Complete Guide to Understanding PayPal for Businesses

What is PayPal Business?

PayPal Business is offered by PayPal and was developed to help businesses send, receive, and manage online and in-person payments. The system is designed for small to medium-sized organizations, freelancers, contractors, e-commerce sellers, and even larger enterprises.

A PayPal Business account offers various financial services, such as:

• Send and receive payments using credit cards, debit cards, PayPal, Venmo, and even some Pay Later options
• Create and send invoices, subscriptions, and recurring payments
• Use QR codes (on your mobile app) and payment links for easy, contactless payment
• Use seller protection and dispute resolution tools
• Track cash flow and transactions with in-depth reporting and analytics
• Create an online store or integrate PayPal into your current e-commerce platform as a means for customers to send money
• Apply for the PayPal Mastercard with up to 3% cash back
• Apply for business loans and PayPal Working Capital (in some regions where PayPal credit is available)

You can also link your bank account, manage multiple currencies (sans currency conversion), and transfer money—all within a secure platform.

It should be noted that PayPal Business charges transaction fees (usually a percentage + a fixed fee per transaction) for a merchant account. One example would be PayPal’s international transaction fees. The basic account (one related to friends and family) has no setup or monthly fees. It’s a flexible and widely trusted payment solution for local or global businesses.

Worried about fees? Try our PayPal fee calculator (in USD).

What’s the difference between PayPal Personal and PayPal Business?

How does PayPal work? While pricing is the biggest difference, here are some others:

Why Businesses Use It

PayPal Business simplifies how small businesses, freelancers, business owners, enterprises, and online platforms send invoices, accept payments, and handle customer transactions. The company processed a record $1.68 trillion in total payment volume (TPV) in 2024, a 10% increase from the previous year. With a global reach and an evolving role in the digital economy, PayPal is a trusted choice for companies looking to get paid quickly, efficiently, and, most importantly, securely.

Information Needed to Set Up an Account

To set up a PayPal Business account, you’ll need the following:

• Contact details and Business Name
• Business type (like LLC, sole proprietor, corporation, etc.)
• Bank account information
• Email address (this is the PayPal login)
• Employer Identification Number (EIN) or Social Security Number (SSN)
• Business owner’s full name, date of birth, and address

Verifying your PayPal Business account by linking a bank account and confirming your identity is a good idea. This boosts the account’s credibility with consumers. It also unlocks higher limits for sending, receiving, and withdrawals.

How to Set Up a PayPal Business Account

Setting up a PayPal Business account is simple. Follow these steps:

1. Go to “PayPal.com” and click the “Sign Up” button
2. Select “Business Account” and click “Next.”
3. Enter your business email address and create a password
4. Provide all business data (see above)
5. Enter your tax ID and business owner details
6. Link a bank account to receive funds
7. Confirm your email and verify the bank account

If you are a global vendor or are using PayPal for Payouts, follow these additional steps:

1. Enable multi-currency support to pay freelancers and vendors in other countries
2. Use PayPal Payouts API for automated, bulk payments
3. Always maintain clear transaction labels to avoid disputes

It should be noted that the best way to build trust is to verify your identity early on. This will help your business avoid reserve holds, reduce payment delays, and build a strong transaction history, increasing trust with both PayPal and your payees.

Why Digital Platforms Choose PayPal Business for Payments

As of early 2025, PayPal continues to dominate digital payments, serving over 434 million active accounts globally. PayPal Business is quick to set up, globally recognized, and simple to use. With support for over 200 markets and 25+ currencies, it’s an ideal platform for scaling global monetization models with little friction. 

Additionally, freelancers, vendors, customers, etc., are already familiar with the global brand. This reduces onboarding challenges and eases the online payment process.

PayPal’s broad brand trust can also increase payout acceptance rates across diverse user bases. For platforms, the payment system offers basic reporting, mass payout tools, and compliance support, making it a practical, low-cost way to manage global payouts and creator earnings.

Benefits of PayPal Business

PayPal’s market share stands at 45.52%, leading top competitors like Stripe and Shopify Pay Installments. It’s an incredibly powerful platform with mass appeal. Here are some of the key benefits of PayPal Business:

• Brand Trust: It’s a globally recognized brand that will boost credibility and user confidence.
• Global Reach: PayPal operates in over 200 markets and accepts payments in 25+ currencies.
• Quick Onboarding: Set up an account in minutes with minimal documentation.
• Flexible Payment Methods: Accepts card payments, a PayPal balance, “Pay Later” payment options, etc.
• Dispute Resolution: Access PayPal’s built-in mediation services, offering both buyer and seller protection
• Integrated Invoicing: Create and send invoices directly from a PayPal dashboard (ideal for service providers)
• Reporting Tools: Monitor transactions, track cash flow, and generate summaries.
• Third-Party Integrations: Connect with e-commerce platforms, accounting tools, and CRMs.
• Mass Payouts: Send payments to multiple recipients at once.

The following features make PayPal Business an appealing choice for small businesses, freelancers, and early-stage platforms looking to launch quickly and scale globally.

• Inconsistent payment release policies
• Manual reporting
• Limited cross-border capabilities at volume
• Tax reporting complexity (e.g., DAC7, W-8/W-9)
• Lack of workflow automation
• Redundant logins
• Limited ERP integrations

It should be noted that PayPal may hold reserve funds longer for a high-risk business. PayPal discusses this on its site. They face increased regulatory scrutiny and evolving policies impacting fund access and account limitations. This is due to regulatory bodies, such as the CFPB, FDIC, and the SEC, taking a closer look at non-banks. 

PayPal may also hold a reserve on your account due to disputes and chargebacks. Reserves can be reviewed in 180 days. This is all designed to protect your business, as well as theirs. That‘s why the platform also instills transfer limits.

Signs You Might Need a Broader Payout Solution

Although PayPal Business is a globally trusted and recognized brand, it has limitations. As your business evolves, you may require additional capabilities that they simply don’t offer, such as tools to streamline compliance, automate operations, and scale globally. 

This is where Tipalti can complement PayPal. The following are a few signs you might need a broader payout solution.

You are:

• Manually collecting and validating tax forms
• Paying vendors in 100+ countries with varying compliance needs
• Expanding globally or managing multiple entities
• Need a scalable mass payouts solution with built-in approval flows
• Require integrated control payout methods, including PayPal payments
• Having issues with reconciliation, duplicate payments, or reporting

How Tipalti Enhances PayPal Business

PayPal Business Is a Starting Point, Not a Destination

For small businesses, early-stage platforms, and startups, PayPal Business is a trusted entry point into digital commerce and global payouts. PayPal’s ease of use and brand recognition make it an ideal system for testing new types of monetization and engaging with international customers or vendors. 

But, as your business grows (especially globally), you may encounter limitations with processes like:

• Tax compliance
• Manual labor
• Reporting
• Payment diversity

This is when it’s worth exploring complementary solutions like Tipalti. The brand extends PayPal’s strength, offering deeper automation, built-in compliance, and multi-entity support. This is the type of tool a finance team needs to scale with confidence. Click here if you’ve reached PayPal’s tipping point.

PayPal Business FAQs