are business accounts taxed?

[Doubt6]

I want to open a business account to accept twitch donations for a friend since for certain reasons they don't have a bank account right now. My question is am I going to get taxed on whatever is donated to her at the end of the year or have more tax forms to complete? We're in Canada if that helps.

[PayPal_Martina]

Hi @Doubt6,

Thank you for your post and welcome to the Community Forum!

In general, donations can only be accepted by Business accounts related to Registered Charities or Non-Profit Organisation. As this is not the case, you would need to receive funds as 'Friends and Family'. These payments are meant to be used as an exchange of money as gifts between friends and family. These payments are not subject to fees. I would recommend reviewing our Seller Protection Policy and User Agreement for more information about this type of payments. 

I hope this helps.

Martina 

[Doubt6]

So are you saying to use a personal account instead of business and not worry about tax income? If so how would I go about hiding my real name from donaters?

[PayPal_Michael]

Hello, Doubt6.

I apologize for any confusion created by the previous reply. While any PayPal customer may accept donations, only accounts associated with registered charities or non-profit organizations may advise their donors the money is tax deductible. In addition, when creating a PayPal Business account to accept donations, it would be important to not self-identify as a "non-profit" or "charity." PayPal is required to collect information from non-profits and charities in order to meet compliance obligations.

PayPal also does not assess tax on received payments or provide tax documents for customers in Canada. It's up to customers to identify and address their tax obligations related to their use of PayPal. For information and advice on tax related questions, I recommend consulting a local tax professional.

So, if you wish to accept donations (also called "tips") related to activity on Twitch.com, and if you want to keep your name private, creating a PayPal Business account is fine. Please note, however, that would be fine if you were the one who was on Twitch.com. It's not fine to not create or operate any PayPal account for the purpose you mentioned ("to accept twitch donations for a friend") since that would violate the PayPal User Agreement.

PayPal accounts must be used for the person whose name is on the account or for the business included on the account. It is not allowed for one person to create and operate an account that is then used to send or receive payments related to someone else's activity. Even Business accounts must have someone's name associated with them, and that person would be responsible for transactions that are completed through the account. The approach you've described also raises concerns related to security, identity verification, anti-money laundering considerations, and related issues.

I'm sorry there was any miscommunication originally regarding the process of accepting donations and with the question you asked about taxes. The larger concern, however, is that one person should never create and/or operate a PayPal account to send or receive payments on someone else's behalf. I'm sorry if this causes any frustration or concern, but I don't want this to lead to any problems down the road.

I hope this is helpful. Thanks for taking the time to post your question here on the PayPal Community Forum!

Sincerely,

Michael

PayPal_Michael