PayPal business account vs personal account

When your small- or medium-sized business (SMB) starts making money, it feels like a windfall. Whether you’ve launched a startup or turned your passion for candle-making into a wildly successful cottage industry on Etsy, once your idea attracts customers, they’re going to need some way to pay you.

PayPal has been a go-to payment processing solution for SMB owners because of its ease of use and its ability to facilitate even international transactions. However, there’s more than one option for those choosing a PayPal account: a personal account and a business account. Here we break down each to help you decide which account type is best for you.

Critical differences

A PayPal business account offers all the features of a PayPal personal account plus others that can help both budding professionals and already successful companies grow and scale.

Here are the key differences between the two types of PayPal accounts.

PayPal personal account

PayPal personal accounts are designed for those who primarily use PayPal for online shopping or to send money to friends and family. That said, this type of account can also be used to sell goods and services.

For example, if you’re selling that pair of Manolo Blahniks you’ve never worn on eBay, a personal PayPal account will give potential buyers an easy way to pay you for the shoes. A personal account might also be appropriate for an artist who occasionally sells their work.

One drawback of a personal account is that the buyer will see your full name on each purchase. What’s more, you won’t be able to accept as many forms of payment as you could with a business account (e.g., you can’t allow people to pay via invoicing) or take advantage of many of the other features a PayPal business account offers.

In a nutshell, a PayPal personal account is ideal for sellers who plan to only occasionally or informally market their goods and services.

Here’s what you need to set up a PayPal personal account:

  1. Your first and last name
  2. Address
  3. Phone number
  4. Email address
  5. Debit or credit card information (optional)
  6. Checking account number and routing number (optional)

PayPal business account

PayPal business accounts include everything a personal account does and more. Business accounts offer a robust suite of services to everyone from moonlighters to SMB owners who need a no-hassle, affordable payment processing solution.

In particular, a PayPal business account makes it simple to transform your website into an e-commerce portal that seamlessly sends customers to PayPal for payment. A business account also allows you to set up subscription services, which enable customers to sign up for recurring shipments in a single transaction, as well as complete transactions in person.

For SMBs with staff, another plus of a PayPal business account is that it allows logins for up to 200 employees, allowing them to access PayPal features such as the ability to set up shipping methods and fees, inventory, and profit tracking.

PayPal business accounts also offer a suite of products and services to help businesses with the day-to-day work of online sales, such as the ability to print labels, track payments, and get live customer support.

Unlike personal accounts, a business account can be registered under a company name rather than your own, which helps protect your privacy when customers make a purchase.

Here’s what you need to set up a PayPal business account:

  1. PayPal account owner’s name and address
  2. Account owner’s email address
  3. Business name and address
  4. Business customer service contact information
  5. General business information (e.g., business type, keywords associated with your business, etc.)
  6. Bank name
  7. Business or personal bank account number
  8. Bank routing number

Additional steps are required to begin accepting credit cards.

Pros and cons

Personal account pros

  • There is no charge for transfers made from a linked bank account, PayPal Cash, or a balance from PayPal Cash Plus.
  • There are no setup costs, monthly fees, or termination costs.
  • It offers a fast, easy way to make online purchases or send money to friends and family.
  • It provides an easy payment option for those who make occasional sales on eBay, Etsy, or other websites.
  • It’s free to transfer money from sales to a linked personal bank account. If you prefer, you can pay a 1-percent fee (up to a maximum of $10) to instantly transfer funds to your account.

Personal account cons

  • PayPal charges fees for accepting debit and credit cards online.
  • Users selling goods and services online have limited access to merchant services.
  • It’s challenging to separate business and personal transactions for tax purposes.

Business account pros

  • It’s easy to set up.
  • There are no setup costs, monthly maintenance fees (for PayPal Payments Standard), or termination fees.
  • You get more privacy than you do with a personal account, thanks to the ability to register the account under a company or business name. 
  • Users can collect payments via credit card from customers who don’t have a PayPal account.
  • Up to 200 employees can access the account, and you choose which of your account features each employee can access.
  • You can track payments, profits, and more.
  • You get live customer support.
  • You get access to PayPal business tools and products.
  • Sellers can collect and process payments in store via PayPal Here.

Business account cons

  • Merchants are charged fees for every purchase.
  • Once established, there’s no automatic way to downgrade from a business account to a personal account. You have to call customer service.

Business account fees vs personal account fees

The best part about both PayPal’s personal and standard business accounts is that neither charge for setup, maintenance, or cancellation. The payment processor only applies transaction fees when you sell your first item via your PayPal account.

Fees are similar for each. Here’s the breakdown:

Sales from personal accounts:

  • Domestic: 2.9 percent of the transaction amount + $0.30 fee per sale (with a discounted rate of 2.2 percent + $0.30 per transaction for eligible charities)
  • International: 4.4 percent transaction fee, plus a fixed fee based on the currency used in the transaction

Sales from business accounts:*

  • Domestic online sales: 2.9 percent of the transaction amount plus a fixed fee based on the currency
  • International online sales: 4.4 percent of the transaction amount plus a fixed fee based on the currency

*Transaction fees vary for merchants who use a PayPal card reader in a brick and mortar location, for 501(c)(3) organizations, and for micropayments.

Here’s a visual look at transaction fees for a PayPal business account versus a personal account.


PayPal Business AccountPayPal Personal Account
Online payment made with a PayPal account in the U.S.2.9 percent + $0.30 USD2.9 percent + $0.30 USD
Online payment made with a credit card or debit card in the U.S.2.9 percent + 0.30 USD2.9 percent + $0.30 USD
Online payment made from an international account or card*4.4 percent + fixed fee based on currency4.4 percent + fixed fee based on currency
In-store payment made in the U.S.2.7 percentNot available
In-store payment made outside the U.S.4.2 percentNot available

*International sales incur a 3-percent currency conversion charge and 1.5 percent fee for receiving a payment from a different country.

This article is originally published on Mar 02, 2020, and updated on Jun 29, 2020
Finance expert. Interested in economics, payment & specialized in online payment methods. Guilty of liking too many puppy photos on Instagram.

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