Are you a freelancer who wants to receive money using PayPal? Then, you have to choose a proper purpose code for your PayPal account.
PayPal requires a purpose code to satisfy governments’ regulatory and taxation requirements. Choosing the correct purpose code for your business will enable the proper tax rate on the fund received.
In this post, I will share a list of all purpose codes available on PayPal and suggest an appropriate PayPal purpose code for freelancers. I will also recommend purpose codes for donations, data entry jobs, online tutoring, online selling, and e-commerce.
Why is a Purpose Code Needed?
PayPal is a trusted brand for receiving and sending funds domestically and internationally. For international payment, it ensures the conversion of currency to the recipient’s choice.
It has been observed that customers are willing to use their cards on PayPal to make payments. If we give an option to our prospective clients for payment through PayPal, then the business conversion rate increases.
As PayPal operates across various countries, it has to satisfy the regulation related to both the source and the destination country for any fund. Hence, it needs a product/service keyword and a purpose code while setting up our business account or withdrawing funds to a bank account.
A purpose code also determines the tax rate to be levied on received funds. Hence, wisely choose an appropriate purpose code for your business activity.
PayPal Purpose Code List
A list of all possible purpose codes available on PayPal is as follows:-
Travel
- P0301 – Purchases towards travel
- P0306 – Other travel receipts
Construction Services
- P0501 – Services relating to cost of construction of projects in India
- P0502 – Construction works carried out abroad by Indian Companies
Telecommunication, computer & information services
- P0801 – Hardware consultancy/implementation
- P0802 – Software consultancy/implementation
- P0803 – Data base, data processing charges
- P0804 – Repair and maintenance of computer and software
- P0805 – News agency services
- P0806 – Other information services
- P0807 – Off-site software exports
- P0808 – Telecommunication services
- P0809 – Satellite services including space shuttle and rockets, etc.
Licencing of creative works
- P0901 – Franchises services
- P0902 – Receipts for use, through licencing arrangements, of produced originals or prototypes, patents
- P1002 – Trade related services – commission on exports/imports
- P1003 – Operational leasing services (other than financial leasing)
- P1004 – Legal services
- P1005 – Accounting, auditing, book keeping services
- P1006 – Business and management consultancy
Export of Goods
- P0101 – Cross-border shipment of goods and services (covered under GR/PP/SOFTEX/EC)
- P0102 – Realisation of export bills (in respect of goods) sent on collection
- P0103 – Advance receipts against export contracts (later covered under GR/PP/SOFTEX/EC)
- P0104 – Cross border delivery of goods and services (not covered under GR/PP/SOFTEX/EC)
- P0108 – Goods sold under merchanting / Receipt against export leg of merchanting trade*
- P0109 – Realisation of exports to Nepal and Bhutan, if any
Other business services
- P1007 – Advertising and market research
- P1008 – Research & development services
- P1009 – Architectural services
- P1010 – Agricultural services
- P1013 – Environmental services
- P1014 – Engineering services
- P1015 – Tax consulting services
- P1016 – Market research and public opinion polling service
- P1017 – Publishing and printing services
- P1018 – Mining services
- P1019 – Commission agent services
- P1020 – Wholesale and retailing trade services
- P1022 – Other technical services including scientific/space services
- P1101 – Audio-visual and related services
- P1103 – Radio and television production, distribution and transmission services
Personal, cultural & recreational services
- P1104 – Entertainment services
- P1105 – Museums, library and archival services
- P1106 – Recreation and sporting activity services
- P1108 – Health service
- P1109 – Other personal, cultural & recreational services
Maintenance and repair services
- P1601 – Maintenance and repair services – ships, etc.
- P1602 – Maintenance and repair services rendered for aircraft, space shuttle, etc.
Manufacturing services
- P1701 – Receipts on account of processing of goods
PayPal Purpose Code for Freelancers
After going through the above list of purpose codes, if you have identified a purpose code that matches your business activity, then you are done. If you have not, then follow the below advice.
Nowadays, there is so much variety of products and services there that it is difficult to define all of them with a single list. Further, new products/services are coming up every year in this innovative globally connected world.
