A PayPal business account is a free account type designed for merchants, freelancers, and companies that need to accept payments under a business name. Unlike a personal PayPal account, it unlocks tools like invoicing, checkout integrations, multi-user access for up to 200 employees, and the ability to accept credit cards, debit cards, and bank payments from customers. There’s no monthly fee to open one, though PayPal charges a processing fee on each transaction you receive.
What You Get With a Business Account
The core difference between a personal and business account comes down to selling tools. A personal account is built for shopping and sending money to friends. A business account is built for getting paid. You can operate under your company or brand name instead of your personal name, which is what customers see at checkout.
Beyond branding, a business account gives you access to PayPal Checkout (an embeddable payment button for websites and apps), a virtual terminal for manually keying in card payments over the phone, QR codes for in-person transactions, recurring invoicing for subscriptions or retainers, and payment links you can share via text or email. You can sync invoicing with accounting software like QuickBooks or Xero to skip manual bookkeeping, and set up automatic payment reminders so you spend less time chasing clients.
You also get a merchant dashboard where you can track sales, manage disputes, and view transaction history in one place. If you have staff who need account access, you can grant limited permissions to up to 200 employees without sharing your login credentials.
How Much PayPal Charges Per Transaction
PayPal doesn’t charge a monthly subscription for a business account, but it takes a cut of every payment you receive. The rate depends on how the payment comes in.
- PayPal Checkout (online): 3.49% + $0.49 when a customer pays with PayPal or Venmo. Credit and debit card payments through checkout run 2.99% + $0.49.
- Expanded Checkout (cards only): 2.89% + $0.29 per transaction.
- In-person payments: 2.29% + $0.09 for card-present or QR code transactions. If you key in the card number manually, the rate jumps to 3.49% + $0.09.
- Invoicing: 3.49% + $0.49 for PayPal and Venmo payments. Card and Apple Pay payments on invoices cost 2.99% + $0.49.
- Virtual terminal: 3.39% + $0.29 per manually entered card payment.
- Pay Later (buy now, pay later): 4.99% + $0.49, the highest rate, reflecting the added risk PayPal takes on installment payments.
To put those numbers in context: if a customer pays a $100 invoice with their PayPal balance, you’d receive about $96.02 after the 3.49% + $0.49 fee. In-person card sales are the cheapest channel at 2.29% + $0.09, which makes QR code and card reader transactions noticeably less expensive than online checkout.
What You Need to Open One
Setting up a business account is free and takes a few minutes online. You’ll need to provide your full legal name, an email address, a password, your business description, and your business bank account details. PayPal also requires a tax identification number for verification.
If you’re a sole proprietor or freelancer, you can use your Social Security Number instead of an Employer Identification Number (EIN) and list your own name as the business name. LLCs, corporations, and partnerships will typically use their EIN. You don’t need to be a registered business entity to open the account, which makes it accessible for side hustlers and independent contractors who are just getting started.
Invoicing and Recurring Payments
PayPal’s invoicing tool is one of the most practical reasons to open a business account. You can create professional invoices from the dashboard, customize them with your logo, and send them via email, a shareable link, or a QR code. Customers can pay directly from the invoice using their PayPal balance, a credit or debit card, a bank account, or Apple Pay.
For businesses that bill on a regular schedule, like monthly retainers, subscriptions, or ongoing service agreements, you can set up recurring invoices that go out automatically at whatever frequency you choose (weekly, monthly, or a custom interval). Automatic reminders notify clients when a payment is due or overdue, reducing the back-and-forth of chasing payments manually.
Accepting Payments on a Website or In Person
If you sell online, PayPal Checkout integrates with your website or app through a JavaScript SDK. Most major e-commerce platforms like Shopify, WooCommerce, and BigCommerce have built-in PayPal integrations, so you often don’t need to write code yourself. Customers see PayPal, Venmo, credit card, debit card, and Pay Later options at checkout.
For in-person sales, PayPal offers a point-of-sale system with a card reader that pairs with a mobile device. You can also generate QR codes that customers scan to pay, which works well at markets, pop-up events, or service calls where you don’t have a traditional register. Both in-person methods carry the lower 2.29% + $0.09 fee, making them the most cost-effective way to accept payments through PayPal.
Seller Protection Coverage
PayPal’s Seller Protection program covers eligible business account transactions when a buyer claims they never received an item or that a payment was unauthorized. If PayPal rules in your favor under the program, you keep the full payment amount.
To qualify, your PayPal account’s primary address must be in the United States, and you need to ship physical goods to the address listed on the transaction details page. You must provide valid proof of shipment or delivery, and ship within seven days of receiving payment (or within the timeframe you listed if items are pre-ordered or made to order). If a shipping carrier redirects the package to a different address after you’ve sent it, you lose eligibility.
Intangible goods like digital products can also qualify under additional requirements. For in-person sales, the buyer must have paid using a PayPal goods and services QR code. One important detail for online sellers: if you’ve integrated PayPal Checkout on your website, you need to be running the current version of the checkout product to maintain seller protection eligibility.
Upgrading From a Personal Account
If you already have a personal PayPal account, you can upgrade it to a business account without creating a new one. Your existing balance, linked bank accounts, and transaction history carry over. You can also keep a separate personal account if you want to maintain a clear line between personal spending and business revenue. PayPal allows one personal account and one business account per person.
The upgrade process asks for the same business information required during a new signup: your business name, type, description, and tax ID. Once converted, your account gains access to all the merchant tools, multi-user access, and checkout integrations described above. There’s no fee to upgrade, and you can start accepting business payments immediately after verification.