I've personally helped hundreds of founders from around the world launch, maintain and grow US LLCs and have compiled a list of the most commonly asked questions. The goal of this post is to provide a 2021 update with help for anyone who wants to learn more about launching a US company and/or is ready to launch their US company but doesn't know how to.
Below I'll cover:
The US has one of the best reputations in the world for being business friendly — even for non-us citizens! The US also has a very competitive corporate tax system and a relatively easy LLC formation system. One of the biggest perks is the low startup costs in comparison to many other countries and the prestige of having a company based out of the US.
One common misconception about creating US companies is that you have to be a US citizen to start one and have a US SSN (Social Security Number).
This is wrong. You don’t have to be a US citizen, be a US resident (i.e. “green card holder”), or have a US SSN.
That means you can start a US LLC as a non-resident, online, as a foreigner and get:
One of the biggest benefits of being a non-US resident starting a US LLC is that an LLC is a "pass-through entity," meaning that taxes can pass through to the owners. This means that your business would not be subject to US tax as long as your LLC:
An LLC gives you a business entity to then set up a bank account, take payments, and as the name "limited liability company" might imply, it protects you from "liability!"
"With an LLC, only the assets owned in the name of the LLC are subject to the claims of business creditors, including lawsuits against the business. The personal assets of the LLC members cannot be claimed to satisfy business debts. For most people, this is the most important reason to form an LLC."
You can read more about LLCs in this post from Investopedia.
Here is a full blog post which dives in to this topic in much more detail.
The best state to form your limited liability company (LLC) in is nearly always your home state. This is because your company is doing business primarily in that state, whether it is a physical business or an online business.
There are two exceptions to this rule:
Some people may also want anonymity in which case Delaware, which does not require owners to list their names, and Wyoming, which allows a "nominee" to list their name as the owner, are what we recommend.
Here is a full blog post which dives in to this topic in much more detail.
If you want to get more in the weeds on the differences between Wyoming and Delaware, check out this guide.
You have a few options here and I'll walk through each of them.
Unfortunately, Stripe Atlas does not serve non-US residents when it comes to forming US LLCs. They only support US residents.
You are able to form an LLC by filing directly with the state online!
To do so you will need to do a few things first:
If you'd like to file on your own in Wyoming or Delaware:
If you're looking for a "one-stop-shop" long-term solution that helps you not only form your LLC but also help you with getting a registered agent, US address, EIN, Phone Number, IRS (Internal Revenue Service) tax filings and more + serves as a long-term partner, check out doola.
There are a ton of different options out there to get a physical address for your mail (that you can operate remotely). Here are a few options:
I'll break this up in to a few sections! But if you want to skip ahead and see how long it is currently taking to receive an EIN in real-time check out this page which has real-time updates from the IRS.
In order 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 not have), then you have to mail or fax application in to get an EIN for your US company.
Due to recent events, the IRS has relaxed some "wet signature" requirements.
You can read more here in this IRS newsroom update but and if it's helpful, from doola side, digital signatures have worked with no issues for us and we have only been sending in SS-4s with digital signatures (and have been receiving EINs with them!)
You can read more about this here.
Check out this website for real-time updates on how long it will take to get an EIN.
If you want to contact the IRS to check on your EIN Application, here are the steps:
You will need your SS-4 form readily available to confirm any information the IRS may ask for.
These acronyms can get pretty confusing so thought it'd be helpful to define them!
EIN stands for Employer Identification Number.
The IRS issues an EIN to a business for tax reporting requirements and you also need an EIN to open a US business bank account once you have opened an LLC.
Check out this blog post here on how to get an EIN!
SSN stands for Social Security Number.
ITIN stands for Individual Taxpayer Identification Number.
The IRS issues an ITIN to people who have a US tax filing (or informational reporting requirement) and are not eligible for an SSN.
Check out this blog post here on how to get an ITIN! Unless you are filing a US tax return OR are trying to set up a US PayPal account, you don't need an ITIN (more on this coming up in how to setup a Stripe / PayPal account).
