There are so many good things about getting paid to write for blogs that it’s nearly impossible to name the bad.
Seriously, I love working my freelance business that much. (I mean I better since I quit my job to pursue it full-time, right?!)
But the one thing about freelancing that I absolutely hate (besides self-employment taxes) is paying PayPal fees.
PayPal fees are so irritating to me. I hate it when I send out my invoices for freelance work I’ve completed only to have a chunk of my income taken away by PayPal. I understand they are a business and they have to make money too, but I still hate paying their fees.
For the longest time, I wondered if there were any legitimate ways to help decrease PayPal fees so I could keep more of my freelance income. After a year of working my business online, I’ve come up with a few strategies to decrease my PayPal fees. Now I’m sharing them with you so you can keep more of your money too!
Here are 6 ways to decrease your PayPal fees.
1. Opt to be Paid Less Often
One way to lower your PayPal fees is to opt to be paid less often. I have some clients who pay me weekly, some that pay me twice a month, and others that only pay me once a month. There are a lot of benefits of getting paid by your clients more often. Getting paid more often can help you avoid cash flow problems in your business. But, one major downside of getting paid more often is paying more PayPal fees.
This is because PayPal not only charges you a percentage of the money you receive, but they also charge you a fee for every transaction. The fee for every transaction is $0.30 USD, plus 2.9% of the amount you receive.
By opting to be paid only once a month you’ll avoid some of these one-time transaction Paypal fees. Yes, it’s only $0.30 per transaction, but savings is savings. You just need to make sure your business can handle the change in cash flow that comes with only getting paid once a month instead of more often.
2. Change How You Take Your Money Out of PayPal
After you get paid in your PayPal account, how do you take your money out? If you request a paper check from PayPal you’ll be charged another fee of $1.50. To access your money faster and avoid this fee, you should do one of two things:
- Request a free PayPal Debit MasterCard so you can access your money right away. This card has no fee for use at any retailers that take debit cards. You can also use the card at an ATM to withdraw cash – up to $400 each day. But, using your card at an ATM may result in fees.
- Transfer money from PayPal to your bank account directly. This method of accessing your money has no fee. PayPal has increased the transfer time. It used to take up to 3-4 business days, but now they estimate that funds should arrive in 1 business day. This is how I choose to access my money from PayPal most of the time to avoid fees of any kind.
3. Ask to be Paid as a Friend or Family
As I said before, whenever you receive money from clients, you’ll be charged a fee of $0.30 plus 2.9% of the amount. However, this is only true for money received for goods or services.But if your client opts to send you money via the friends or family option in PayPal instead you won’t be charged a fee for receiving the money.
One way around this is to change how you send invoices to your clients. Instead of sending a PayPal invoice to your clients, send them an invoice via another program not connected to your PayPal account, or ask them to make the payment via friends and family instead of paying directly through the invoice.
4. Use Accounting Software to Lower Your PayPal Fees
I have been using FreshBooks for my accounting since 2015. I used to do all of my finance tracking manually, but now that I’ve started using FreshBooks, I’ll never go back.
FreshBooks has saved me tons of time and stress at the end of the month when I get ready to send invoices to my clients. Plus, their agreement with PayPal saves me a ton of money on fees, too!
I currently spend $9.95/month for their smallest plan. But, the time and savings on Paypal fees more than pays for the cost of FreshBooks.
Here’s how it works:
FreshBooks works with PayPal via PayPal’s pilot program to lower fees to a flat $0.50 per transaction. This means that no matter if you receive $20 or $5,000, the fee will be $0.50!
In order to take advantage of lower PayPal fees through FreshBooks, you must use PayPal Business payments. This means that you must have this check marked on the invoices you send to your clients as one of the payment options they can use to pay your invoice.
Your client must have a PayPal account and they must pay via their PayPal balance or a connected bank account. They cannot pay via credit card to qualify for PayPal Business payments. If they pay via credit card, you will be charged a higher fee.
You and your client both have to be U.S. based in order to qualify for the flat $0.50 fee on payments. So, if you have a lot of international clients, it won’t help lower fees for those payments.
How much it saves me:
When I first started using FreshBooks, it was saving me about $10/month (net) after paying for the cost of the program. These days, I save around $360/month (net) on PayPal fees!
5. Factor PayPal Fees Into Your Payment Equation
A tip I’ve picked up that doesn’t really reduce your PayPal fees, but helps you to feel better about them, is factoring them into your payment equation.
For example, instead of charging your client $50 for a blog post, you could increase your rate to $52 per blog post. This will help you cover those fees so you are still making $50 after the fees are taken out of your earnings.
6. Include PayPal Fees as an Expense on Your Tax Return
Did you know you can deduct PayPal fees on your tax return? This won’t lower the PayPal fees you pay throughout the year. But, it will help you lower your tax bill so you can keep more of your money that way instead.
Do you have any other ideas for lowering your PayPal fees?