Filing Business Papers for Receipt of PayPal Payments

[Aminka Ozmun]

Does it make sense for an author just starting out trying to sell eBooks on her site to file business papers?

I opened a separate personal checking account the other day just for collecting payment via PayPal (just figured monthly statements would look nicer without any deductions whatsoever!) and was told that the bank, at its discretion (the criteria used are classified information, apparently), would stop PayPal payments because a personal checking account isn't supposed to be used for business transactions.

But it doesn't seem to make sense to me right now to file business papers and go through a whole detailed vetting process until I'm actually making torrents of money!


As usual, all advice appreciated.

[VinceG]

Derek Sivers, creator of the company CD Baby, didn't do a darn thing, including file business papers, until the business grew to the point to where he couldn't keep operating otherwise. Demand driven.

IOW, if you have to ask, the answer is no.

[Aminka Ozmun]

Right, but the problem is (what got this whole thing started, my question) that my bank rep stated that at their discretion they can stop PayPal payments because they don't want a personal account being used for business purposes!

Apparently that's federal banking laws and not just some idiosyncratic quirk of my bank, that continuing business transactions require business/merchant accounts, with all the attendant filing of papers.

Any of you entrepreneurs ever encountered this situation?? I'd figured on just opening up a separate personal account to serve as a piggy bank for whatever money I make off a site. But now I find out that the bank can just stop payment, and apparently the criteria under which they make their calls are not public information!

I'm concerned that a customer can get the eProduct I'm selling because her credit card checks out all right but then my bank blocks actual payment!

[VinceG]

Originally Posted by Aminka Ozmun

Right, but the problem is (what got this whole thing started, my question) that my bank rep stated that at their discretion they can stop PayPal payments because they don't want a personal account being used for business purposes!

Apparently that's federal banking laws and not just some idiosyncratic quirk of my bank, that continuing business transactions require business/merchant accounts, with all the attendant filing of papers.

Any of you entrepreneurs ever encountered this situation?? I'd figured on just opening up a separate personal account to serve as a piggy bank for whatever money I make off a site. But now I find out that the bank can just stop payment, and apparently the criteria under which they make their calls are not public information!

I'm concerned that a customer can get the eProduct I'm selling because her credit card checks out all right but then my bank blocks actual payment!

Sounds to me like they're screwing with you, trying to scare you into getting a more expensive merchant account.

Paypal lets you link more than one bank account. If one bank won't accept the payment, just send the funds to the other bank account. I've been using Paypal for over a year now and I haven't had a problem. In your case, I'd only send funds once a month or so, rather than have 30 $3.99 transactions.

Sounds screwy to me. If you're getting paid with PayPal, then that's a personal account usage. If you started paying your business expenses with your personal bank account, that would be business usage.

[givejonadollar]

I've never had a bank say that. While it may be true.....remember that paypal will send you the free debit card.

Therefore, you don't have to send all payments, or any, to your bank account.

[Aminka Ozmun]

Hey, Guys,

Thanks for your replies. I've checked with my bank's "central office" and it seems like this lady simply fed me misinformation, maybe trying to upsell me to a business account or something.