You will need a US Phone number to apply for a US bank account and to set up your Stripe account (and more). Here are some of the main reasons why a US Phone Number is important to get:
In terms of phone number options, there are many many providers online! A quick google search can show you a ton of different possibilities.
If you're looking for a Phone line with a utility bill that also has SMS, unlimited international text and calling, and "digital access via a computer" check out: https://www.doola.com/blog/us-phone-number-with-utility-bill-proof
Unfortunately, there are very limited options when it comes to banking in terms of who can support:
So to address this challenge, we've launched doola banking! But you can also use Mercury
Here are some of the most commonly asked questions when it comes to Mercury!
How much does Mercury cost?
Mercury is free. They don’t have minimum balances, account opening fees, or monthly fees. The only things that cost money are wire transfers, which are $5 domestically and $20 internationally.
Does Mercury provide a debit card?
Per the Mercury FAQ: "When, where, and how will my debit card arrive? Your debit card should arrive in a plain white envelope to your business address within 8-10 business days of account approval." Mercury will also give you access to a virtual debit card you can start using right away once your account is approved!"
Mercury ships this card internationally as well so you can have it sent to you directly, and you'll also have access to a virtual card you can start using immediately 😄
Will Mercury support my business?
Per the Mercury FAQ here are the types of businesses and founders they support! As long as your company / you aren't on either of these lists, I have little reason to believe you won't be able to work with Mercury :)
What are some other banking options?
If you're curious about other banking options and what their requirements are check out this guide which outlines a list of banks which one can open and what their requirements are: How To Open a US Business Bank Account
In the guide you can see all of the requirements for the following banks:
Stripe does not require a US SSN and only requires an EIN + Formation documents.
PayPal does require a US SSN or ITIN in addition to an EIN + Formation documents. Unfortunately, if you do not have a US SSN or ITIN, PayPal is not an option.
This is why Stripe is a much more convenient option!
To open a US Stripe Account you'll need
You should also make sure you are not on Stripe's list of restricted businesses! As long as you don't see your business on the list, there is little reason to believe you won't be able to work with Stripe.
To read more in full about how to open a US Stripe Account as well as learn more about their exact requirements (as directly told by Stripe) check out this page.
To create a Business PayPal account, you'll need:
To read more in full about how to open a US PayPal Account as well as learn more about their exact requirements (as directly told by PayPal) check out this page.
Taxes and IRS filing requirements can be extremely confusing. So below is an overview of the required filings + key deadlines to keep in mind to stay on top of taxes and/or IRS filing requirements for your LLC.
If you own a Foreign Single Member LLC, and you are not considered as “Engaged in US Trade or Business” you are not required to file 1040NR or pay personal income taxes.
As a "Non-Resident Alien" (aka foreigner), you are only required to file and pay taxes in the U.S if you have FDAP income for which withholding was not done at source , or have effectively connected income with US Trade or Business.
However, as of 2017, you still report information like a corporation (see Section 1.6038A-1). Therefore, unless you have registered as a corporation, all single-member LLCs are subject to these requirements. Failure to file or incorrect filling will incur a minimum penalty of $25,000.
No you are not required to do so. But folks sometimes find these forms confusing, or stressful to fill out so working with a professional is always an option to remove some stress here. To read about this in more detail + see an option for professional help check out this guide here.
As mentioned above in Wyoming there is a $60 payment + an annual report due each year to the state and in Delaware there is a $300 annual franchise fee tax.
Both of these can be paid online, directly to the state!
It is possible to launch and grow a US LLC business from anywhere in the world (without the need for US citizenship). And it is also possible to do it on your own! But there are a lot of moving pieces here so it can be helpful to have a hand / a long-term partner that take you through the business formation process smoothly and accurately.
At the end of the day it's your business, your choice regarding whether or not you decide to launch a US business and how you go about doing it. 🚀
I hope this was helpful and if you have any questions at all feel free to live chat us online at any time!