Business Account for a Sole Proprietorship?

[5thy89VNB]

I run (alone) a small personal service where all of my clients pay in cash.  The accounting is so simple that I just keep my taxes in my personal account and the few receipts for deductables off to the side.  I also just use my personal email address for interactions which are never much.  I'm considering accepting online payments through my website instead of just using my website for scheduling.  I currently have a PayPal personal account.

Do I need a second PayPal Business account or do I need to upgrade my personal one?  If so, would I then need separate bank accounts and a separate email account?  I want to keep things as simple as possible.  The business is very simple.  Very few deductions, taxes to the side.  No employees.

[sharpiemarker]

If you need advanced PayPal checkout integration on your website, go for the business account.  If you're gonna use web payments standard to accept payments, i.e. PayPal generated buttons, then stick with the personal account.

[5thy89VNB]

My scheduling service which is integrated into my website (so clients can schedule time with me through my website) has started to allow me to accept payments online at the same time the clients schedule with me.  The scheduling service provides them with the option to pay, so I do not need to add any buttons or anything.  However, the scheduling service seems to want me to use a PayPal Business account to process those payments but I'm not clear why.

[sharpiemarker]

In that case, go with the business account.  I was under the impression the site/scheduling was all done by you, then you have control, but if you are working with a third party and they prefer business account, then yeah upgrade to business. Be forewarned though that PayPal will do ID/business check when you upgrade and possibly subject your account to the 21 day hold on new payments received for a period of time.  It's as if they treat you as a new user.  So ask the schedule service if there is any particular reason the PayPal account has to be a business one since you already have a personal one that is working fine so far.

There was forum post recently where the person upgraded their account to business on the suggestion by PayPal and it totally hamstrung their payments, limit their account for ID/questioning about their business and the person couldn't downgrade their account fast enough. lol. If you can deal with the transition, upgrade away.   Or just open a business account so that you can still receive payments the old way until you get the business account set up and ready to go.

On the other hand, I suspect that there is an overall number of transaction limitations to personal account before you would need to upgrade or make a business account anyway.

So a few things to consider: Ask scheduler why they prefer PP business account; be prepared for uparade transitioning or open a business account; do you foresee a great enough increase in transactions to merit the change or just stick to how you've been receiving payments if possible.

[5thy89VNB]

"Be forewarned though that PayPal will do ID/business check when you upgrade"

What do you mean by ID/business check?  I do business under my own name.  It's not an LLC or anything.  No EIN.

"ask the schedule service if there is any particular reason the PayPal account has to be a business one since you already have a personal one that is working fine so far"

I will and then include their response here.  Thus far, I've only accepted cash payments, so my personal PayPal account has never been used for anything related to my business.

If I upgrade, will I still be able to use the now business paypal account for personal use?  If I open a second paypal account for business, do I need to use a different email address and bank account?

"On the other hand, I suspect that there is an overall number of transaction limitations to personal account before you would need to upgrade or make a business account anyway."

I make about 500 cash transactions per year at this point each less than 25 dollars.

[sharpiemarker]

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@5thy89VNB wrote:

"Be forewarned though that PayPal will do ID/business check when you upgrade"

What do you mean by ID/business check?  I do business under my own name.  It's not an LLC or anything.  No EIN.

"ask the schedule service if there is any particular reason the PayPal account has to be a business one since you already have a personal one that is working fine so far"

I will and then include their response here.  Thus far, I've only accepted cash payments, so my personal PayPal account has never been used for anything related to my business.

If I upgrade, will I still be able to use the now business paypal account for personal use?  If I open a second paypal account for business, do I need to use a different email address and bank account?

"On the other hand, I suspect that there is an overall number of transaction limitations to personal account before you would need to upgrade or make a business account anyway."

I make about 500 cash transactions per year at this point each less than 25 dollars.

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Since you are planning to upgrade to business, they'll inquire about some background to see if what you do is appropriate for PayPal. You can use your SSN.

Yes, you can still use business account for personal payments.

Each PP account (biz or pers) must have unique email address, however a bank account can't be linked to more than two PP accounts so you may be able to use the same bank account for a second PP account.  Choose sole proprietor as business type so you can use your own name in the second account and the name would match the name on your bank account.

The amount of transacting you do seem to be fine for personal account.

[5thy89VNB]

Perfect.  Thank you.

Here's the reply from my third party scheduling service embedded into my website about requiring a business account:

"Your personal PayPal account will need to be upgraded to a business account if you want to keep the same account. It is a free upgrade. This will allow you, among other things, to accept payments from people who don't have PayPal accounts, using their credit cards instead."

[sharpiemarker]

Check if you have this setting in your account currently:

Log in > Summary > Seller Preferences > Website Preferences > Update > PayPal Account Optional > Set to: On

[5thy89VNB]

Yes, I have that setting in my account currently.

[sharpiemarker]

Tell them you have that setting to accept payments without having customers registering for a PayPal account.