Paypal Friends and Family Can People See Your Address
The ane thing about freelancing that I absolutely detest (besides self-employment taxes) is paying PayPal fees.
I hate doing slap-up work for my clients and getting paid, just to see a large chunk of my income going to pay fees. Luckily, there are several options bachelor to aid us reduce PayPal fees.
You tin reduce PayPal fees by using invoicing software to reduce fees simply still get paid via PayPal. Or you can skip PayPal altogether and use other payment processors such equally Venmo. Find out how to avoid PayPal fees in this guide.
Contents
- What is PayPal?
- Does PayPal Accept Fees?
- How to Avoid PayPal Fees
- 1. Opt to Be Paid Less Often
- two. Change How Yous Withdraw Your Money From PayPal
- 3. Employ Accounting Software to Lower PayPal Fees
- 4. Ask to Be Paid as a Friend or Family unit
- v. Factor PayPal Fees into Your Payment Equation
- half dozen. Accept Other Forms of Payment
- 7. Use a PayPal Alternative
- eight. Include PayPal Fees equally a Tax Deduction
- How are PayPal Fees Calculated?
- PayPal Fee Reckoner
- Summary
What is PayPal?
PayPal is "a worldwide online payments system that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders," co-ordinate to Wikipedia.
Thousands of online companies apply PayPal every bit their payment processor. It used to be if you wanted to accept credit cards, so you needed to open up up a merchant business relationship and purchase expensive equipment to swipe credit cards. PayPal eliminated the need for all that.
PayPal is convenient, but it is not always gratis.
Does PayPal Have Fees?
When businesses accept payments via PayPal, they get charged a percentage of the sale and a fixed fee. More often than not, in the Us, companies volition pay a commercial fee of 3.49% of the transaction corporeality plus a fixed fee of 49 cents.
Permit's say y'all invoice a customer for $1,000, and the client opts to pay you through PayPal. You will receive $964.61. PayPal'south three.49% amounts to $34.xc, plus there is the fixed fee of 49 cents.
How to Avoid PayPal Fees
As a freelancer, if you can avoid PayPal fees (or lower them), then y'all can help your lesser line. Proceed reading to learn 8 ways to subtract or avoid PayPal fees so yous tin keep more of your hard-earned money:
1. Opt to Be Paid Less Oftentimes
One way to lower your PayPal fees is to opt to be paid less often.
I accept some clients who pay me weekly, some that pay me twice a month, and others that only pay me once a calendar month.
At that place are a lot of benefits to getting paid more than often, such as avoiding cash menses issues in your business. But, one major downside is paying more PayPal fees.
This is because PayPal not only charges you lot a percentage of the money you receive, but they likewise charge y'all a fee for every transaction.
The fee for each transaction is $0.49 USD, plus 3.49% of the amount you receive from U.S.-based clients.
For funds being received from someone outside the U.S., the fee for each transaction is 4.99% plus a stock-still fee that varies depending on the land where the funds are coming from.
By opting to be paid simply in one case a month you'll avoid some of these one-time transaction PayPal fees. Yes, information technology's only $0.49 per transaction, but savings is savings.
You lot just demand to make sure your business organisation can handle the change in greenbacks flow that comes with only getting paid one time a month instead of more often.
2. Change How You lot Withdraw Your Money From PayPal
How you take your money out of PayPal can be just as important as how you receive it.
To access your money fast and avoid PayPal fees, you should exercise 1 of two things.
Transfer Money from PayPal Straight to Your Bank Account
The nearly popular manner to admission your coin is to transfer the money from your PayPal account to your banking company account.
Standard Transfers have no fee to and funds are usually deposited in your bank account the next business 24-hour interval. This is an improvement every bit it used to take 3-4 business days for transfers. This is how I cull to access my money almost of the time and how to avoid PayPal fees of any kind.
Or if you choose to do an instant transfer to your debit card or bank account, the fee is 1% of the amount transferred up to a maximum of $x. These funds are typically available in your bank account within minutes.
Request a PayPal Cash Card
If transferring the coin to your bank account doesn't work for you lot, you can asking a PayPal Cash Card. This is basically a debit card for your PayPal account and volition let y'all to access your money right away.
