Pre-checking and approval of personal PayPal account for increased use?

[bigmackcam]

Hello, all. I've held a personal PayPal account for many years, and use it quite frequently to pay for products and services. I also (rarely) use it to receive money from friends and family. I'm about to start up a small business from home, operating as a UK "sole trader" (i.e. not as a limited company), making and selling photographic accessories and tools. The market for one of these products is quite large, and it's possible I could start generating quite a lot of sales each year (tens of thousands of pounds, possibly). I've heard some worrying stories about peoples' PayPal accounts being frozen for considerable time, access to funds limited and therefore cashflow problems to small businesses. I would like to avoid that as far as possible, so - is it possible for me to ask PayPal to do whatever security / fraud / "knoy your customer" checks on my account in advance? I understand the need for such security checks, but would like to get them out of the way before I start conducting business...

Thanks in advance for any help or advice!

[sharpiemarker · Accepted solution]

@bigmackcam 

I would open a separate business account for your small business. It’ll let you select sole trader as business type.

Also, that’s not how you get PayPal to not cause cashflow problems.

What will is slow, gradual, long term growth. No sudden increases or a flood of payments overnight right off the bat. Leave that until you’ve established a good track record with PayPal.

Start off slow to develop your best selling practices (ie. How you handle customer complaints, having accurate item descriptions, handling time/shipping/return/exchange policies, shipping logistics, etc). Be prepared to have some capital on hand to ship/buy inventory for your first few orders. A credit card will do just fine to keep operations afloat. Don’t run your business payment by payment. You won’t survive it against these holds. When you’ve gotten a hang of things (the workflow of your operations), then you can buy an ad/ have a sale campaign to increase your sales or don’t buy an ad to pull back adjusting to your ability to fulfill orders.

People rush in thinking they’d get the funds instantly but not always. That they’re gonna use the customer’s payment to buy what they need. Nope. You need to have skin in the game. There is a dark side to selling online now too and it’s called risk, scams, friendly fraud. PayPal need to make sure sellers ship orders, not whisk off with the funds. You also have to read seller protection and buyer protection for if and when a buyer disputes a transaction. You hear horror stories because unpreparedness.

Your account will have a “release amount”. This release amount can change every month depending on payment volume and if you go beyond it within the month, payments beyond this release amount is subject to the 21 day hold so you may receive payments instantly at first until you hit this limit.

It’s PayPal’s way to slow you down, making sure you can fulfill orders without customer complaints. Imho, it’s a test of sorts to see who has their stuff together.

Here’s what to PayPal expects:

https://www.paypal.com/us/brc/article/funds-availability

When you get to the section, “What you can do to access your money sooner”, come back to this post to see How can I release my payment(s) on hold? because someone forgot to include it in the article. 😂 You can ask your customer to confirm receipt: How do I confirm I received an item?

KYC is KYC to verify who you say you are. Sure, PayPal may ask for supplier invoices and have you explain what your business is but that has no barring on how smooth your transactions go overall when you’re conducting your business, especially if you’ve never sold before.

I am speaking from first hand experience, never experienced a hold. Never even knew there was such a thing at the time. I just happened to start slow and I guess the release amount grew with me.

If you have more questions make a new post and I or others can assist. Good luck.