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Paypal Personal

by Cynthia Mosher
9 replies
I have an independent contractor doing some online work for me. I pay her by the hour for her work and payment is sent via Paypal. She lives in Canada.

I have been playing the payment as Purchase of Services which results in the fee being deducted and the balance sent to her. My account type is Business.

She's asking me to make the payment as a Personal one as Payment Owed or Other. Is that okay or is there a legal issue because it is a commercial payment?
#paypal #personal
  • Profile picture of the author noble
    I believe she is just trying to avoid fees which is understandable if you pay her often. There's no real issue except if you pay her and she never does the work, you can't dispute a payment owed with a non-receipt, etc. because its not like you were buying something
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    • Profile picture of the author Cynthia Mosher
      Yes, you're right. She wants to avoid the fees. My concern is that I cannot deduct it as a business expense on my taxes.
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  • Profile picture of the author noble
    Speak to an accountant to be 100% sure but I think it is fine. You are still sending a payment for a business service and have a paper trail to back it up. I would think the method the payment is made are more of paypal terms than IRS requirements; especially since it is funds from your business account being paid to your contractor.
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  • Profile picture of the author nerrutis
    Originally Posted by Cynthia Mosher View Post

    I have an independent contractor doing some online work for me. I pay her by the hour for her work and payment is sent via Paypal. She lives in Canada.

    I have been playing the payment as Purchase of Services which results in the fee being deducted and the balance sent to her. My account type is Business.

    She's asking me to make the payment as a Personal one as Payment Owed or Other. Is that okay or is there a legal issue because it is a commercial payment?
    If you will send as a Payment Owed, service provider simply will get all the money without any fees to paypal, thats only one reason why someone may ask for a such stuff.
    Also few days ago even "payment owed" is charged by paypal, so its all over now. Paypal fees has to be payd, no matter how you send it.
    Also there is no any legal issues, no one can check why you send the money, you can send it if you wish freely by writing anything you want in the paypal form why the money is payd for. It`s you money, you do whatever you want.
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    • Profile picture of the author Terry Crim
      At some point last year Paypal changed there TOS to address this sort of thing. From my understanding they don't want you to do that any longer, send payments for business related services, products in ways to get around the fees.

      You better go through and read the Terms at paypal, it is very possible if you do this a lot and they check you could end up losing your paypal account.

      I am not trying to scare monger, I just remember the big deal Paypal made about this issue last year and the changes to their TOS. I haven't recently read their TOS but I doubt they changed that part, I don't know though.


      - T
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  • Profile picture of the author Cynthia Mosher
    nerrutis - I didn't know they are no charging fees on all payments. Interesting.

    Thanks for the feedback everyone!
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    • Profile picture of the author Tina Golden
      To cover your own butt, send it the way you normally would but add a couple extra bucks to take care of the fees for her.

      It is against the TOS of PayPal to do this on her part, at least. Plus if you don't send them as business, there is a large chance that you will not be able to deduct it because she's not claiming this income.

      Better to give her a couple extra dollars and keep yourself covered.
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  • Profile picture of the author masterjani
    Better to tell her to send an invoice and keep it for the proof and do personal payments.
    This helps.
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  • Profile picture of the author Cynthia Mosher
    Nice suggestion Tina. Thanks!

    masterjani I do have an invoice so I'm covered there too. Thanks!
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