Generally speaking, "business" is not the same as "corporation." If you are an individual seller, you are running a business as an individual seller. As far as this situation, I just went through the paypal reconnection on itch.io and upgraded my paypal as required to a business account, and so far I haven't seen any issues. When I answered the three questions on the upgrade page, I answered "sole proprietorship" for the type of business organization https://en.wikipedia.org/wiki/Sole_proprietorship