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Practical (legal) limitations of Paypal Premier account?

by markowe
9 replies
My head is going round in circles with looking into payment processing options. Can a Paypal guru help me? (hey, that's half this forum! )

I have a UK Paypal Premier account, i.e. 'Verified', and as far as I can see the only real difference between that and a Business account is the fact that you can present yourself to your customers under your trading name rather than Joe Bloggs. Is that essentially right?

I am just wondering about limits, published or unpublished, in the amounts you can receive that way. I am not incorporated (in the UK, i.e. not self-employed or anything), I have a different arrangement with the taxman, so unless there is a good legal reason to register as a business and upgrade to Paypal Business I would rather not bother. There's zillions of private individuals selling on eBay and using Premier accounts, right?

P.S. If I was a registered company, I would NEED a Business account in order to have payments made to the company name (for accounting purposes), I get that. But other than possibly the use of some APIs (and therefore third-party plugins) I am not sure if there is any other difference.
#account #legal #limitations #paypal #practical #premier
  • Profile picture of the author Frank Donovan
    Hi Mark,

    Originally Posted by markowe View Post

    I have a UK Paypal Premier account, i.e. 'Verified', and as far as I can see the only real difference between that and a Business account is the fact that you can present yourself to your customers under your trading name rather than Joe Bloggs. Is that essentially right?
    Essentially, that's correct.

    I am just wondering about limits, published or unpublished, in the amounts you can receive that way. I am not incorporated (in the UK, i.e. not self-employed or anything), I have a different arrangement with the taxman, so unless there is a good legal reason to register as a business and upgrade to Paypal Business I would rather not bother.
    Firstly, you don't need to be registered as a company to open a PayPal Business account. You can 'trade' as a company (i.e. present yourself to customers as a company) without necessarily incorporating. Although, as you state you're not registered as self-employed, this matter should really be discussed with your accountant or financial advisor.

    As far as limits are concerned, PayPal would be looking at sudden anomalies in your trading patterns. Any large or unusual transactions are likely to be scrutinized more. That's going to be the case with both Premier and Business accounts.

    If you expect a high volume of large transactions, you might want to consider opening a standard merchant account (maybe with your bank), if only as a back-up.


    Frank
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    • Profile picture of the author Silas Hart
      PayPal being registered as a bank in the U.K., you have to follow both the rules of PayPal and U.K. banking regulations. You can not sell anything in the U.K. under an assumed business name using anything but a PayPal business account. If you are a sole proprietor and registered as such legally, then you are to operate under you own name through PayPal, and can do such through a Premier Account.

      Once you reach about 6400 pounds of transactions processed through your PayPal account, PayPal will look more closely at your account and probably try to get you to become registered as a business and not just a person using PayPal.
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      • Profile picture of the author markowe
        Originally Posted by FaJeeb View Post

        You can not sell anything in the U.K. under an assumed business name using anything but a PayPal business account. If you are a sole proprietor and registered as such legally, then you are to operate under you own name through PayPal, and can do such through a Premier Account.
        Aha - what do you mean by 'an assumed business name'? Anyone operating with a Premier account would be operating under their own personal name, right? But this is the problem, I can't be a sole proprietor as I am not resident in the UK for tax purposes and this is also the reason I cannot open a merchant account, as Frank suggested above, otherwise I would just do that anyway, and use some other online payment gateway.

        Originally Posted by Frank Donovan

        As far as limits are concerned, PayPal would be looking at sudden anomalies in your trading patterns. Any large or unusual transactions are likely to be scrutinized more. That's going to be the case with both Premier and Business accounts.
        Originally Posted by FaJeeb View Post

        Once you reach about 6400 pounds of transactions processed through your PayPal account, PayPal will look more closely at your account and probably try to get you to become registered as a business and not just a person using PayPal.
        Right, this is kind of what I suspect. I guess if I start funneling my online millions (OK, thousands ) through PayPal, at some point they are going to want to know what's going on. I certainly don't want to fall foul, knowing how trigger-happy they can be about freezing accounts etc. Must say, I had never heard that 6400 figure before, do they actually state that anywhere?

        Hmm, it's looking like I might have to register a limited company, which you can do even if you are not resident, but then you have to start paying for an agency to run it for you and whatnot. Overkill, and expensive!
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      • Profile picture of the author Alexa Smith
        Banned
        Originally Posted by FaJeeb View Post

        PayPal being registered as a bank in the U.K., you have to follow both the rules of PayPal and U.K. banking regulations. You can not sell anything in the U.K. under an assumed business name using anything but a PayPal business account. If you are a sole proprietor and registered as such legally, then you are to operate under you own name through PayPal, and can do such through a Premier Account.
        I think you probably missed out a word, from the last sentence, between "are" and "to"?

        I'm wondering what it was, because it can change the entire meaning dramatically!

        If you intended to say "then you are able to operate ...", that's one thing; but if you meant "then you are obliged to operate ...", or indeed if you didn't omit a word at all and meant literally what you said, with "are to" meaning the same as "have to", that would be a radically different proposition, wouldn't it? :confused:
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        • Profile picture of the author Jeff Henshaw
          PayPal being registered as a bank in the U.K.
          PayPal is not registered as a bank in the UK.

          Jeff.
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  • Profile picture of the author Neil Morgan
    Not in the UK but in Luxembourg and falls under their equivalent of the FSA with regard to regulation.

    Cheers,

    Neil
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    • Profile picture of the author Silas Hart
      Originally Posted by Neil Morgan View Post

      Not in the UK but in Luxembourg and falls under their equivalent of the FSA with regard to regulation.

      Cheers,

      Neil
      Yeah, Luxembourg.
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  • Profile picture of the author Tekstar
    Actually I just went through this process to upgrade to the Business account and the questions it asked were how much business do you expect to do,it gave a range, what type of business are you (offline, website etc), made you put in a customer service info and basically that was it. I am an llc so dont know if that makes a difference or not but it was essentially not much of an upgrade. What does change are the rates and I'm sure that they will be monitoring your account for a while to see what changes if any happen to it. My guess is that it gets flagged for a while until they deem you ok again.
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    • Profile picture of the author Silas Hart
      Originally Posted by Tekstar View Post

      Actually I just went through this process to upgrade to the Business account and the questions it asked were how much business do you expect to do,it gave a range, what type of business are you (offline, website etc), made you put in a customer service info and basically that was it. I am an llc so dont know if that makes a difference or not but it was essentially not much of an upgrade. What does change are the rates and I'm sure that they will be monitoring your account for a while to see what changes if any happen to it. My guess is that it gets flagged for a while until they deem you ok again.
      The real difference is the way they analyze increased income, or spikes of income. If you are operating a small website and you are bringing in $20 USD a day, and then one day you receive $8,000, expect a limitation so they can investigate the funds. Typically someone who uses a premier account makes less than $10,000 USD a year and for this, PayPal considers you less of a risk than someone who has a Business account. If you have a business account, it's likely you plan on exceeding $10,000 and thus there is a higher risk to fraud, so PayPal inspects Business accounts slightly more.

      If you are upgrading to a LLC (Business), I recommend actually calling PayPal and closing your previous accounts and telling them that you would like to run everything through your business as it is it's own entity. PayPal will be able to look up your personal/premier account and it will show you are a reputable user. You are still loosely affiliated with your now old account so that reputation goes over to your business accounts notes. This would be good say that you have a spike in sales from say $1,200 a week to $3,000 a week they can look up your accounts notes to find that you are a legal entity and do have history with PayPal.
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