PayPal Purpose Code for Freelancers – Complete Guide

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.

• Read: PayPal product or service keywords list and how to choose one.

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!