Lately, even my biggest clients have paid via PayPal. It’s an easy way to handle payments for freelancers, allowing you to accept payments without needing to wait for a check or hand out your banking information.
Today, though, I’ve heard some worries about PayPal from several freelancers: seemingly overnight, the payment processing service added a fee for receiving payments in a personal account. Leaving aside the question of whether PayPal acted properly in how they notified account holders, I think it is important to note that it’s very easy for freelancers to avoid this new fee.
Many freelancers, especially those who work part-time, seem to have personal PayPal accounts because it’s the easiest type of account to set up. However, as long as you’re freelancing, you’re not really using your PayPal account for personal purposes.
The Differences Between Accounts
A business PayPal account offers you the ability to handle far more complex transactions than a persona account, from invoicing clients to creating a shopping cart on your website. You also don’t face the limits on transactions from a personal account. You can’t transfer more than $500 out of a personal account in any given month, for instance. That limitation can be a major problem for a freelancer — unless your landlord accepts PayPal.
There’s no cost for upgrading your account to a business account: it’s more a matter of time. You do have to verify your information beyond the basic level used for a personal account, but that can be a benefit.
Despite its ease of use, PayPal has had its share of problems. Besides this morning’s issues, some freelancers have found themselves facing situations where they could not access funds in their PayPal accounts or clients had scammed them through the site. I still use PayPal — but I transfer money out immediately and am cautious about how I use my account. It’s worth reading up on such problems in order to be aware of the issues, as well as make sure that PayPal is the best choice for you. Cara William’s story may be a good starting point.