Paypal account for both income & expenses. Any red flags?

by stong
15 replies
Okay, I know that many warriors here hate Paypal with a passion, but I've got a question about it and I hope someone can give me some opinions?

Here's the deal: I have a standard Paypal account that's verified and linked to my actual bank account. It's pretty much set to funnel any earnings into the bank.

The thing is that I've got this account even before I ever thought about doing IM, and I've been using it pretty regularly to make purchases online. Mostly entertainment stuff.

I've been getting a little worried about how Paypal handles accounts that they consider suspicious (i.e. strange transaction patterns as percieved by them). What I want to know is, is it okay to have this account serve as my primary income repository while still using it for day-to-day purchases, or would it cause alarm bells to go off for Paypal which could lead to them shutting it down for no reason?

I do know that I could always create another account for my online business, but for now I'd want to use something that I already have for now. Besides, I'm guessing that I would need to open another bank account to sync with the new account? I haven't actually read up much about this part but that's how it seems to my uneducated mind now.

Any opinions about this? :confused:
#account #expenses #flags #income #paypal #red
  • Profile picture of the author Norfolk
    As far as I know, you can't link one bank account to two paypal accounts or two bank accounts to one paypal account, so you're right there.

    I haven't made any breakthrough sales yet, but I use paypal for both sales and purchases and so far had no troubles. I think the problem can start when you start shuffling big sums through your account. Try calling them on a toll free number, explain the situation and get info from the horse's mouth. I've read of an IMer who simply called paypal, told them he's expecting to start making big sales, and never had a problem with his paypal account.

    I also suspect most people around here use their paypal for both sales and purchases. That's what it is for anyway.
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  • Profile picture of the author stong
    Thanks for the advice Norfolk. I guess I'll use my existing account to hold my income until I start hitting some good numbers, then I'll switch over to a new dedicated account. Paypal is meant to be used for both sales and purchases, after all.

    I guess all those 'Paypal = Scam' threads floating around recently have spooked me a little too much... :p
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  • Profile picture of the author jamesrich1
    If you are not over the $5k a month mark consistently do not worry about it. By that time you will have gotten into a merchant account to avoid the whole paypal fiasco.
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    • Profile picture of the author Kay King
      Just be certain you have upgraded to a premium account and aren't using a personal Paypal account for business. As your business grows, consider opening a second Paypal account (allowed) as a business account and open a bank account specifically for business use.

      I have a premium account and a business account with Paypal - and they are linked to different bank accounts and different credit cards for verification.

      kay
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      • Profile picture of the author James B
        Originally Posted by Kay King View Post

        Just be certain you have upgraded to a premium account and aren't using a personal Paypal account for business. As your business grows, consider opening a second Paypal account (allowed) as a business account and open a bank account specifically for business use.

        I have a premium account and a business account with Paypal - and they are linked to different bank accounts and different credit cards for verification.

        kay
        What 'Kay' said is true. When you get a merchant account you dont have any limits to your account.

        You can do this by asking your bank that you would like to make a merchant account. Keep in mind you need a deposit minimum (this is based on your bank) then send that over to paypal once completed.

        I hoped this help at some what in the right direction.
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  • Profile picture of the author john_kennedy
    Where do you come up with this stuff? I was regularly billing over 20k a month using PayPal Pro with no issues at all. I did this for over 2 years. Funds were swept into my bank account each night automatically by PayPal. I never had one problem with them the entire time. I also paid all my server fees and employees with PayPal as well as all my other operating expenses. It worked beautifully.
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  • Profile picture of the author makingiants
    Great stuff. Paypal has scared folks over the years.
    I've had few issues with them.

    Let them know if you're going to make a large sum of money
    and you can avoid any potential problems...

    Hope this helps.

    Vince aka makingiants
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    • Profile picture of the author Kay King
      I should add - my reason for having two accounts is not worrying about any problems with Paypal. I do a lot of personal shopping online and want to keep those purchases separate from my business.
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  • Profile picture of the author john_kennedy
    I would treat your business PP account as that. One for use by your business. Personal purchase should be made through your personal PayPal account. The IRS frowns real big on co-mingled funds. Keep them separate for less headaches come tax time. I did my daughter's business taxes this year and it was a nightmare trying to go back through a years worth of PP transactions and finding out which ones were personal and which were business.
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  • Profile picture of the author Lilypuff
    I have used PayPal for years with no issues. Two years ago I was Power seller on eBay with as much as 10,000 going through the account in a single month. I don't know if they have changed things, but I have never had an issue. When in doubt, give them a call and ask. They want your business, just tell them exactly what you want and ask what the appropriate action is.
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  • Profile picture of the author WillR
    Having expenses and income going through the same account is the sign of a REAL business. This is definitely not something you should be worried about. All businesses have expenses so it only makes sense you have expenses coming out of the same account.
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  • Profile picture of the author Farish
    If you are in the United States, the way things work are as followed.

    If you are a sole propetrior or self employed. You can co mingle personal and business expenses from one bank account.

    If you are a LLC or Corporation, you can not. The reason being is a LLC/Corp protects you from personal liabilty. It is treated as separate entity and you must do so also. If you do not, then either through a lawsuit by an outside party or an government agency like the IRS, they can break the corporate veil and go after your personal assets.
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  • Profile picture of the author Ruka
    It's fine to have income and expenses going through the same account, but you should have separate accounts for your personal transactions, and for your business transactions. It's very messy come tax return time, if you have personal items going through your business account. So you'll need to open a new bank account to link to a new, second paypal account (paypal lets you have two, one for personal, one for business).
    HTH!
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  • Profile picture of the author Gerald Arno
    Banned
    Well, if you are using your paypal account for business, then you need to get a business account.

    Usually, you will need to upgrade your paypal account once you got a certain amount of money.
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  • Profile picture of the author Eleanor
    I agree with others who have said that if you are using your PayPal account for business then you should use a Business account (or a Premier account until you're making big bucks). A Business and Premier account have no limits on sending and receiving money but a Personal account does.

    You should also consider calling PayPal and asking them - after all, what they tell you is likely to be the best course of action and then if something does go wrong, you can always say you followed their advice. Don't be afraid to talk to them and be completely honest about what you are trying to do.

    Hope that helps

    Eleanor
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