I use a Paypal business accountfor all my online invoicing and payments. If you’re looking for a secure, reliable and user-friendly way to take payments online, Paypal is an excellent option. This article provides a tutorial on setting up Paypal for business, covering:
- step-by-step instructions for setting up a Paypal business account
- advice on what type of Paypal account to choose
- the difference between shopping cart and merchant account, and why you need to know this
- information on what it costs to use Paypal for business
How to set up a Paypal account for your business:
1. Click here to open Paypal in a new window.
2. Select the tab that says “Business” and then the button that says “Get Started”
3. Select your country and language.
4. Choose type of account. Personal accounts don’t let you accept credit card payments from customers, so you should choose Premier or Business.
Note: The only difference between Premier and Business is that the Business Paypal account allows you to set up the account under your company name. Both types of accounts will allow you to accept credit card payments from your customers. In order to get a Paypal Business account you need to have a company bank account and wait for your Paypal account to be approved. If you don’t yet have a company bank account, you can set your account to “Premier” to get started and then upgrade it to “Business” later.
5. This step will be slightly different depending on whether you selected “Business Account” or “Premier Account” in step 5.
a) if you selected “Business Account” in step 4, do this:
- click “select Payment solution” to view the drop-down menu
- from the drop-down menu, choose “Website Payments Standard”
- click “Account SignUp”
- click “continue”
b) if you selected “Premier Account” in step 4, do this:
- fill in all fields with your name and other info
- click “agree”
- click “create account”
6. Congratulations! You’ve completed the main part of the set up procedure. You will now have to wait a couple of days to have your account verified, and then you will be good to go!
After your account is verified you can pay someone by Paypal, or request payment (send an invoice) just by going to www.paypal.com and logging in to your account. You login to your account using the email address and password that you signed up with. It’s very obvious how to do it. If you have questions, Paypal’s customer service phone number is 1-402-935-2017for existing customers, and 1-402-935-2050for new customers (U.S. telephone numbers).
What type of account should you choose: Paypal Standard or Paypal Pro?
In step 4 above you made a choice between “Business Account” or “Premier Account”. If you choose ”Business Account” you then had to decide (in step 5) which type of Business Account you wanted: Paypal Standard or Paypal Pro. Here’s the difference:
- Paypal Standard is the basic type of PayPal. Your customer clicks the buy button and then is taken to Paypal’s website to complete the payment. They have the choice of either logging in to their PayPal account or using a credit/debit card without having an account. You can’t take phone and fax orders. There is no monthly fee (you only pay your Paypal transaction fees).
- Paypal Pro is a more advanced type of Paypal. The main advantage is that the payment is integrated into your own shopping cart on your website. This way customers stay on your website for the entire shopping process, instead of being taken to Paypal’s website to complete the payment. Another advantage is that you can take phone and fax orders. There is a $35 monthly fee in addition to your Paypal transaction fees.
“Standard” is the simplest and least expensive. It’s also your only option if you don’t have a separate shopping cart. Separate shopping cart – what does that mean? I know, it can be confusing. Let me explain a very important ecommerce concept that took me years to understand.
The difference between shopping cart and merchant account
In order to take payments online there are two separate processes required: 1) a way to process the order (shopping cart), and 2) a way to process the money (merchant account). It’s hard for beginners to understand the distinction between the order and the money, because it seems like the same thing when we are doing it. But it’s important to realize that these are two separate processes that each require their own software or service to make happen. To understand which type of Paypal Business Account is best for your circumstances, you need to decide how you want customers to check out and complete payments. There are basically three ways this can happen:
1. Paypal only (Standard)
If you want to keep it really simple, just use Paypal (the order and the moneyare both processed by Paypal). How this works is that Paypal gives you little “buy now” buttons that you can put right on your website. With this method, customers simply:
- click your “buy” button (the order)
- get taken to Paypal to complete the payment using a credit card, bank account or Paypal account (the money)
2. Paypal combined with a third party shopping cart system (Standard or Pro)
If you use a third party shopping cart such as 1ShoppingCart, CoreCommerce or e-Junkie then you can use either Website Payments Standard or Website Payments Pro. This is the process that customers will go through:
- click your “buy” button
- get taken to your shopping cart (the order)
- fill out the info that your shopping cart requires
- get taken to Paypal to complete the payment using a credit card, bank account or Paypal account (the money)
3. Paypal combined with a self-hosted shopping cart (Pro)
If you have your own shopping cart hosted on your server, then you want Website Payments Pro. With the Pro version customers can shop (the order) and pay (the money) directly on your website, without going over to Paypal (even though Paypal is running in the background processing the money).
