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How to Set Up a Business Paypal Account: Step-by-Step Instructions

I use a Paypal business account for 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:

  1. step-by-step instructions for setting up a Paypal business account
  2. advice on what type of Paypal account to choose
  3. the difference between shopping cart and merchant account, and why you need to know this
  4. 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”.

3. In the box for “Standard – $0 a month”, click “Get Started” .

4. Fill in your country and language, and click “Create new account”.

5. Fill in all the blanks with your information.

6. If you are asked whether you want a Premier or a Business account, here is what you need to know:

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.

7. 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?

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:

  1. 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).
  2. 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.

Comments on this entry are closed.

  • Naif Amoodi January 15, 2009, 6:36 pm

    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.

  • Max January 29, 2010, 4:49 am

    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.

  • FAST EDDIE April 27, 2010, 4:17 am

    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.

  • KSMH International May 5, 2010, 5:06 pm

    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

  • Barbra May 5, 2010, 5:41 pm

    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.

  • mary November 9, 2010, 9:49 am

    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.

  • Rose December 1, 2010, 7:25 am

    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.

  • Steve January 8, 2011, 3:21 pm

    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?

  • Tyler January 16, 2011, 2:04 am

    Steve, you can have a drop-down list of sizes or colors or etc. with a Premier account.

  • Barbra January 22, 2011, 7:26 am

    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.

  • Adebowale dabur January 24, 2011, 3:43 pm

    I need PayPal business account, please how can i get it verified by paypal

  • Mark February 21, 2011, 2:52 pm


    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.

  • Dimitrios March 22, 2011, 11:56 pm

    @ 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 :)

  • Maka May 23, 2011, 1:03 pm

    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.

  • Ambrose Mugwump July 10, 2011, 7:35 am

    Nice and clear, thank you. Isn’t it funny that Paypal does a lesser job of explaining itself than some outsiders do?

  • itel cards July 16, 2011, 2:57 pm

    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

  • Lisa July 24, 2011, 11:21 pm

    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… :)

  • Barbra August 11, 2011, 2:37 am

    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!

  • Barbra August 11, 2011, 3:04 am

    Thanks for the compliment Ambrose. Glad to hear you found the instructions helpful.

  • Mary Natal October 28, 2011, 4:15 pm

    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

  • Sainy February 28, 2012, 11:23 am

    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?


  • Barbra Sundquist March 12, 2012, 7:05 am

    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.

  • Silas March 24, 2012, 12:04 pm

    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.

  • Barbra Sundquist April 2, 2012, 9:50 pm

    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!

  • Ripaul May 5, 2012, 10:36 am

    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.

  • Barbra Sundquist May 15, 2012, 7:27 pm

    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!

  • Inga May 25, 2012, 4:33 pm

    Hi Barbra,

    I am writting because I have a bit of a problem with my paypal account and maybe you know more about it.
    I have a business account opened in UK, so it is in British pounds. My problem is that I also receive payments in euro but if I want to withdraw the money paypal exchanges the euro into pounds and I loose quite a bit. Is there anyway to minimize this loss?
    Also I would be interested if you could tell me more about how to lower paypal fees if you have more then 3000$ coming in monthly. Is this the same for non US paypal accounts as well?
    Thank you in advance and keep up the great work that you do over here.


  • Phil May 26, 2012, 2:23 pm

    I am preparing to start a business of concerts/dances (7 per year). Can I show all the dances on my site and let the customers pick the one/s they want a ticket for?
    Also, will I be charged 2.9% + .30 for each ticket sold? If I want to sell tickets for walk-ins at the dance will I need the pro.act. to swipe a card.

  • Olly June 25, 2012, 10:35 am

    I am wanting to start a small business on line and want to set up a pay pal business account so I can be paid…. Is there a charge that PayPal requires to have this account and does paypal get a percentage on each sale?


  • Barbra Sundquist July 16, 2012, 7:56 pm

    Hi Olly,

    It’s free to set up a Paypal business account, and there are no monthly fees. 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.

  • Anna August 10, 2012, 10:00 am

    Hi Barbara,
    I was wondering if you could help me. I am setting up paypal for our tennis club in NZ. We are a registered charitable organisation so I have signed up for a business account under the club name. I am trying to verify the account but it is asking for a credit or debit card to verify. The club doesn’t have a credit card/debit only a bank account. how do we then get verified so we can lift our withdrawal limit?

  • Terra August 14, 2012, 2:09 pm

    Hi Barbara-

    I have a consulting firm and the way most of my clients pay me is recurring monthly payments until my fees have been met. I have them sign a form authorizing automatic debit from CC. Is PayPal capable of completing transactions like this? I have my clients CC info as well as their authorization so can I simple enter it and set up recurring withdrawls from them (paymets to my paypal acct)?

    I appreciate your assistance.

    Thank you,

  • Barbra Sundquist August 15, 2012, 5:43 pm

    Hi Terra,

    Yes, Paypal can do recurring payments. They call it a Paypal subscription and it works the same way as a recurring monthly payment. You won’t be able to enter their CC info yourself. What you will do is create a link in Paypal that your client will click to authorize the recurring subscription. Your client doesn’t need a Paypal account – they can pay with their credit card. Here is more info

  • Barbra Sundquist August 15, 2012, 5:45 pm

    Hi Anna,

    It can be done. Just contact Paypal and they will sort you out.

  • Michelle October 19, 2012, 6:25 am

    Hi Barbra. Thank you for a simple guide to starting a Paypal account. I took your advice and started a ‘standard’ business account. It was fast and easy and I’ve already linked my business bank account to it. I just need to wait for the 2 small transactions to occur which they say will take 3-5 days. Then I’m good to go. Thanks again,

  • ADAM CLARKE January 9, 2013, 12:08 am

    Thanks Barbara for the article, it certainly helps! My needs though are perhaps even simpler than the options you outline. I just need to be able to request money from customers without the need for any buttons, carts or anything else. Just like I would as a personal user, but without the limits that comes with that. Only thing is I am just the manager of a business so would need to use the owners Nicaraguan bank account as the linked account. How easy is it to get that set up? Or maybe I should just ask what kind of service should I sign up for to do that?

  • andrea March 31, 2013, 3:22 am

    Hi i submitted my appilication on monday its now sunday. i was told after i submitted my application i would now if i got approve for paypal within 2 days
    i wanted know how long do you typical wait. I’m ready for my business online to open but my website isn’t published live because ion’t have my cart set up to take paypal

  • andrea March 31, 2013, 3:23 am

    Sorry about all the typos I’m trying to multitask while type on my phone

  • Kylie May 8, 2013, 2:38 pm

    Hi Barbra
    Great article :) Sorry if you’ve covered this off somewhere, but just to clarify, if I opt for the PayPal Standard account, can a customer still pay using a credit/debit card even if he/she does not have a PayPal account themselves (and do they need to open one)? Also, not sure if you can answer this, but I am looking at building my website using Wix – would the PayPal Standard account work okay with the Wix shopping cart?

  • Marion July 25, 2013, 5:42 pm

    Have you ever thought about creating an ebook or guest authoring on other websites?
    I have a blog centered on the same ideas you discuss and would
    really like to have you share some stories/information. I know my subscribers would appreciate your work.
    If you are even remotely interested, feel free
    to send me an email.