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I develop software and games, some of my users have said they would be interested in supporting me, even though what I make is free.

It seems to be that the PayPal donate button is reserved for charities/non-profit organizations (even though their are tons of blog posts saying this can be used as a donate button for your blog, which sounds against the terms). Instead, could I create a PayPal Premier account, and create a new product called "Support ____", allow users to pay what they want, and accept "tips" this way? (And make it clear that nothing will be provided in return)

  • Taxable income see the Minecraft thread. As you are in the US, I believe this question to be a duplicate of that. If you feel there is some subtle difference, please advise. – JoeTaxpayer Jun 27 '15 at 17:32
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    @JoeTaxpayer That question focuses on whether it is considered income or not. I want to know how to accept the money (variable price item in PayPal?). (Minecraft has existing services such as Buycraft that integrate with PayPal) – Cyral Jun 27 '15 at 17:43
  • Your line "make it clear that nothing will be provided in return" seemed to me that you wish to avoid tax. But I see, you wish to avoid owing the buyer anything more. I'd just use the same donate button, knowing "donate" is a misnomer. – JoeTaxpayer Jun 27 '15 at 17:45
  • By that I mean I don't want any situations where someone "paid" for something (As it isn't a donation, but an item as far as PayPal is concerned), but didn't receive anything in return. – Cyral Jun 27 '15 at 17:47
  • Whoops, didn't see your 2nd sentence. Donate doesn't seem right as PayPal reserves it for non-profit organizations. "This button is intended for fundraising. If you are not raising money for a cause, please choose another option. Nonprofits must verify their status to withdraw donations they receive. Users that are not verified nonprofits must demonstrate how their donations will be used, once they raise more than $10,000." – Cyral Jun 27 '15 at 17:48
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I see two ways you can handle this.

  1. Use the gifts for the purpose of creating more free software. This is fundraising, and your cause is writing free software. The language is a little tricky from the PayPal Donate button (emphasis mine):

    This button is intended for fundraising. If you are not raising money for a cause, please choose another option. Nonprofits must verify their status to withdraw donations they receive. Users that are not verified nonprofits must demonstrate how their donations will be used, once they raise more than $10,000 USD.

    You don't have to be a nonprofit; they are only requiring existing nonprofits to verify their status. You don't even have to account for the donations if they are below $10,000.

  2. Give out your PayPal email address and instruct the gift-givers to simply send you money through their PayPal interface. They can mark it as a gift when they send the money.

I think option one is how the various bloggers and other personal users are justifiying their collection of donations, and I think its a valid use of the PayPal Donate button.

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I would be inclined to back the 'tip jar' weblink idea, this is very prolific within the Twitch community, as a method of tipping and thereby supporting content creators. I know that there are numerous tutorials on how to set up 'tip' sites for such usage, so that may point you in the right direction.

Also you could turn to crowd-funding opportunities, such as Kickstarter and others, however I am not sure on the ruling of these companies and whether you have to offer the completed project as a reward for backers (it tends to be the done thing).

And depending on how serious your friends are in helping you as a fledgeling indie developer, you could investigate in setting yourself up as a limited business. This would allow your supporters to purchase shares in your business, turning them into true stakeholders, but whilst retaining the limited status of the company. However, I must stress, on this point I know very little and may be wrong (I am actually hoping someone else contradicts this so I can learn).

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Lots of webcomic sites now have "tip jar" links, or let supporters send money via services like Patrion. I presume other kinds of sites have developed similar solutions. I'd suggest you go out, wander the web a bit looking for such, then contact the sites' owners to ask how it's been working for them

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