Why I Recommend Paypal Standard for Most Small Businesses
I have “Standard” and it meets all my needs for accepting online payments quickly and easily. It has worked reliably for me for over eight years now, and my bookkeeper really likes how it keeps all the “money in and money out” straight. I don’t need to pay an extra $35 a month for what Paypal Pro offers.
What Does it Cost for a Business to Use Paypal?
Recently I was asked by a reader, “Does Paypal get profit from my income?” I took that to mean “what does it cost to use a Paypal business account?”
Paypal does takes a small transaction fee each time you get paid through them. The exact amount varies depending on a couple of different factors, but generally it’s about 3%. So if your client paid you $100 you would get about $97. The transaction fee is the only cost, as there are no setup or monthly fees to have a basic Paypal Business account.
Yes, it’s a drag to have to pay a transaction fee, but there are fees with any bank you use and I find it’s worth it for the convenience. For my business, I like being able to send a Paypal invoice to someone and all they have to do is click a link to pay. They can pay either with the funds in their own Paypal account or using any major credit card.
I find that I get paid faster using Paypal than if I have to wait for a client to send a cheque in the mail. Not only is mail slower, but clients have to find the time to write out the cheque, address the envelope, find a stamp, and mail the envelope. Paypal is so much faster and easier for clients, and it also gives them the option of using a credit card.
There are ways to reduce the cost of having a Paypal account, and I detail these in my free report. For instance, not many people know that once you have more than $3000 a month coming in to your Paypal account you can apply to have a lower fee.
Ready to take the plunge? Go here if you want to set up a Paypal business account. Don’t worry, it’s easy! You can do it in just a few minutes, and start accepting customer payments quickly and easily.
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{ 26 comments… read them below or add one }
Barbra,
I believe by doing that, your bank account would see the name of the Business that you enter instead of your real name. I don’t know about PayPal but I think this might cause problems with the bank.
Regards.
I think Signing Up with Business name is Premier Account will still require Bank Account with Business Name to process funds in Bank via wire transfer.
I am now three days into setting up a business account. This post severely over simplifies the process. Verification alone takes multiple days. The idea of being able to accept credit cards in minutes is a complete mis representation of what this service can do.
We set up a micro business account with pay pal this week. We will be having a song on a website that can be downloaded for 99 cents. Can you tell us what we do about taxes? Do we have to charge sales tax? If so, how do you know what to charge when we plan to market this across the nation? Which state is it paid to? Also, what about Federal Tax? Do you turn in the Form to the internal revenue showing any earnings or do we do that? Do you know the name of the form? Also, is it done quarterly or annually? Do you know who to contact to answer these questions if you do not know the answer?
Thanks for your help, Donna Hoover
Hi Donna, I’m not a tax expert but there is some good information at this link. Congratulations on your new online business!
Fast Eddie: Thanks for pointing out about the verification process. I’ve now added that information in step 7.
Naif and Max: Thanks for your input. I’ve changed the information about the Premier account.
can i send and receive money on a pay pal account without using a credit card? If so, how? I do not own a credit card at present.
How do you go about getting an EIN number? I believe that is required for a business account. $7 offers requires a business paypal account so I want to get one, but the EIN has slowed me down.
I am interested in pay pal for business. I will be selling apparel so I am in need of a drop down menu for sizes. Will I be able to achieve this with the Premier account or will I be needing the Business account?
Steve, you can have a drop-down list of sizes or colors or etc. with a Premier account.
Mary, yes you can send and receive money using a Paypal account without using a credit card. It’s very simple. To receive money, just ask people to go to Paypal and click “Send money” and then type in the $ amount along with the email address associated with your Paypal account (i.e. the email address that you used to sign up to Paypal). If they have a Paypal account they can have the money taken out of Paypal. If they don’t have a Paypal account they can use an echeque (the money comes out of their bank account) or a credit card. You can do the same process when you want to send money to someone.
