Can I use a business name to accept Paypal donations (for free software) before legally forming a business?


2

I would like to give away some software I have developed for free on a website as donationware, but rather than see my name when people donate, I would like them to see something more official like the name of the software or a company name.

Is this possible without spending the time and money necessary to legally form a business and set up a business account at a bank? (I plan to set these up later if I have any success, but not until then.)

I found this article that suggests signing up for a Paypal Premier Account and filling in my desired company name instead of my real name. The author claims that this does not require me to set up a business bank account.

EDIT: To be clear, he suggests putting in your desired company name under the first and last name fields. There is not a specific box that asks for company name. The example he gives is First Name: Acme, Last Name: Consulting. [/EDIT]

Is this a valid approach? Will I be able to withdraw my funds even though the name on my account is not my real name (as on my personal bank account)? Will Paypal ask me to verify the name or freeze my account?

If this method doesn't work, are there any other options?

Payments Business Donations

asked Jan 24 '12 at 17:03
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Fentoooon
113 points
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll
  • Have you asked PayPal? – Kekito 8 years ago
  • I had a short conversation with a Paypal customer service agent who suggested that I start a Business Account and also said that I DO NOT need a business bank account before I am approved (contrary to what the article I linked to said). I will keep investigating further. – Fentoooon 8 years ago
  • I am finding more sources now (example: http://www.homebusinesswiz.com/2006/12/how-to-set-up-a-business-paypal-account-step-by-step-instructions.html) that say I need a business bank account to get approved for a Paypal business account. But this one suggests that I set up a Premier Account (in my own name) first and later upgrade to a business account. That looks like it might be an OK compromise. – Fentoooon 8 years ago
  • If you are not a business (legally), then don't advertise yourself as one. – Markasaurus 7 years ago

3 Answers


3

Yes, Paypal will probably ask to verify the name and/or freeze the account. I recently set up a Paypal account for my corporation to accept payments, and when linking the account to my checking account, I triggered some fraud safeguard and my account was frozen (which may have been as simple as my providing a PO Box mailing address for the account, rather than my company's physical address). More than likely, a name/SSN/EIN match is needed to validate the account, so spoofing the system (by providing a personal SSN and company [or false] name won't work).

Ultimately, their 'resolutions' system allowed me to upload corporate documents & IRS documentation to demonstrate that the account was legitimate and operated by a true corporate entity (rather than a random person claiming to be a corporation merely to add the air of legitimacy to their enterprise), which was quick & easy (and they repeatedly harassed me via email until I got around to it).

Donations are abused on Paypal to skirt paying full fees, just like labeling payments as 'gifts'. That's a great way to run afoul of Paypal's TOS.

Most likely, in any case, you won't be permitted to do business on Paypal in any name other than your own, unless it is that of an established corporate entity (unless some trickery is used that escapes notice).

answered Sep 23 '12 at 13:55
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Dan
46 points

1

Per PayPal's FAQ, you can open a Premier account without a business name:

Premier : Recommended for casual sellers or non-businesses who wish to get paid online, and who also make online purchases.

Search for difference between personal premier - I can't post the link since I'm not sure it'll work because it contains a session ID parameter.

That being said, you can't use PayPal's Donate button unless you're an approved charity and you will still be liable for income taxes on the money you receive.

answered Jan 25 '12 at 02:37
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Dnbrv
1,963 points

1

I'm not an accountant, nor lawyer, I'm only sharing one possibility that can technically work (since I've done this).
Also note: This is Canadian-based, but the basic principles are fairly universal.

Going through the registrar to register your business name is a process that is very light on paperwork (one document), and doesn't require trademark searches or incorporation. It costs me $30.

Once you have the registration document, you are able to do business as that name, which means you can open a business account at a major bank (and receive cheques written to the business).

You are now regally able to operate, process cash, and receive payments.

"Dont make things more complicated than they are."

Note: Once you process a certain amount of cash (as determined by local laws), it's highly suggested to hire an accountant and make sure you are reporting properly.

answered Nov 27 '12 at 00:23
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Josh
11 points

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