Unless you have just returned from a very long retreat, chances are that you have used or are using PayPal.
It’s an online payment system, which enables businesses, large & small, & individuals, to buy & sell goods and services. There are other online payment companies out there, like SecurePay in Australia for example, but PayPal is possibly the larges and most recognised company of its kind.
While it can be very straightforward to use as a buyer, as a service provider or seller, it can get a little complicated & possibly frustrating. I have run into several problems over the years with PayPal, both for myself and for clients and thought that sharing my experiences here may save you some time and tears.
1. Set the account up yourself
If you’re outsourcing your administration, setting up a PayPal account may be something that you would consider sending to a Virtual Assistant (VA) or a freelance administrator. As a VA, as someone who manages multiple PayPal accounts, my advice is DON’T. PayPal are very, very hot on whom is the lead person for each account and it can be very frustrating to get them to talk to someone who isn’t named right from the start as part of the business. If you are absolutely confident in your VA’s abilities, by all means give them ALL your business data (& I do mean all) for them to set up the account in your name, with your email address & contact details. Your VA also then needs access to your email account to manage the responses from PayPal.
2. Set yourself up as a business account
“Oh, I’m only a one-man-band & my income through PayPal will be minimal.” *Mad chuckle, sigh.* I thought that too. I got stung. This may vary from financial zone to financial so, but PayPal set their income limits quite low on a basic, personal account; just £2,500 per 12 month period. That may sound quite high, but you only need a couple of clients to pay you via PayPal, have the Bank of Mum & Dad to send you some shoe money & you will have reached that income limit quite quickly.
Setting yourself up as a business account does mean that you will have to have all your business information to hand; Companies House number, VAT number, etc. as well as your personal information such as passport details, utility bills, driving licence and so forth. And these documents need to be available as up-loadable files in .jpeg or .gif format. This is so that PayPal can verify that you are who you say you are. PayPal are very hot on possibly being used for fraudulent transactions and money laundering.
Trust me, it’s better to go through this process at the start of your relationship
with PayPal; get all the questions & answers out of the way before you start
needing your PayPal account. In my experience, sending a truck load of
paperwork over to PayPal when you have funds in your account that you cannot
withdraw because your account has been limited is a very, very frustrating process & one that can be avoided with a little bit of planning in the early stages.
3. Open up balances in multiple currencies
While PayPal is free to use & doesn’t charge those sending monies, there are fees and charges that as an account holder you need to be aware of. These change depending on what you are doing, but in general there will be a charge to receive money paid by a credit card & fees levied when receiving a payment from one currency when your account is set up to receive another currency i.e. your account is set up in Sterling, but your client is paying with Euros.
My recent-found hack is to open up balances in multiple currencies, in my case Euros and UK Sterling. The majority of my transactions are made in Sterling (GB£), but occasionally I will receive a payment in Euros. Rather than have PayPal convert this into GB£, I have opened up a balance in Euros. There’s then no charge for accepting individual payments in Euros, and I can always either pay for goods with the Euro balance, or have the balance converted to GB£ at a later date, only incurring one charge.