If you don’t want to pay for a merchant account, but you run a business, your next best bet is to open a PayPal business account. PayPal business accounts not only help you collect payments, but they also offer many more business tools to help your business grow.
What is a PayPal Business Account?
A PayPal business account is like your personal PayPal account because you can accept payments. But you also get access to a variety of eCommerce and in-store features that help with invoicing, recurring billing, customer loyalty, and collecting payments via your website versus in PayPal.
A PayPal business account doesn’t have fees or dues, unlike merchant accounts, so it can be a more affordable way to have a business account.
How is it Different from a PayPal Personal Account?
It’s common to think PayPal personal and business accounts are the same, and while they have some similarities, business accounts have more features.
With both the business and personal account, you can accept money for sales, as well as pay bills or for your own services too. If you use a personal account to accept money, you must mark it for ‘goods and services’ so you pay the appropriate transaction fees.
What the business account offers that a personal PayPal account doesn’t are the eCommerce features offered that help you track inventory, create labels, collect payments directly on your website, or even set up subscriptions for your customers.
What’s Needed to Open a PayPal Business Account?
It’s easy to sign up for a PayPal business account, but make sure you have the documentation they request ready right away. Third-party processors like PayPal often scrutinize business accounts after they are opened to ensure everything meets their guidelines.
To sign up initially, you’ll need a business name, address, and phone number. You’ll also provide your email address, social security number, and EIN if you have one. Additionally, PayPal will need your bank account information to transfer the funds and your date of birth.
PayPal may ask for bank statements to ensure your business is legit. The faster you provide them or any other information they provide, the lower your risk of having any funds withheld.
How to Set up your PayPal Business Account
Setting up a PayPal business account is simple, especially if you already have a personal account. Use these steps to get started:
- Click sign up and decide if you’ll use a different email address than your personal PayPal account or if you’ll cancel your personal account and use the same email to open your business account.
- Provide your business information including the name, address, and phone number of your business.
- Provide your business details including the type of ownership (sole proprietor, partnership, or corporation), and other important information about your business including monthly sales, business keywords, and your EIN.
- Provide your date of birth, the last four digits of your social security number, and your address.
Choosing your Features
Your next step after signing up for a PayPal business account is to choose what features you need/want. You can always add features later too. Here are the most common features.
- Invoicing – This free feature allows you to send customers invoices and get paid faster. You can even customize the invoices to meet your company’s branding.
- Online payments – You can collect online payments via PayPal by adding a PayPal checkout button, integrating with your website making PayPal the only way you collect payments, or making PayPal a supplementary way to collect payments.
- Marketplace payments – If you’ll sell goods in marketplaces, you can link the marketplaces to your PayPal account to collect payments.
- In-store payments – You can choose PayPal Zettle a POS to collect payments in-store.
The Benefits of a PayPal Business Account
A PayPal business account has many benefits especially when comparing it to a standard merchant account including:
- Everyone is familiar with PayPal, so you’ll likely retain more customers because you use a familiar payment processor.
- You don’t have to apply and wait for approval on a merchant account. Anyone can sign up for a PayPal business account.
- Your clients can pay you even without a PayPal account, but they get the reassurance of using a familiar tool.
- PayPal works with many shopping carts making it easy to add to your already established eCommerce website.
- You can create customized invoices and send them directly from your account.
Most importantly, PayPal fees are competitive with most merchant accounts. Credit and debit card purchases are 2.9%. + $0.30 per transaction.
The Disadvantages of a PayPal Business Account
Like any payment processor, there are downsides to using PayPal business accounts including:
- Chargebacks incur a large penalty and could cause you to lose your account if they happen too often.
- PayPal can freeze your funds or put a hold on them indefinitely if they suspect anything suspicious is going on with your business.
- Customer service isn’t easy to get a hold of, which can be frightening if you have a serious issue or need answers right away.
Final Thoughts
If you have a business, consider a PayPal business account rather than a personal account. If you’re choosing between a merchant account and PayPal, you’ll find it a lot easier to get a PayPal account.
Just make sure your business is legit and there isn’t any reason for PayPal to freeze your funds. But don’t worry, this isn’t an issue only with PayPal – it occurs with other third-party processors like Square too.
The bottom line is PayPal is affordable, recognizable, and easy to work with to help you increase your business and your bottom line.