How to set up a US LLC and US Bank Account remotely as a non-US resident?
We’ll cover the following:
- Benefits of a US LLC
- LLC Formation
- Best State to Form an LLC
- Registered Agent
- US Address
- US Phone Number
- US Banking
- Getting an EIN
- Stripe vs. PayPal
- US Tax Filing Requirements
- LLC Annual Reports
Benefits of Starting Your Business in the US
The U.S. is known for its business-friendly environment, with a competitive corporate tax system and a straightforward LLC formation process. In particular, start-up costs are relatively low compared to many other countries, and having a U.S.-based company adds significant prestige.
Can a Non-US Resident Start a US LLC?
A common misconception is that only US citizens can start a US company and need a Social Security Number (SSN). This is not true. You don’t have to be a US citizen, resident (i.e. “green card holder”), or have a US SSN to form a US LLC.
As a non-resident, you can start a US LLC online and get:
- A US LLC
- A US Bank Account
- Access to US Payment Systems
- And more!
One major benefit is that an LLC is a “pass-through entity,” meaning taxes pass through to the owners. Your business would not be subject to US tax if your LLC:
- Is 100% owned by non-US tax residents (individuals or entities)
- Has no US presence or economic substance
- The income is not “effectively connected” to the US
What is an LLC?
An LLC, or Limited Liability Company, is a business structure that provides a separate entity for business operations. It allows you to open a bank account, accept payments, and, as the name suggests, provides protection from liability.
With an LLC, only the assets owned by the company are subject to the claims of business creditors, including those arising from lawsuits against the company. The personal assets of the LLC members are protected and cannot be used to satisfy business debts. This liability protection is often the primary reason many people choose to form an LLC.
For more information on LLCs, read this article on Investopedia:
https://www.investopedia.com/terms/l/llc.asp
Should I form an LLC or a C Corp?
When deciding between forming an LLC or a C Corporation, consider the following factors:
Liability Protection and Flexibility: If you seek liability protection along with flexibility and minimal administrative upkeep, an LLC is an excellent choice for new businesses. LLCs are generally easier to start and maintain, offering tax flexibility and fewer regulatory requirements.
Raising Capital and Going Public: If your goal is to raise venture capital or take your company public, a C Corporation is the way to go. U.S. investors typically prefer or require a C Corporation structure for venture capital investments, and it is the preferred structure for companies aiming to go public.
Ultimately, the choice between an LLC and a C Corporation depends on your business goals and needs. Consider your plans for raising capital, the level of administrative complexity you can manage, and your long-term business objectives.
For a more detailed exploration of this topic, check out this comprehensive blog post.
What is the best state to form my LLC in?
When deciding the best state to form your LLC, it’s generally best to choose your home state. This is because your business, whether physical or online, primarily operates in that state.
There are a couple of exceptions to this rule:
Non-U.S. Residents: If you are a non-U.S. resident, you can choose any state. Wyoming and Delaware are often recommended due to their business-friendly regulations and tax benefits.
Real Estate LLCs: If you are forming a real estate LLC, the “home state rule” may not apply, and you might consider other states depending on your specific needs.
Additionally, if you seek anonymity, Delaware and Wyoming are good options. Delaware does not require owners to list their names, and Wyoming allows a “nominee” to list their name as the owner.
For most businesses, forming your LLC in your home state is the simplest and most practical choice.
Don’t forget you can always form your LLC with just one click thanks to Startxperss!
What do you recommend between Wyoming vs Delaware?
We recommend Delaware if you plan to convert your LLC to a C Corporation in the future to raise venture capital from U.S. investors, or if you value the “prestige” of having a Delaware-based company. Some customers believe this matters, and if it does to you, it’s your business, your choice!
Otherwise, we recommend Wyoming. Wyoming is the top choice for non-residents, online businesses, e-commerce ventures, and business owners seeking an easy and straightforward way to form and manage their companies. It’s particularly popular among Startxpress customers due to its lower annual fees ($60 vs. $300 in Delaware), a low filing fee ($100), and its historical significance as the first state to create an LLC. Wyoming also boasts a favorable business environment and has been dubbed “The Switzerland of the Rocky Mountains,” adding its own sense of prestige.
How should I form my LLC?
If you’re seeking a comprehensive, long-term solution that not only assists you in forming your LLC but also provides services like obtaining a registered agent, U.S. address, EIN, phone number, IRS tax filings, and more, consider checking out Startxpress. We can serve as a long-term partner, helping to streamline and support your business needs.
How do I get an EIN?
Obtaining an Employer Identification Number (EIN) is a crucial step in establishing your business. An EIN, issued by the IRS, is necessary for tax reporting, opening a business bank account, and hiring employees. Here’s a step-by-step guide to getting an EIN:
- Determine Eligibility: Ensure your business is located in the U.S. or U.S. Territories and that you have a valid Taxpayer Identification Number (SSN, ITIN, or EIN).
- Choose Your Method:
- Online Application: The fastest and most convenient method. Visit the IRS website and use their EIN Assistant tool. The process takes about 15 minutes, and you’ll receive your EIN immediately upon completion.
- Mail or Fax: Download and complete Form SS-4 from the IRS website. Mail or fax the completed form to the appropriate address listed on the form. Processing time is four weeks for mail and four business days for fax.
- Provide Required Information: Be prepared to provide the legal name of the business, trade name (if applicable), the responsible party’s name and SSN/ITIN, and the business structure (LLC, corporation, partnership, etc.).
