You can open a PayPal Business account for your US LLC once you have an EIN and a US business bank account. This guide covers the setup steps, common holds and reserves, typical fees, and when Stripe or another processor makes more sense.
What you need before you apply
PayPal asks for a few basic things when you open a business account.
- Your LLC's legal name and formation state.
- Your EIN confirmation letter from the IRS.
- A US business address. A virtual mailing address usually works.
- A US bank account linked for payouts.
- Details about what you sell and your expected monthly volume.
If you are a non-resident founder, get your EIN first. That normally takes two to four weeks without an SSN, or a matter of days if you use an expedited EIN service. Open your US bank account after the EIN arrives, since most banks require it before they will approve an account. PowerLaunch can introduce you to Mercury, Wise Business, or Relay once your EIN is issued, though the final approval is always the bank's decision.
Setting up the account
Once you have your EIN and bank account, the PayPal application itself is quick. You fill in your business details, link your bank account, and verify your identity as the LLC's authorized signer. PayPal may ask for a copy of your formation certificate or EIN letter during review, so keep those documents ready.
Approval can happen instantly or take a few business days if PayPal flags your application for manual review. Manual review is more common for new LLCs with no trading history, high-risk product categories, or founders based outside the US.
Holds and reserves
This is where most new sellers get surprised. PayPal can hold funds from a transaction for a period after the sale, especially in your first few months or after a spike in sales volume. Holds are meant to cover potential refunds or chargebacks.
There are two main types.
- Temporary holds on individual transactions, often released after the buyer confirms receipt or after a set number of days.
- Reserves, where PayPal keeps back a percentage of your balance or a fixed amount, released on a rolling schedule. Reserves are more likely if you sell physical goods with long delivery times, digital goods, or if your account has a limited track record.
None of this is unique to PayPal. Most processors do something similar. But PayPal tends to apply holds more aggressively to brand new accounts and to certain product categories like digital downloads, event tickets, or high ticket items. Check PayPal's own policy pages for the current thresholds, since these change and vary by account type and country.
Fees to expect
PayPal charges a percentage plus a fixed fee per transaction, and the exact rate depends on whether the payment is domestic or international, and whether it is a standard checkout or an invoice. International transactions usually carry a higher fee and a currency conversion charge if the buyer pays in a different currency.
Common fee categories to budget for:
| Fee type | When it applies |
|---|---|
| Standard transaction fee | Every domestic sale |
| Cross-border fee | Payments from buyers outside the US |
| Currency conversion | When PayPal converts the payment to USD |
| Chargeback fee | If a buyer disputes a charge |
| Instant transfer fee | If you move funds to your bank faster than the standard schedule |
Check PayPal's current fee schedule directly, since rates are adjusted from time to time and differ by country.
PayPal vs Stripe for a US LLC
Both work with a US LLC and EIN. The right choice depends on how you sell and to whom.
| Factor | PayPal | Stripe |
|---|---|---|
| Buyer familiarity | Very high, especially for consumer checkout | Growing, less recognized by casual buyers |
| Setup with a US LLC | EIN and US bank account required | EIN and US bank account required |
| Holds and reserves | More common for new or high-risk accounts | Also applies, generally more predictable |
| Invoicing | Built in, simple | Strong, integrates with financial reporting tools |
| International buyers | Widely used worldwide | Also widely supported |
| Developer flexibility | Limited without add-ons | Extensive API and integrations |
If most of your customers already have PayPal accounts and expect to see it at checkout, especially for consumer goods or marketplace-style sales, keep it as an option. If you are billing clients directly, running subscriptions, or want cleaner financial reporting that ties into your bookkeeping, Stripe usually does the job on its own. Many founders end up offering both, using Stripe for invoicing and recurring billing, and PayPal as an extra checkout option for buyers who prefer it.
When to skip PayPal
There are a few situations where PayPal adds friction without much benefit.
- You only invoice a small number of B2B clients who pay by bank transfer or card through Stripe anyway.
- Your product category is one PayPal treats as high risk, which can mean longer holds and larger reserves.
- You need funds to move quickly and can't tolerate a reserve sitting on part of your balance.
- Your buyers are concentrated in a country where PayPal's fees or currency conversion make it more expensive than Stripe.
In these cases, Stripe alone, connected through the Run or Scale plan's Stripe invoicing and live financial reports, often gives you a simpler setup with fewer surprises.
Keeping your books straight either way
Whichever processor you use, keep transactions separated by platform so your bookkeeping stays clean. The Run and Scale plans include transaction tracking with AI categorization, monthly and quarterly closings, and Stripe invoicing, which makes it easier to reconcile PayPal payouts against your actual sales. If you're a foreign-owned single-member LLC, remember that Form 5472 and a pro forma 1120 are due by April 15 regardless of which processor moves your money. BOI reporting is currently not required for US-formed companies under the FinCEN interim rule, but check for updates since this can change.
What to do next
If you're still deciding how to structure your payment setup around a new LLC, book a free 20-minute consultation at powerlaunch.solutions/book and talk it through with someone who can look at your specific situation. When you're ready to form your LLC and get your EIN moving, head to powerlaunch.solutions/signup and pick the plan that fits, Launch to get started, or Run if you want the tax filings and financial reporting handled from day one.
