Moving PayPal to business account necessary????

shashaela

Hi . Looking for some advice. I'm a very small home based business. I endeavour to stay this way at the moment, I don't make much money in doing what I do, but I do it as I love it, and any money received usually goes straight back into buying materials, my husband works so I'm not financially dependent on what I do.
I've been using my Facebook selling page for the past few years , but now I've been working on setting up my own website and I need to integrate PayPal into it to receive payments. This means that I now need to change my paypal account from personal to business. My PayPal account is hooked up to my personal and only credit card.
I know it would make sense to set up a whole new bank account etc..or open up a business account, but I'm not ready to register it as a proper business .
Is it going to get messy if I transfer my only paypal account from a personal to business account? Its my credit card account that I use to buy materials and for personal use. Am I leaving my self open to any problems (fraud, scams etc...)???
I'd love to hear from anyone who was in the same position.

antix80

Long time since I used PayPal.. But unless they changed their business model they'll likely force you to move to a business account when you hit a certain volume or value of transactions that aren't marked as gifts. Fees may be higher. You should also be careful you're operating within their t&cs - for example don't ask buyers to mark payments for goods as gifts to avoid fees.

No problem using personal bank accounts but it's good practice to keep a separate bank account (or credit card) for business use and lodge all your receipts to it, and pay all your business expenses from it. It makes things a lot simpler if revenue start sniffing around and makes it easier to do your accounts and see how your business is doing.

368100

antix80 wrote: »

Long time since I used PayPal.. But unless they changed their business model they'll likely force you to move to a business account when you hit a certain volume or value of transactions that aren't marked as gifts. Fees may be higher. You should also be careful you're operating within their t&cs - for example don't ask buyers to mark payments for goods as gifts to avoid fees.

No problem using personal bank accounts but it's good practice to keep a separate bank account (or credit card) for business use and lodge all your receipts to it, and pay all your business expenses from it. It makes things a lot simpler if revenue start sniffing around and makes it easier to do your accounts and see how your business is doing.

It's not no problem using personal bank accounts....banks scan accounts all the time for activity that might point to business use, (multiple monthly credits, high volume of cheque lodgements, credits from a merchant service provider) ...and next is a letter to transfer to business account or close it down.

antix80

Op's query is in relation to PayPal personal or business account.

As for banks... Sure, if they notice the bank account is used for business use they can put pressure on you to upgrade to a business account. That's a separate issue.

shashaela

Thanks Antix80. YeS that's what I was thinking too , I may just confuse myself if business and personal are all mixed up in the one account .
Your advice makes sense as I'm afraid to open a second bank account thats purely for business as we receive family income supplement. Not that we have anything to hide but they may think we have more money than we actually do.

shashaela

Oh that's actually a fair point, I never thought about the account being flagged by the bank as a business account. But then again if all my funds stay within PayPal then the bank won't know, right? I've never withdrew any funds from PayPal to date as I use the same funds to buy materials.

antix80

If all your funds are in paypal and you don't mix them with personal funds, well then PayPal is your bank account.. So no need to worry.

The idea is, if you were ever audited by revenue or social welfare, you don't want to end up circling amounts on your personal account (used for shopping, socialising, etc) and saying"oh, that's business income", "that's a business expense", etc.

shashaela

antix80 wrote: »

The idea is, if you were ever audited by revenue or social welfare, you don't want to end up circling amounts on your personal account (used for shopping, socialising, etc) and saying"oh, that's business income", "that's a business expense", etc.

That's exactly what I was afraid of. So I guess then it means I'll have to just change PayPal account from personal to business, as its the only way PayPal can be integrated into the website.

antix80

shashaela wrote: »

That's exactly what I was afraid of. So I guess then it means I'll have to just change PayPal account from personal to business, as its the only way PayPal can be integrated into the website.

Well.. That's a different issue but rightly enough you'd need a business account to accept card payments.

Just be aware of the charges, and whether the convenience of being able to accept card payments via a website is worth the extra cost. Depending on the business and how close you are to your customers, some people will be happy enough to send cheques by post, eft, revolut, cash etc.

Still leaves you needing a separate bank account to lodge these receipts to. Once again, this is best practice and not a legal requirement. What is a legal requirement is to keep your receipts for expenses, issue invoices/receipts, keep a record of your income and expenditure, and obviously declare the profits to revenue.