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. The client also won't be charged a fee to send money via this method if they use their PayPal balance or a bank account, or a combination of both. If they send money using a debit or credit card, they will have to pay a fee to send you the money.
If you want to get paid via the friends or family option, change how you send invoices to your clients. Instead of sending a PayPal invoice to your clients, which will automatically make the payment a business payment that is subject to the $0.30 plus 2.9% fee, send them an invoice via another program.
It does take an extra step for your client to log in to PayPal and send money via the friends or family option since your invoice is not directly connected to your PayPal account.
If you want to invoice via PayPal, you could also try asking them to make the payment via friends or family instead of paying directly through the invoice. Again, this would be an extra step for your client.
The other downside for your client is they won't have payment protection if they opt to send you money via the friends or family option. However, if you're both comfortable with this method, it can be a good way to save money on PayPal fees.
Note also that there is a risk that you could possibly get into trouble for using this method. If you are caught doing this for business payments that PayPal decides are not actual friends and family of yours, your account could be shut down. So use this one at your own risk.
4. Use FreshBooks Classic to Lower Your PayPal Fees
FreshBooks Classic is no longer available unless you've already got an account. However, FreshBooks still has a ton of other great features that make it a wonderful tool for freelancers!
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, FreshBooks Classic has an agreement with PayPal that saves me a ton of money on fees, too!
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.
Another way to avoid PayPal fees is to ask your clients to pay the fees instead. Make sure you get this in writing as part of your contract. Then you can include a 3–4% fee at the bottom of each invoice to cover your PayPal fees.
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.
Just add up how much you paid in PayPal fees throughout the year and include that amount on
your Schedule C.
7. Consider Other Payment Methods
Of course, the easiest way to decrease your PayPal fees is simply to request your clients use other forms of payment.
Many companies offer direct deposit. With this option, you'll be able to get paid just as quickly. Plus, you can avoid PayPal fees and transfer times altogether.
If direct deposit isn't an option, you can always go back to an old standby method: a paper check. Getting paid via paper check will take longer, but there won't be any PayPal fees.
Finally, if you use invoicing software like QuickBooks Online, you can accept ACH bank transfers, which has no fee!
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