PayPal Business Account vs PayPal Personal Account
PayPal is the largest payment platform that allows you to send and receive money without having to share your bank details. In fact, as of 2021, this e-commerce payment platform had 426 million users with a significant 87.5% of online buyers choosing this platform for at least one transaction.
It’s only obvious for online businesses to start using the platform to accept order payments.
But when you’re getting started, there’s always a confusion between the two types of PayPal accounts and which one you should be using.
Individuals are best suited to create personal PayPal accounts whereas e-commerce businesses and merchants should have business PayPal accounts in order to have access to enhanced features which are particularly suited to you.
Alternatively, if you were a small business earlier, a personal account would have worked just fine. But, as you grow, you may want to consider a business account to manage the payments better.
In this article, we want to help you understand the difference between a personal PayPal account and a business PayPal account and which account is more suited to your needs.
What is a PayPal personal account?
A PayPal personal account is one where the account holder primarily uses it for either online shopping or to send money to friends and family. However, a personal PayPal account can also be used by e-commerce business owners who sell their products online or businesses that provide their services to individuals.
For example, if you are an independent contractor looking to sell their services to clients like writing services or commissioning artworks, you can opt for a personal PayPal account. Additionally, if you are hoping to receive one-off payments, this type of account might be suitable for you.
To set up a PayPal personal account, here is what you need:
- Your legal name
- Residential address
- Contact details such as your mobile number and email id
- Card information
- Bank account details
It is extremely simple to set up this account and can easily be done within minutes.
But when you use a personal PayPal account, the paying party can view all your personal details including your full name and address.
Furthermore, by owning a personal account, you will not have access to multiple forms of payment that business accounts enjoy.
If your business is just starting out, you may use this type of account initially. However, if you start getting payments more routinely, you might want to switch to a business account to leverage the additional features that come with it.
What is a PayPal business account?
A PayPal business account is one that includes the features of a personal account coupled with additional features that can help businesses with an easy and affordable payment solution.
For example, this type of PayPal account allows users to not only send and receive invoices but also set up subscription services. This allows your customers to sign up for your product while setting up a recurring payment in a single transaction.
PayPal also makes it extremely easy for small to medium-sized businesses to create their invoices using the PayPal interface. This is especially helpful for businesses that are starting out since it reduces the burden of any additional work and also creates a painless payment process.
A PayPal business account is beneficial to slightly bigger companies too. This is because it allows logins for up to 200 people. Now, you can have dedicated teams that focus on shipping and fees, inventory management and even to track the profits.
Some of the additional services that business account holders can opt for are payment tracking, label printing and even live customer support to address customer queries in real-time.
Since business accounts can be registered under your company’s name, your personal details are not shared with customers. This provides an additional layer of privacy when you engage in transactions with your customers.
Furthermore, you may even receive periodic offers from PayPal for credit and loans. This is a profitable feature for business owners since you can use the credit amount to invest and grow your business during times when there is a lull.
To set up a PayPal business account, here are the things you may need:
- Account holder’s name
- Account holder’s address
- Account holder’s email id
- Business name and registered address
- Contact information for business customer service
- Registered bank account details
This type of account takes longer to set up than a personal account but it is not really a hassle when you take into consideration the host of benefits you receive. Also, it is important to note that once you have a PayPal business account, you can’t downgrade your account to a personal account without contacting PayPal’s customer care.
Pros and cons of PayPal business and personal accounts
Before you decide on which account you want to get, be sure to weigh the pros and cons. To help you get started, here are a few:
PayPal personal account: Pros
- You are not charged when you make transfers from a linked bank account
- You do not have to pay any set up costs, monthly fees or even account closing costs
- It is very easy to set up
- It is one of the quickest payment solutions for online purchases or to send money to close ones
- It is a preferred option for small business owners who have infrequent sales on their websites or other platforms like Etsy and eBay
- It already offers a no hassle transfer solution that is free. However, it also offers instant fund transfer for which you may have to pay a 1% fee (of which the upper limit is $10).
PayPal personal account: Cons
- You are charged for accepting debit and credit card payments
- You get only restricted access to PayPal’s merchant benefits
- It might become difficult to calculate individual and business taxes
PayPal business account: Pros
- It is not as easy to set up as a personal PayPal account but is still fairly easy to do
- You do not incur any costs for setting up your account, monthly maintenance or even account closure fees.
- Due to your business name being registered as the account holder, you get more privacy while using this type of account
- You can even receive payments from credit card holders who do not have a PayPal account
- You can have up to 200 employees use the account while also deciding which feature is accessible to which employee
- Tracking payments and profits is effortless
- Option to have live customer support
- Access to PayPal’s internal tools and products
- Payments can directly be processed within the app
PayPal business Account: Cons
- You are charged fees for every purchase that is made
- You cannot downgrade your account without the help of PayPal’s customer service executive