PayPal Personal vs Business – Which Is Best?

As we advance further into the era of technology, everything around us is going digital. From shopping to education, every industry is building its online presence in some way or another. This includes PayPal, one of the industry leaders in digital payments. But what exactly does PayPal do, and what type of accounts do they offer? In this article, we’ll compare PayPal personal vs business accounts, so you can decide which one is right for you.

What Is PayPal?

PayPal is an online payment platform that provides financial services for individuals and businesses around the world. It lets customers pay merchants for goods, allows family members to quickly transfer money, and allows freelancers to create invoices and keep track of their finances.

As freelancers, we typically use PayPal to receive money from clients. For freelancers who work remotely, PayPal allows for fast and secure local or international payments. Personally, I really like the hassle-free aspect of PayPal.

But PayPal isn’t just for individuals, as many organisations use the platform too. Since different users have different needs, PayPal offers two account options – personal and business. While it may sound obvious which account you should go for, that’s not always the case.

To find out why, let’s pit them against each other, to find out which account is right for you in the case of PayPal personal vs business.

PayPal Personal

The PayPal personal account is best for individuals that make payments and shop online. This account is also great for receiving small amounts of money from friends and family, or even for small-time sellers on eBay.

In essence, the PayPal personal account is useful for paying for things like Netflix subscriptions or receiving money as a birthday gift. It’s best for those handling small transactions, and not for businesses or people handling hundreds of big transactions per year. You can use a PayPal personal account as a freelancer. However, if you operate under a business name or plan to in the future, a PayPal business account might be best.

How to Create a PayPal Personal Account

1. Go to and Click Sign Up

Once you click sign up, choose the PayPal personal option, and follow the instructions.

2. Fill in Your Details

Input your legal name, email address, and create a password. Then, put in your physical address and phone number. To create a PayPal account, you must be at least 18 years old.

3. Read and Accept the T&Cs

Finally, read through and accept PayPal’s policies, and you’re done!

If you want to transfer money to your PayPal account, click the “Get Started” button under the “Buy with Confidence” section. Once you key in your credit or debit card details and your billing address, just click “Link Card” and you’re all set. With your card linked, you can shop or send payments online with PayPal straight away.

Advantages of PayPal Personal

1. Free Input/Output of Funds

When transferring money from your linked bank account to your PayPal wallet and vice versa, there aren’t any fees. This also means that when you send money to others, you won’t pay a fee – the recipient bears the transaction fees by default.

While PayPal doesn’t charge you for the influx of money into your PayPal wallet, your bank may charge a fee for this transfer. Remember to check with your bank before doing so to avoid any surprise transaction fees.

2. No Account Fees

When you create a PayPal personal account, it’s free. And it stays free forever too. Even if you want to terminate your account, it’s still free. Note that there is an account inactivity fee. If you have any funds in your PayPal account and don’t use it for 12 months, PayPal will charge a fee of up to £9. To avoid this fee, just make sure you log in to your PayPal account at least once a year!

When you need to use PayPal for anything, you can just log in and use it. The idea that you can be a registered user, yet not pay any membership fees, is what attracts many people to PayPal over other payment systems.

3. Great Integration

If you’re a casual shopper on platforms like eBay, Shopify, etc., the ease of use of PayPal is amazing. You can integrate PayPal into your own online store too, by inserting a PayPal widget or plugin.

Millions of stores worldwide accept payment by PayPal, including Microsoft, Google Play, and even Spotify. With an extensive network of merchants, using your PayPal personal account to pay for products and services is so much easier.

Disadvantages of PayPal Personal

1. International Payment Fees

One of the disadvantages of PayPal’s Personal Account are the fees for international payments. In the UK, you can expect to pay a fee of 5% on any outgoing international payments. This fee is a minimum of 99p and goes up to a maximum of £2.99. These fees vary depending on where you live, but it’s useful to bear in mind if you plan to send a lot of money abroad.

2. Difficulty Tracking Transactions

If you’re using your PayPal Personal account for both business and personal affairs, this could be a problem, especially when sorting your taxes.