- Receive Your EIN: Once your application is processed, you will receive your EIN. If applied online, it’s immediate. For mail or fax, it will arrive via the chosen method.
- Save Your EIN Confirmation: Keep your EIN confirmation notice safe as you’ll need it for tax filings, opening bank accounts, and other business activities.
For a streamlined experience and ongoing support in managing your business needs, consider using Startxpress. We provide comprehensive services, including EIN acquisition, registered agent services, U.S. address, and more, ensuring your business is well-supported from the start.
Can I apply for an EIN online?
To apply for an EIN online, the person applying must have a valid Taxpayer Identification Number (SSN or ITIN).
If you don’t have a Social Security Number or Individual Taxpayer Identification Number (which international founders might lack), you will need to mail or fax your application to obtain an EIN for your U.S. company.
What is the overall process to apply for an EIN?
With SSN: If you have a Social Security Number, you can visit the IRS website and apply for your EIN online. If all your information is valid, you will receive your EIN within minutes!
Without a SSN: If you do not have a Social Security Number, you will need to fill out Form SS-4 and fax it to the IRS. Processing can take anywhere from 2 to 4 months from the date of submission.
If you’re skeptical about potential delays or want to check the status of your EIN application, you can contact the IRS directly by following these steps:
Call the Business & Specialty Tax Line at 800-829-4933.
The helpline operates from 7:00 a.m. to 7:00 p.m. local time, Monday through Friday.
Follow the automated instructions to inquire about EIN applications.
You will need your SS-4 form readily available to confirm any information the IRS may ask for.
What is an EIN vs an ITIN vs an SSN?
EIN stands for Employer Identification Number: The IRS issues an EIN to a business for tax reporting requirements. It’s also needed to open a U.S. business bank account once you’ve established an LLC.
SSN stands for Social Security Number: The U.S. Social Security Administration issues an SSN to identify U.S. citizens, permanent residents, or temporary nonimmigrant workers.
ITIN stands for Individual Taxpayer Identification Number: The IRS issues an ITIN to individuals who have a U.S. tax filing or informational reporting requirement but are not eligible for an SSN.
How do I get an ITIN or do I need one?
Check out this article for a guide to getting an ITIN! Unless you plan to file a US tax return or set up a US PayPal account, you generally won’t need an ITIN. (See the instructions for setting up a Stripe/PayPal account for more details).
How do I get a US Phone Number or do I need one?
Getting a US phone number is essential for various business purposes, including applying for a US bank account, setting up a Stripe account, and more. Here’s why having a US phone number is important:
- Business Verification: Many platforms such as banks, Stripe, PayPal, and Amazon Seller require a US phone number for account setup and verification.
- Proof of Location: Some services may request a utility bill with a US address as proof of location, especially for activities like selling on Amazon.
- Customer Support: Providing a US phone number offers customers the option to communicate directly, enhancing customer support and trust.
- Professionalism: Having a US business phone number adds a level of professionalism to your LLC, making it appear more established and credible.
There are numerous online providers offering US phone number services. A quick Google search will reveal various options to suit your business needs.
How do I set up a US Business Bank Account?
Unfortunately, banking options are limited for:
- Non-US residents
- Individuals without a US Social Security Number (SSN)
- No requirement to travel to the US
These limitations can pose significant challenges for international entrepreneurs seeking to establish a presence or conduct business in the United States.
Once I have a bank account should I use Stripe or PayPal?
Once you have a bank account, deciding between Stripe and PayPal depends on your specific situation:
1. Stripe: Stripe is a convenient option, particularly for individuals who don’t possess a US Social Security Number (SSN). It only requires an EIN and formation documents, making it more accessible for international entrepreneurs.
2. PayPal: While PayPal is widely used, it necessitates a US SSN or ITIN, in addition to an EIN and formation documents. Unfortunately, if you lack a US SSN or ITIN, PayPal is not feasible.
Considering the accessibility and ease of setup, Stripe emerges as the more convenient option, especially for individuals without a US SSN or ITIN.
How do I set up a US Stripe Account?
To open a US Stripe Account, you’ll need:
- An LLC
- An EIN Number
- A physical location in the country where your EIN is registered
- A phone number registered in that country
- A Government ID from any country
Additionally, it’s essential to ensure your business is not on Stripe’s list of restricted businesses. As long as your business is not listed, there’s little reason to believe you won’t be able to work with Stripe. You can review the list of restricted businesses https://stripe.com/restricted-businesses
How do I set up a US PayPal Account?
To set up a US PayPal Business account, you’ll need:
- An LLC
- A company phone number
- A company address
- An EIN number
- A Social Security number or an Individual Taxpayer Identification Number (ITIN)
Conclusion:
Establishing a US LLC and US bank account remotely as a non-US resident is achievable with thorough planning and appropriate assistance. By understanding the process and meeting the necessary requirements, you can establish a business presence in the US and take advantage of its myriad benefits. Partnering with Startxpress can provide comprehensive support to ensure the successful establishment of your business in the United States.
For more details, check out the Startxpress Help Center and Blog. If you need assistance, contact us at support@startxpress.io! We’re here to help make managing your business as smooth as possible.
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- What is an EIN?
- How are LLCs taxed?
- What Is the Best State to Form Your LLC In?
- A State by State Guide of LLC Fees
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