PayPal Business Account for Sole Proprietors: Setup, Features & Benefits

A PayPal Business account, sole proprietorship, is a simple and effective way to manage online payments, even if you’re running your business as a one-person operation. As a sole proprietor, you can use your own name or your business name when creating the account, giving you flexibility in how customers see your brand.

PayPal makes it easy to send and receive payments, create invoices and link your bank account for smooth transfers. So let’s take a look at PayPal Business accounts for sole proprietorship and how you can benefit from them.

What Are Sole Proprietors?

A sole proprietor is an individual who owns and operates a business on their own, without forming a separate legal entity. This is the simplest type of business structure, and it’s popular with freelancers, small business owners and anyone running a side hustle. As a sole proprietor, your business income is considered your personal income for tax purposes, meaning there’s no legal separation between you and your business.

Many sole proprietors choose tools like PayPal Business accounts to manage payments, issue invoices and keep track of transactions, so it’s easier to run a business without complex accounting systems.⁴ This approach allows small business owners to stay organized, accept multiple payment methods and present a professional image to customers, all while maintaining the flexibility that comes with being a sole proprietor.

How Easy Is It to Start a Sole Proprietorship?

How easy is it to start a sole proprietorship? Starting a sole proprietorship is one of the easiest ways to begin your business journey, especially if you want a simple setup with minimal paperwork.

The best part about it is that a sole proprietorship doesn’t require complicated registration processes in most locations; often, you can start operating under your own name or a “doing business as” (DBA) name with just a local business license. This makes it ideal for freelancers, online sellers and small business owners who want to get started quickly.

When paired with tools like a PayPal Business account, managing payments becomes even easier. PayPal allows sole proprietors to send invoices, accept multiple payment types and track transactions all in one place.² Setting up your account is straightforward; you can create it online, connect your bank and start receiving payments without a long approval process.⁴ For anyone wanting to test a business idea or start earning immediately, this structure offers speed and simplicity.

PayPal Account Options for Sole Proprietors

If you’re a sole proprietor wondering which PayPal account best fits your business needs, then choosing the right setup can impact how you get paid, manage your income and appear to customers. Here’s a look at the best PayPal options tailored for sole proprietors.

PayPal Business Account

The PayPal Business account is the top choice for most sole proprietors. It lets you operate under your business name, accept multiple payment methods and issue professional invoices. Even if you don’t have a registered company, PayPal still allows you to sign up using your own name or a “doing business as” (DBA) name.¹

You’ll also get access to useful features like detailed reporting, shipping tools and integrations with e-commerce platforms. Standard transaction fees apply; the benefits of ease and flexibility make it an ideal setup for freelancers and one-person businesses.²

PayPal Premier Account (Now Discontinued)

PayPal used to offer a Premier account for individual sellers and freelancers, which acted as a middle ground between personal and business accounts. While it’s no longer available for new users, some legacy users still operate under this setup. It allowed individuals to accept payments under their name without fully transitioning to a business account.

However, this option lacked the full range of features that modern sole proprietors now need, like invoicing tools, payment tracking or integrations with business tools.

PayPal Personal Account (Not Ideal for Business Use, but can be used)

A PayPal Personal account is designed for casual use, like sending money to friends or shopping online. While it technically lets you receive payments, using it for business income can be limiting and may violate PayPal’s terms if used heavily for commercial purposes. There are no business tools like invoicing, detailed transaction reports, or tax-friendly features that sole proprietors need.

If you're just testing the waters with a side hustle, a personal account might seem easier, but you could upgrade to a business account to avoid complications and access more features once the money really starts flowing.⁴

Wise Business Could Help Your Company Save on Global Payments

Managing Business Income and Transaction Fees as a Sole Proprietor

As a sole proprietor using PayPal, managing your business income efficiently means understanding how transaction fees work. With a PayPal Business account, you’ll pay a standard fee of around 2.9% plus 30 cents per transaction for domestic payments, and higher fees for international ones.²

These transaction fees can add up, but they’re the trade-off for convenience, speed, and professionalism. You can easily track your incoming payments, generate reports for taxes and link your PayPal to accounting tools.³ It’s also important to separate your personal and business finances using a dedicated PayPal Business account so you stay organized and more compliant when it comes to tax time.⁴

If you sell products or services online, PayPal’s built-in invoicing, payment tracking and customer insights make it easier to monitor your revenue and expenses. Keeping tabs on your business income and transaction fees is key to growing your business sustainably.

Setting Up a Sole Proprietor Account for Online Payments

Setting up a sole proprietor account with a PayPal Business account is simple, and it’s an effective way to manage online payments. You don’t need to be incorporated or have an LLC. PayPal lets you register under your own name or a sole proprietor business name (DBA).¹

During setup, you’ll enter basic details like your business type, name, address and tax ID or Social Security Number.² Once verified, you’ll unlock features like invoicing, payment buttons, and instant transfers to your bank.³

For sole proprietors, this means you can accept credit cards, PayPal payments, and Venmo, all from your PayPal Business account.⁴ You also get access to transaction records, downloadable reports and integrations with e-commerce platforms. This can add credibility and efficiency to your operations, so you can scale with confidence.

Save Time and Money On Overseas Payments With Wise Business

Wise Business can help you save big time on international payments.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in currencies.

Signing up to Wise Business allows access to BatchTransfer which you can use to pay up to 1000 invoices in one go. This is perfect for small businesses that are managing a global team, saving a ton of time and hassle when making payments.

Some key features of Wise Business include:

• Mid-market rate: Get the mid-market exchange rate with no hidden fees on international transfers

• Global Account: Send money to countries and hold multiple currencies, all in one place. You can also get major currency account details for a one-off fee to receive overseas payments like a local

• Access to BatchTransfer: Pay up to 1000 invoices in one click. Save time, money, and stress when you make 1000 payments in one click with BatchTransfer payments. Access to BatchTransfer is free with a Wise Business account

• Auto-conversions: Don't like the current currency exchange rate? Set your desired rate, and Wise sends the transfer the moment the rate is met

• Free invoicing tool: Generate and send professional invoices

• No minimum balance requirements or monthly fees: US-based businesses can open an account for free. Learn more about fees here

Use Wise Business >>

Final Thoughts

For sole proprietors, a PayPal Business account offers a simple and flexible solution for managing online payments. You don’t need to register a formal business entity to get started, and setup is fast and user-friendly. You should keep in mind, however, that there are transaction fees that can add up depending on your business scale.

In conclusion, depending on your sole proprietorship’s structure and needs, PayPal might offer an effective way of managing your overall business finances.

Sources:

1. PayPal – What Is a Business Account?
2. Merchant Maverick – PayPal Business Account Review
3. Jotform – How to Set Up a PayPal Business Account
4. TrackiPal – PayPal Business Account: Everything You Need to Know