There are several options available to you when it comes to invoicing and collecting payments for your products or services. I believe that PayPal is the easiest method for someone just starting out. Everyone is familiar with it in some form or another. PayPal as comes a very long way. Many of the features that have been added wasn’t available back when I started using it but you can take full advantage of them now.
What I like about PayPal now:
- It’s free.
- You can send invoices and received payments.
- You can create a simple shopping cart by using their various button options
- You can receive payments from customers/clients who do not have a PayPal account. They can use their debit or credit card to pay your invoices.
- You can apply for a PayPal Debit Card to gain access to your money faster because it takes a few days to transfer to your bank.
- You can apply for a loan. There are some requirements to apply but they only take in count the money you received in your PayPal account.
- You can take payments in person with their card reader.
Of course as with anything there are a few disadvantages.
- Although, it’s free to open an account, they do attach a fee to every transaction. The more the money you received the bigger the fee.
- Cannot set up automatic reminders for unpaid invoices. You will have to take care of this manually.
- You cannot set up an option to offer automatic billing or split payments using the Basic Business Account. You will need to add enhanced recurring payments for a monthly fee of $19.99.
Can you operate on a basic plan?
Yes. My recommendation is to weight your options based on your business needs. You want to stay within your means and only pay for services or tools that you absolutely need. Keep in mind you want to make it as easy as possible for people to pay you.
4 Tips to help you get the most of out using PayPal
Tip #1: Create invoice templates. This will help you save time. You can also brand them with your logo and other business information. Make sure you add your policies for refunds, late fees, cancellations, etc.
Tip #2: Plan out and create your buttons for your products or services. Know what page buyers should be redirected to after a success payment or if they cancel the process (hint: it should go back to your site).
Tip #3: If you plan on doing in person meetings, classes or vendor events, get yourself a card reader. It’s free. Download the app to your phone or tablet and make sure you test it out first.
The new readers that can read the credit/debit card that has the EMV chip are not free, so make sure you figure this into your future plans.
Here’s the big one.
After you create your account, you need to fill out some information to get your account verified. Linking to a bank account and/or credit card is one of the things you have to do. Why? If you do not have the funds in your PayPal account to cover a transaction (or refund) it will be taken from your bank account or charge to that credit card you have on file.
I know for most people you may not have the funds required to open up a traditional business checking account, so I am going to give you couple of ideas to consider.
Tip #4A: If you already have a personal checking account, open up another one preferably at the same bank. You want to make sure that you can transfer money for free between the two accounts.
Your new bank account will be the one that you link to your PayPal and should only be use for business transactions. Now don’t forget, in the future you should convert that account into a traditional business account, once you can meet the daily balance requirements.
Tip #4B: You can use a prepaid debit card. Of course that card need to have money on it. With a prepaid debit card you can only spend the money you have on the card. Therefore this will help you keep yourself on a budget.
Please make sure you understand the fees associated with using the card you choose.
Now, I must put out this disclaimer – I am not accountant, tax preparer, or lawyer. However, I do know that when you are starting your business you want to do things right as well as within your means. Plus keeping your personal finances and your business finances separate will make tax time so much easier.