This bill of fare has no fee for use at retailers that take Mastercards. You tin can too use the carte at an ATM to withdraw cash — upwardly to $400 each day. At that place are over 33,000 MoneyPass ATM locations where you tin can withdraw greenbacks for free in the US. Using your card at other ATMs may result in fees.
3. Use Bookkeeping Software to Lower PayPal Fees
I have been using FreshBooks for my accounting since 2015.
FreshBooks is an bookkeeping software that has saved me tons of time and stress at the end of the month when I get prepare to send invoices to my clients. Plus, FreshBooks Classic has an understanding with PayPal that saves me a ton of coin on fees, as well!
I currently spend $xiii.50/month on their smallest plan. But, the time and savings on PayPal fees more than pays for the cost of FreshBooks.
Related Post: FreshBooks: An Honest Review of My Favorite Business organisation Tool
How I Save Money on PayPal Fees
FreshBooks Classic works with a PayPal airplane pilot program to lower fees to a flat $0.50 per transaction. This means that no matter if you lot receive $20 or $5,000, the fee will be $0.50!
In order to accept advantage of lower PayPal fees through FreshBooks, you and your client must both be located in the The states. You much also use PayPal Business organisation Payments, and you must already have a FreshBooks Archetype business relationship.
UPDATE: You can no longer enroll as a new FreshBooks user and become a FreshBooks Classic business relationship. However, FreshBooks still has a ton of other great features that make it a wonderful tool for freelancers!
Hither's how to connect your PayPal account in FreshBooks:
1. Go toSettings in the height right corner
2. Click on theAccept Credit Cards sub-tab
3. Adjacent to "PayPal" click on the blue "Actuate PayPal" link
4. Check the box next to "PayPal Standard" so enter your PayPal email address
v. HitSave
When you transport an invoice, you must take the "PayPal Business concern Payments" box check marked on the invoices you ship to your clients.
In order to avoid PayPal fees with PayPal Business Payments, your client must have a PayPal account, and they must pay your invoice via their PayPal residual or a continued bank business relationship. (This is chosen an e-check.)
They cannot pay via credit card to qualify for PayPal Business organisation Payments. If they pay via credit card, you will be charged a higher PayPal fee.
As mentioned, you and your client both accept to be U.Due south.-based in society to qualify for the flat $0.50 fee on payments. So, if you lot have a lot of international clients, it won't assistance lower fees for those payments.
How Much It Saves Me
When I kickoff started using FreshBooks, information technology was saving me about $10/month (net) after paying for the cost of the program. (Meaning I was saving $10 in PayPal fees each month subsequently the monthly cost of FreshBooks.)
But these days, I salvage around $360/month (net) on PayPal fees thanks to FreshBooks and PayPal Business Payments!
FreshBooks is definitely worth a look, peculiarly considering y'all can effort FreshBooks for FREE for 30 days with my link!
Important Note About FreshBooks vs FreshBooks Classic
FreshBooks has changed to a newer version that no longer supports the $0.50 PayPal fee pilot program. If you accept a FreshBooks Classic account, you can use this option as long as you lot don't update to the new version of FreshBooks!
4. Ask to Be Paid every bit a Friend or Family
As I said before, whenever you receive coin from clients, you'll be charged a fee of $0.49 plus 3.49% of the amount. However, this is only true for money received for goods or services.
If your customer opts to send you money via the friends or family option in PayPal instead, you won't be charged a fee for receiving the money. The customer also won't exist charged a fee to send money via this method either if they use their PayPal balance or a banking concern business relationship, or a combination of both.
If your customer sends money using a debit or credit card, they will have to pay a fee to transport you the money. The fee is 2.9% plus a fixed fee based on location from this nautical chart from PayPal.
How to Utilize PayPal Friends and Family
If y'all want to get paid via the friends or family option in PayPal, alter how y'all send invoices to your clients. Instead of sending a PayPal invoice to your clients, which will automatically make the payment a business organisation payment that is subject to the $0.49 plus 3.49% fee, send them an invoice via an accounting program or brand ane on a spreadsheet manually.
Afterward sending your client the invoice, it does take an extra footstep for them to log in to PayPal and ship money via the friends or family selection since your invoice is non direct connected to your PayPal business relationship.
