Pay Bussiness vs. Personal

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stussy5555

stussy5555

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Dec 12, 2007
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Quick question for you guys, couldn't find the answer anywhere.

When sending payment to someone through Paypal for a copywriting project, is it okay to send it to them as personal vs. business so they avoid the fees? Just doesn't seem like the right thing to do because its a business transaction, but figured I would ask.

Thanks

***mods the title should read "Paypal Business vs. Personal" - sorry about that.
 


Unless you plan on taking the transaction into account come tax time you may as well do it under personal.
 
It doesn't matter how you do it.

Paypal's classification is arbitrary and has nothing to do with how the IRS will see the expediture. If you have an invoice and a verifiable record of a matching payment to the vendor the IRS will be fine with it.

However....there is a HUGE "gotcha" in there.

If you are doing this all as an independent you are fine. If you have an LLC, LLP, S-Corp, or any other type of business it is imperative that you keep the monies separate so proper accounting can take place.

For example, let's say you paid this invoice out of your personal account. That is fine. You just need to claim an expense for the amount from the corporation and have the corp pay you back accordingly. Likewise for any expense. But under no circumstances should you do something like buy personal stuff out of a business account or pay for business expenses out of a personal account.

If you managed to do any of those things get a CPA to fix it for you pronto. It is manageable but if you don't and the IRS finds it you are screwed.

Never mix accounts. It's very, very bad.
 
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