When you receive payments in your PayPal personal account, you can’t really organise them. All your transactions, whether sending or receiving, are logged on the same activity page. As such, you have to painstakingly go through each transaction one by one when you’re filling out your tax return.

Unfortunately, there isn’t any way around this, except if you strictly use your account for either personal or business activities. This is one of the main reasons a PayPal business account is a good idea for freelancers and sole traders. So, when it comes to PayPal personal vs business, what does the business account bring to the table?

PayPal Business Account

A PayPal business account is great for business owners and merchants managing companies. A PayPal business account provides a wider range of services, from setting up subscriptions to letting up to 200 employees access some areas of the account.

A good way to look at it is that the PayPal business account is your organisation’s central wallet. Instead of hiring employees to handle and manage your funds, you can just leave it to PayPal!

How to Create a PayPal Business Account

1. Go to and Click Sign Up

Once you click sign up, choose the PayPal business option, and follow the instructions.

2. Pick an Account Type and Fill in Your Details

We recommend the PayPal business standard account option, as it accepts debit and credit cards, and doesn’t have a subscription fee. Feel free to choose another account type if your business model suits it better. If you just want seamless integration within your website, choose PayPal Checkout. If you plan to charge subscription fees, need a virtual PayPal terminal to take payments over the phone, or want a hosted PayPal Checkout page, choose PayPal Payments Pro.

After making your selection, put in your business email address. Create your login ID, password, and enter your business information, like its physical address and company name. Read through PayPal’s policies, and click Agree to continue.

3. Add in Some More Information

Then, enter some basic details about your business, like what category it fits under, and the type of company it’s registered as. Don’t forget to key in your employer ID number or social security number, whichever is applicable. If you have a website, add that in as well.

4. Confirm Your Email

Finally, PayPal will request some personal information, just to verify your identity. Once complete, they will send an email to you for confirmation. Afterwards, verify your account via the confirmation email, and that’s it!

Advantages of PayPal Business

1. Employee Access

When you create a PayPal business account, it’s not just for your own use. Your employees can also access some parts of the account (you can limit this, of course), so they can help with the management of company transactions. Up to 200 employees can access an account.

You can let employees access the account by going to the ‘Manage Users’ section and adding users. Key in your employee’s information and set their privileges. Note that you don’t want to give just anybody the “Money Movement” permission!

You can also set different tiers and approvals in PayPal, to accommodate different ranks of employees in your business. The customisability of the PayPal business account makes it very attractive for businesses of all sizes.

2. Accept Credit Card Payments

If you choose to use a PayPal business account, you probably run a business. You may deal with many customers and clients on a daily basis. Some of these customers won’t have a PayPal account.

All you need to do is create a PayPal payment button and embed it in your online store or website. Through this, your customers and clients can click the button and pay using their credit/debit cards. This makes it much easier for customers to pay you.

3. Show Your Business Name

Finally, you can show your business name instead of your own name when you have a PayPal business account. With a PayPal personal account, your contact information (like your full name and even your billing address) is shown to the sender or recipient. Some people aren’t comfortable with this.

With the PayPal business account, you can simply choose to show your company’s name instead. That way, clients and customers won’t see these details. Even if you’re a freelancer with a PayPal business account, you can also do the same thing to better protect your identity.

Disadvantages of PayPal Business

1. Higher Merchant Fees

There are fees to take into account when you use PayPal for your business’ finances. For merchants, this is 2.9% + £0.30/$0.30 per transaction. There are also fees for payments through PayPal Checkout, and you can find out more about PayPal’s fees here.

2. You Can’t Downgrade to a Personal Account

If for some reason you want to change your business account to a personal one, you can’t. You can upgrade your PayPal personal account to a business account, but it doesn’t work the other way. If you want to downgrade your account, you have to contact PayPal about this. While not necessarily a dealbreaker, it’s worth bearing in mind.

PayPal Personal vs Business – Which Is Right for You?

PayPal is a widely used online payment platform, but when it comes to PayPal personal vs business, it’s not always clear which one is right for you. PayPal’s personal accounts suit individuals sending and receiving small amounts of money here and there. PayPal’s business account is better for companies dealing with lots of customers and large amounts of money. No matter which account type you choose, always look at the fine print before making the decision.