Nightmarish Experience Opening Second Business Account

Not applicable

By way of background, I've had a PayPal business account for about 11 years in its current iteration, and about 20 years total. The short version of why there is an iteration is that I sold most of a previous business, but retained one piece of it; and the account was modified to reflect the new business name and tax ID.


In all of that time, I've never had any problems with PayPal. I have Web Payments Pro on that account and process between USD $3,500 and USD $5,000 of plastic every month, and have never had a chargeback, dispute, nor even a returned item from an eBay buyer. I don't often sell on eBay, but when I have, everyone has been happy. I have 100 percent positive feedback over about 20 years.


I've also taken out and paid off several PayPal Working Capital loans, and am asked if I want to take out another every time I log into my existing PayPal account. They even call me once or twice a month trying to lend me money.


In short, my association with PayPal on the existing account has been a happy partnership; and I've recommended PayPal to many, many new business owners over the years.


Based on my recent experiences, however, I'll be thinking twice about making that recommendation again.


The Story


About a year ago I started a new, unrelated business, using my own name, and only accepting cash or checks made out to me personally. About two weeks ago I decided to file a DBA for the new business and to start accepting plastic and PayPal. I was told by PayPal support that I had to open a new business account for the new DBA. What they didn't tell me was that doing so would be a nightmare.


Here are some of my observations about the process.


1. When you open a new PayPal account, even being the same person and using the same SSN and EIN, they treat you like a stranger. My 20 years of perfect reputation mean nothing. You have to start all over again with holds and the like -- even when transferring funds from one of your own accounts into the other (for example, to test the link). That's kind of an insult, to say the least.


2. You can't use the same bank account on both accounts. Now bear in mind that it's been at least 15 years (probably more) since I've written a paper business check, which is the only reason I can think of why it would matter which account a sole proprietor's money goes into or comes out of. You'd want the name on the check to match the name of the business. Other than that, all the money belongs to the proprietor and goes into and comes out of the same pocket.


But some things just are what they are; so I opened a new business account for the new DBA at Navy Fed. It's been several days trying to get that account confirmed with PayPal; and because of attempts made by two different PayPal reps to do so, there's now a 48-hour hold during which even they can't confirm the account.


I'll actually be surprised if it ever gets confirmed. I fully expect that it will not, at which time PayPal will expect me to open yet another useless account. Most likely I'll just abandon the process and move on at that point.


3. You can't use the same phone number on both accounts, so now I need a new phone number that will never be used. Regardless of which number a customer calls, they'll always be talking to me. But I still have to have another number and eat the costs associated with having it just to keep PayPal happy.


4. You can't use the same mobile phone number on both accounts. In addition, one PayPal rep told me it should also be a postpaid number. He told me that a prepaid number registered to myself might work, but it didn't.


I also have learned that the mobile number has to have international service. I tried using a cheap prepaid account that is registered to myself. It initially confirmed (meaning that PayPal sent me a text message with a code that I confirmed); but it's not really confirmed. I can see the number on my profile, but PayPal reps can't see it on their side nor use it to confirm my identity. I also can't use that number to call PayPal because their 800 number comes up as international when I try, and the prepaid plan doesn't include international calling or texting.


So in a nutshell, for the mobile number to be full-functional with PayPal, it has to be a postpaid number, registered to the user or the business name, with international service. Even with my veteran discount, that's another $55.00 a month PayPal expects me to pay for a number that will serve no purpose other than to receive text messages from PayPal.


How All This Could Be Avoided


PayPal allows (and actually requires) separate DBA's to have separate business accounts, even if they have the same owner and tax ID. This is strictly a PayPal rule. It is not law. In fact, the IRS (the US tax agency) forbids sole proprietors from having more than one tax ID. They just stack additional DBA's onto the same EIN.


I also know of at least one merchant card processor that allows multiple DBA's on the same tax ID. The only reason I know is because I opened an account with them. Again, I have serious doubts that PayPal will ever be able to confirm my business checking account, at which point my new PayPal account will become useless to me; so I needed a backup plan.


The simplest solution to this nightmare would be for PayPal to allow established sole-proprietor merchants with decent reputations to create additional business profiles under additional DBA's. The government has no problem with that (and in fact even requires that sole props with multiple DBA's us the same tax ID), and other merchant providers have no problem with that. I really don't know why PayPal does. It just complicates something that could be very, very simple.


I'm keeping my existing PayPal account for the old business open. That relationship has been a happy one, and I consider PayPal an old and well-loved friend in that account's context. But I expect that by Tuesday, I will have closed the new account for the new business. If the next attempt to confirm the checking account fails yet again, there will be no point in keeping the account open.


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