Hence, better to choose a code closer to your business activity. For example, those writing a blog post can use the code P0805 – News agency services as writing content closely resembles a news agency’s work.
If you are doing blogging and seek to receive donations to support it, you can also use the code P0805 – News agency services, as here you are charging on a voluntary basis for your content.
Few Purpose Code Suggestions
PayPal Purpose Code for Data Entry Jobs
A data entry job can be viewed as a computer & information service. Hence, the code P0803 – Data base, data processing charges will be most suitable.
PayPal Purpose Code for Online Tutoring
Nowadays, online tutoring has come up a big way. As per my view, the code P1109 – Other personal, cultural & recreational services can be used for this activity.
PayPal Purpose Code for Online Selling
If online selling is for the export purpose, then a suitable code from the group ‘Export of Goods’ can be used. Otherwise, the code P1020 – Wholesale and retailing trade services can also be used.
PayPal Purpose Code for e-Commerce
Here, the code P1020 – Wholesale and retailing trade services can be used to denote the activity.
Summary
In this post, we have seen the complete list of purpose codes available on PayPal. Further, we have seen a specific suggestion for a PayPal purpose code for freelancers. We also provided suggestions for purpose codes for data entry jobs, online tutoring, online selling, and e-Commerce.
If you have any questions or queries about choosing a purpose code for your business activity, then feel free to drop a comment. I will try to provide the relevant help.
Cheers!
Hey. What could be the purpose code for a freelance translator that earns through ko-fi and ad-revenue from site.
Hi, you may use P1109 – Other personal, cultural & recreational services for the purpose.
Hi what is the purpose code for I am into freelancing of teaching students[99% of them are outside India]
You may use P1109 – Other personal, cultural & recreational services for the purpose.
what is the purpose code for funded trader?..
Hi Ananth, I feel that P1019 – Commission agent services or P1020 – Wholesale and retailing trade services
can be used here.
What’s the purpose code for a book reviewer?
Hi Kritika,
you may use P1109 – Other personal, cultural & recreational services or P1022 – Other technical services including scientific/space services.
What to give if am looking to get multiple income as freelancer? What to give as purpose code? Like if i want to do design work and writing work. what to give?
In that case, choose one which is more prominent activity of yours.
What’s the purpose code for portrait artists
Hi Sanjay, you can use eithr of P0902 – Receipts for use, through licencing arrangements, of produced originals or prototypes, patents or P1109 – Other personal, cultural & recreational services.
What do you think is more related to ( print on demand ) exclusively for Redbubble and Teppublic ( where I upload my design and a customer buys it and the company do the printing and shipping )?
Hi Hossam, I feel that P0902 – Receipts for use, through licencing arrangements, of produced originals or prototypes, patents would be appropriate in your case.
We are NVOCC , which purpose code to use
I will suggest an appropriate code under exports of goods as per your business or a general code P1022 – Other technical services including scientific/space services.
I am teacher.taking tution.
Which purpose code can I use
I feel that P1109 – Other personal, cultural & recreational services will be appropriate here.
I am looking to work part time into transcription and proofreading, what can be the code i use ??
As per me, P1017 – Publishing and printing services would fit better your work description.
im using usertesting website kindly help me to select the code for the same on paypal
Hi Akash, P0804 or P0806 seems appropriate to me.
hi what is the purpose code to use in paypal for digital cards,bookmarks, greetings and the like … Is P1017 right? TIA
Hi Mathi, this seems right to me.
Hi what is purchase code for donation
Hi, the purpose code you have to choose for donation is the area in which you work for which people are ready to donate you.
Hi… I am just doing surveys and some audio projects with Neevo. Is P1016 right code for me?
Hi Shivani, this seems fine with me. We have to just note down that economic activities are now so vast that it is difficult to list down each and every one. So, we have to narrow down to one closely matches with our activity.
Hi what to give purpose code for commission arts (sketching potraits)
Hi, I find the code P1017 – Publishing and printing services to be the most closer to your work.