Or if y'all withal want to invoice via PayPal, you could also attempt asking them to brand the payment via friends or family unit instead of paying directly through the invoice. Again, this would exist an extra step for your client but information technology shouldn't take long.
Risks of Using This Method
One run a risk for your clients is that they won't have payment protection if they opt to send you money via the friends or family option. Notwithstanding, if you're both comfy with this method, information technology can be a good way to avert PayPal fees.
Annotation also that in that location is a risk that yous could maybe get into trouble with PayPal for using this method. If yous are caught doing this for business payments that PayPal decides are not bodily friends and family of yours, your business relationship could be shut down. And so utilise this ane at your ain chance!
5. Factor PayPal Fees into Your Payment Equation
A tip I've picked up that doesn't really reduce your PayPal fees, merely helps yous to feel better about them, is factoring them into your payment equation.
For example, instead of charging your client $50 for writing a weblog postal service, y'all could increment your rate to $55 per weblog post. This will assist you cover those fees so you are still making $50 after the fees are taken out of your earnings.
Some other fashion to avoid PayPal fees is to inquire your clients to pay the fees instead. Make certain yous get this in writing equally part of your contract. Then you tin include a iv–5% fee at the bottom of each invoice to encompass your PayPal fees.
About clients are totally OK with this. You just need to ask!
six. Accept Other Forms of Payment
Of course, the easiest mode to avert PayPal fees is simply to asking your clients utilise other forms of payment instead.
Many companies offering direct eolith. With this option, you'll be able to go paid merely as chop-chop. Plus, you tin avoid PayPal fees and transfer times altogether.
If direct deposit isn't an option, yous tin e'er go back to an old standby method: a newspaper check. Getting paid via paper bank check volition accept longer, just there won't exist any PayPal fees.
Finally, if you lot use invoicing software like QuickBooks Online, yous tin can accept ACH bank transfers, which has no fee!
Related Post: FreshBooks vs QuickBooks: A Comparison
seven. Use a PayPal Alternative
PayPal is far from the only selection for sending and receiving coin for your work, so you don't take to use PayPal. If you switch to a PayPal alternative, you'll avoid PayPal fees birthday. (Though the alternatives may accept some fees too, so scout that carefully.)
In add-on to PayPal, I likewise have a Stripe business relationship to have payments in my business.
Related Post: 10 Best PayPal Alternatives for Freelancers
viii. Include PayPal Fees equally a Taxation Deduction
Did you know you can deduct PayPal fees on your tax render? This won't lower the PayPal fees you pay throughout the year. Simply, it volition help you lower your tax pecker so yous can continue more of your money that style instead.
Just add up how much you paid in PayPal fees throughout the year and include that amount on your Schedule C.
Related Post: eighteen Ordinarily Disregarded Tax Deductions for Freelancers
How are PayPal Fees Calculated?
The mode that PayPal makes money is by charging a 3.49% fee from the total corporeality of each payment that is received from the U.S. In addition, there is also a $0.49 flat fee on each transaction.
For funds beingness received from other countries outside the U.S., the fee for each transaction is 4.99% plus a stock-still fee that varies depending on the country the funds are coming from.
This fee is charged to the person receiving the money, not the person paying for the goods or services. This is similar to what happens every time you pay by card at a store. The shop has to pay a fee for the "convenience" of being able to accept credit card payments.
PayPal Fee Calculator
Wondering exactly how much it's going to cost you lot in fees to get paid via PayPal? Find out with this PayPal fee computer.
PayPal Fees Calculator
PayPal fees current every bit of August 2, 2021
Summary
PayPal fees are and so irritating to me. I hate information technology when I get paid for freelance work, only to have a chunk of my income taken away past PayPal fees. I sympathise they are a concern and they have to make money likewise, but I nevertheless hate paying their fees.
Luckily there are several ways to minimize them, or even avoid them altogether. To minimize them you tin can be paid less often, use invoicing software that pairs with PayPal, or ask to exist paid "Friends and Family".
To avoid them altogether you lot tin can be paid via other alternatives.
Have yous successfully avoided PayPal fees? What method do you utilize?
Source: https://kaylasloan.com/decrease-paypal-fees/
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