using PayPal Here — PayPal’s legacy mPOS solution — can continue to do so.

How To Upgrade Or Downgrade A PayPal Business Account

Want to upgrade your existing PayPal personal account to a business account? You can do this, but you’ll have to use a different email address for each account. To upgrade your current account to a business account, here’s what to do:

• On the PayPal home page, click “Sign Up” in the top right corner and then select the Business Account option. You’ll then be prompted to enter your existing personal account info. After doing this, you’re asked whether you want to switch your personal account to a business account. Choose “Use your current email to switch to a business account” and click Next.
• You’ll then be prompted to enter your business information. From there, follow the instructions in the “How To Set Up Your PayPal Business Account” section.

To downgrade your business account to a personal account, you’ll have to contact PayPal directly. It’s not something you can do yourself.

Are There Any Paypal Business Account Fees?

You can set up a PayPal business account without paying anything. It’s completely free to have a PayPal business account (unless you sign up for the $5/month PayPal Payments Advanced plan or the $30/month Payments Pro plan). Of course, free payment processing doesn’t exist, and PayPal is no exception. Payment processing fees will apply when you make a sale through PayPal. Unfortunately, the new pricing scheme PayPal implemented on August 2nd, 2021 significantly increases what small-ticket merchants and those who rely on small donations/tips will pay in fees.

Here are the per-transaction fees US-based merchants will pay:

• 3.49% + $0.49 per PayPal Digital Payments (PayPal Checkout, Pay with Venmo, PayPal Credit, Pay in 4, PayPal Pay with Rewards, and Checkout with Crypto) transaction
• 2.99% + $0.49 per online credit/debit transaction with standard card payments
• 2.59% + $0.49 per online credit/debit transaction with advanced card payments (2.99% + $0.49 per transaction if you have Chargeback Protection)
• 2.89% + $0.49 per transaction if you’re on the Payments Advanced (not the same thing as advanced card payments) or Payments Pro plan
• 1.9% + $0.10 for PayPal/Venmo QR code transactions above $10
• 2.4% + $0.05 for PayPal/Venmo QR code transactions $10 and under
• 1.99% + $0.49 per online transaction for nonprofits (check out PayPal For Nonprofits to learn more)
• 3.09% + $0.49 per Virtual Terminal transaction
• 4.99% + $0.09 per transaction under the MicroPayments plan

Keep in mind that the Virtual Terminal costs $30/month, whether you get it as a standalone feature or you get it through Payments Pro. Overall, PayPal’s fees are comparable to those of other third-party processors, though as I mentioned, both Square and Shopify offer a virtual terminal without a monthly fee.

One recent policy change that has sellers chagrined is that when a transaction is refunded, PayPal will not return the processing fee to you. That means that if you refund a $100 online purchase to a customer, you’ll lose $3.98 (in the case of a PayPal Checkout transaction). If you’re issuing lots of refunds, these costs add up quickly. For more on refund policies in the payment processing industry, check out our article on credit card refund fees.

This article doesn’t cover every single PayPal fee. For more on the costs of such things as card readers, conversion fees, American Express processing fees, and chargeback fees, read our article on PayPal pricing. And if you’re a seller outside the US, have a look at PayPal’s complete list of merchant fees, as the fixed portion of your transaction fees (with a 2.59% + $0.49 transaction fee, the 49 cents is the fixed part) will vary based on the currency you use.

The Bottom Line On PayPal For Business Accounts

If you’re going to use your PayPal account for business purposes, you really should get a PayPal business account. But how does PayPal stack up against competing payment processing solutions?

Overall, despite its shortcomings, PayPal is a solid option for merchants. With simple, transparent pricing and extensive eCommerce integrations, PayPal works particularly well as a starter option for new businesses and will scale with your business as it grows. What’s more, online sellers can always choose to use PayPal as a supplemental means of accepting payments. This isn’t the case with most of PayPal’s competitors.

PayPal has plenty to offer offline sellers as well — with PayPal’s in-house Zettle POS solution along with its robust POS and accounting integrations, you’ll be able to take payments anywhere with ease. Read our full PayPal review for an even deeper look into what the payments giant has to offer your business.

That being said, PayPal obviously isn’t an ideal solution for everybody. If you’re not happy with PayPal’s business practices (the recent pricing changes come to mind) or if you’re in the process of comparison shopping, see our article on PayPal alternatives. You may want to have a look at our merchant account comparison chart as well. We also have an article comparing PayPal with traditional full-service merchant accounts.

As always, if you have experience using PayPal business account to accept payments, we’d love to hear about it! Please drop us a comment!

Frequently Asked Questions About PayPal Business Accounts

Do you have to be a U.S. citizen to open a PayPal business account?

You do not have to be a U.S. citizen to open a PayPal business account. PayPal accounts are available in more than 200 countries and regions. PayPal also supports 25 currencies.

Is there a minimum income required to open a PayPal business account?

There is no minimum income required to open a PayPal business account.

How does a PayPal business account work?

With a PayPal business account, you get three different account options for taking payments, one of which has no monthly fees. You also get access to eCommerce and in-person POS software integrations, numerous business features, and the ability to let your employees use your PayPal account.

Is a business account on PayPal free?

You can create a PayPal business account free of charge, and if you use PayPal Checkout to take payments, you won’t pay any monthly fees. When accepting payments, however, you will pay transaction fees, just as with any payment processor.

How much does it cost to use PayPal for my business?

If you use PayPal Checkout to accept payments, you won’t pay any monthly fees. If you use PayPal Payments Advanced, you’ll pay $5/month, and if you use Payments Pro, you’ll pay $30 per month.

As for transaction fees, these fees vary depending on transaction type, but you’ll pay 3.49% + $0.49 per PayPal Checkout transaction, 2.99% + $0.49 per standard online credit/debit transaction, 2.59% + $0.49 per advanced credit/debit transaction, 2.89% + $0.49 per credit/debit transaction if you have Payments Advanced or Payments Pro, and 2.29% + $0.09 per swiped, dipped, or tapped offline transaction with PayPal Zettle.

See our article on PayPal pricing for more.

Do you need a business for a PayPal business account?

You don’t need a business to use a PayPal business account. You can simply sell under your own name if you don’t have a business or if your business is a sole proprietorship.

Can you do business with a personal PayPal account?

What is the difference between PayPal Personal account and business account?