I need PayPal business account, please how can i get it verified by paypal
Hello,
I’m currently setting up a small badge making site (1 inch button badges) and I have set up a business account on paypal. I was doing my first full payment and paypal charged me in 0.55 Euro on a 6 Euro transaction……this is totally crazy. I tried to find out why I was charged such a crazy fee but it’s almost impossible to find this info.
Shouldn’t the fees be around 3% and not in excess of 8%? Anyone have any advice on this as I can’t sell my little badges when they will be taking such high fees from every transaction.
@ Mark
Hi ,
read this pdf by paypal : https://merchant.paypal.com/cms_content/US/en_US/files/merchant/pp_mpr_datasheet_wps_r4.pdf
Acording to paypal : ” The pricing (3% fee) applies to domestic payments in US dollars. There’s an additional 2.5% charge for any currency conversion and a 1% charge to receive payments from another country ” .
Yes it is crazy
This my frist time looking in to useing paypal for online payment service, and would like to learn more about it. if you could please, send me more info about what the service can offer in security, reliabuilty, price and rules. please send it to my e-mail thank you.
Nice and clear, thank you. Isn’t it funny that Paypal does a lesser job of explaining itself than some outsiders do?
Really don’t know why paypal hang up peoples money and refuse to release it is that not wickedness, am never going to use it never
My fiancee was looking for a business investment and found one to buy while on vacation in the Dominican Republic for the amount of $15,000. My question to you is what now? How does he now turn this investment into a online business? What does he have to do to make sure its legal in and under the USA laws? Last but not least what does he have to do to make sure everyone who is supposed to get paid gets paid (IRS)? Im sorry if this sounds like a lot but he’s so lost as to whats next. I have some knowledge but not eough to trust my judgement without some help. I came across your website almost by accident and read some of your advice to others and thought why not? I will appreciate any assistance or even a point in the right direction. I am so thanking you in advance…
Hi Lisa,
Your question is beyond the scope of my expertise. I would suggest you contact a lawyer who advises on international business. I know it’s expensive to go to a lawyer, but it might save you even more expensive headaches in the long run. Good luck!
Thanks for the compliment Ambrose. Glad to hear you found the instructions helpful.
I created an advertise in clasificados on line an a customer is interested, she wants to make the payment with paypal. I need to know how it function
Mary Natal
Hi Barbra
i have setup a co. under my personal name. but when clients receive their receipt for the payment (online) via paypal, i dont want them to see a personal name but rather a business name or a product name. How do i do that?
Thanks
Hi Sainy,
You can easily do that in your Paypal account. Go to “My Account” >> “Profile” >> “My Business Info” and then scroll to the bottom of the list. You’ll see a place where you can update the name that customers see on their receipt.
Hello Barbra,
It’s a good job you’re doing here. I want to setup a business account for ticket fee of a concert I’m holding in Canada. The ticket is for $30, how much will PayPal charge me for each of the ticket sold and since I’m just a student, can I link my personal account as a business account? Also, which of premier or business account will you recommend? I only hold this concerts once a year.
Hi Silas,
Paypal will charge you about $1 for each ticket sold. You can use your personal account, but a personal account doesn’t allow you to take credit cards. If you want to take credit cards you need to get a business account. I would recommend you get just the most basic of the business accounts if you only hold the concert once a year. Hope this helps!
Hello Barbara
i have a problem with my Paypal account because i am not able to receive payment from my customer online from my site. If i come to you today it’s just i saw that you had the same problem in the past and you solved out that problem. i need your help to solve out this issue that happening to me.
i had a word with paypal and they said there’s no problem with my account and customer can pay but once customers are willing to pay they are receiving this message before conforming the order (Unable to process payment contact your merchant or use another credit card) i don’t know what to do. help me please
if i missed something in my account?
Please help me and you help will be very important for me.
Hi Ripaul,
That sounds frustrating. Is it happening with all customers, or just some customers? What I would suggest you do is try to make a purchase as though you are a customer, and take a screenshot of the message that appears before confirming the order. Then contact Paypal again and ask them to explain what could be causing that error message. To be frank, I have never found Paypal’s customer support to be all that great, so you may have to be persistent. If you don’t get a satisfactory answer, ask to speak to a supervisor. Sometimes I have found that simply calling back and speaking to a (hopefully more knowledgable) different customer service rep can do the trick. Good luck!