You’ve probably heard of PayPal, and you may have an account with the platform. But, unless you’ve really played around with it, you might not know how handy it is for managing the finances of your side hustle.
A Brief Disclaimer
This article is meant to showcase the features of PayPal that individuals can use to manage finances. It is not financial, legal, or tax advice.
Depending on the work that you wish to get paid for and how much money you actually make, there are state and federal laws that you should be familiar with. So make sure that you are complying with all federal and state tax laws when you collect and report payments.
Also, there is a specific PayPal Business solution. This is meant for larger businesses than we are considering in this article and comes with more resources.
A Quick Introduction to PayPal
PayPal was founded in the late 1990s. The company is larger than you might think; it also owns Xoom and Venmo. Initially, the platform was created for users to make purchases from established online retailers.
However, within just the last five years, the company has expanded, and you can use PayPal to receive payments from anyone.
You can access the service with any browser or use the dedicated apps for Android and iOS. The mobile apps don’t have all of the features we are going to discuss, but they can still be pretty handy.
Download: PayPal for Windows 10 | Android | iOS (Free)
Sending Invoices
The single best feature for using PayPal to manage your side hustle is its invoice feature. You can split bills with friends, etc., by using the Send and Request feature, but the invoice feature is more detailed.
From a technical perspective, it works in pretty much the same way as the general Request feature. However, it has a lot of other helpful tools.
Using the PayPal Invoice Feature
You get to the invoice feature through the Send and Request banner menu on your account’s homepage. From there, select Send an Invoice from the right-hand side of the screen.
The invoice feature allows you to itemize requests by line item. Beyond that, you can add tax, discounts, or shipping costs.
As you add items, the tool calculates the total for you like a register or point-of-sale system would. You also have the option to allow tips and partial payments, type notes to clients or customers, and include terms and conditions.
If you want to make or take a shortcut, you can also search through pre-existing templates or create your own template.
You can also set invoices to be sent automatically on a regular schedule. That’s not too handy for most venders, but if your side hustle is something that you do regularly for clients, like mowing grass or removing snow, it can be helpful.
The actual invoice is sent to the customer or client’s email, but if you’re shipping goods as well, a hard copy can be printed out and included. The payment can be set to Due on Receipt or for a number of days out, in the event that you want to allow your customer time to inspect the product.
After the Invoice is Sent
Once the invoice is sent, PayPal allows you to track its progress. Once it’s paid, that money gets deposited into your PayPal account. It can stay there to be used for online purchases, or it can be transferred to a bank account or PayPal Debit Card (if you have one).
No matter what stage of the process the invoice is in, even after it has been paid, it remains in your account records for seven years. You can archive paid invoices but you can’t delete them.
If necessary, you can copy paid invoices, share them as links, view them as PDFs, or print them.
Generating Reports
If you want to get serious about your PayPal-facilitated side hustle, there’s another tool that you should know about: Statements. Select Activity from the banner menu at the top of the screen to open your Statements page.
This page and its options help you take a look at your recent transactions with a glance, but PayPal has a lot more tools to offer behind this screen.
To access these, select the Statements pancake menu on the upper right. You now have a few more options:
Access any tax documents that PayPal has generated for you, get monthly statements just like you would from the bank. Create monthly revenue and expense reports, and even create CSVs for reporting income or expenses on your taxes. To narrow down to just your side hustle filter out payments that don’t relate to your industry.
Keeping Work and Your Personal Life Separate
By now, you know that PayPal can help you sort out your earnings and manage your accounts. However, with a little craft, you can also use PayPal to keep your side hustle separate from your regular finances.
Keeping Your Funds in PayPal
PayPal is a convenient way to keep your side hustle finances separate from your regular finances.
If you need material inputs, you can reinvest your profits into your side hustle by using your PayPal balance to buy from online retailers. After all, most major online vendors (or vendors with an online presence) accept PayPal.
If you want the funds that your side hustle brings in to be more of a “rainy day” fund, the same principles apply. Just use that income in your PayPal account to buy digital media, order takeout online, etc.
The PayPal Cash Card
If you want to be able to spend more of your income at brick-and-mortar retailers, that’s still an option. PayPal has a debit card system. You load the PayPal Cash Card with money from your PayPal account. Remember, your spending limit is your PayPal balance.
You can run the card into the red by a few dollars without any real consequences—your card will just get rejected rather than hitting you with overdraft charges like a bank would. Just like any financial decision, you should understand the terms and conditions before signing up.
Because the PayPal Cash Card is supported by MasterCard, it’s accepted by most retailers, and you can even use it to get cash withdrawals from ATMs.
Make Money Online With PayPal
For most people, PayPal is still what it was envisioned as: a convenient way to send and receive money between friends or pay for online goods and services. However, the platform has grown along with the gig economy and has become a powerful online payment tool for people to manage income from different sources.
