How to set up a US LLC and US Bank Account as a non-US resident, remotely from anywhere (2021 Update)
We'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.
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:
- Benefits of a US LLC
- LLC Formation
- Best State to form an LLC In
- Registered Agent
- US Address
- US Phone Number
- US Banking
- Getting an EIN
- Stripe vs PayPal
- US Tax Filing Requirements
- LLC Annual Reports
- Formation: File on your own through the state of Delaware/Wyoming or use StartPack (https://startpack.io)
- Banking: Mercury (https://mercury.com/faq)
- Payments: Stripe (https://startpack.io)
Benefits of choosing the US to start your business
The US has one of the best reputations in the word for being business friendly! 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.
Can a non-US resident start a US LLC?
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
- A US LLC
- A US Bank Account
- Access to US Payments
- And more!
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:
- Is 100% owned by non-US tax residents (either natural or legal persons)
- Has no US presence or economic substance
- The income must not be “effectively connected"
What is an 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: https://www.investopedia.com/terms/l/llc.asp
Should I form an LLC or a C Corp?
- If you are looking for liability protection and flexibility (limited admin upkeep, tax flexibility) an LLC is a great choice for new businesses. LLCs are considered easier to start and maintain.
- If you are currently raising or will need to raise US venture capital, and take a company public a C Corporation is a great choice. US investors require a C Corporation to invest venture capital.
- At the end of the day: it's your business, your choice!
Here is a full blog post which dives in to this topic in much more detail: https://www.unstack.com/blog/llc-vs-c-corp
What is the best state to form my LLC in?
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:
- You are a non-US resident (in which case you can choose any state and we recommend Wyoming or Delaware)
- Or if you have a real estate LLC essentially the "home state rule" doesn't apply here)
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: https://www.startpack.io/blog/what-is-the-best-state-to-form-my-llc-in
What do you recommend between Wyoming vs Delaware?
- I recommend Delaware only if you have plans to in the future convert your LLC to a C Corp (to raise venture capital from U.S. investors) or you really want the "prestige" of saying your company is from Delaware. Some customers say this matters to them and if it does, it is your business, your choice!
- Otherwise, I recommend Wyoming. Why? Wyoming is the most popular state for non-residents who are online businesses, e-commerce businesses, or business owners who want a easy and simple way to form and manage their company. It's the most popular state among StartPack customers, has lower annual fees ($50 vs $300 in Delaware), a low filing fee ($100), was the first state to ever create the LLC. Also don't sleep on Wyoming's prestige as well; it has a friendly business environment and has even been called "The Switzerland of the Rocky Mountains."
If you want to get more in the weeds on the differences between Wyoming and Delaware, check out this guide here: https://www.startpack.io/blog/wyoming-vs-delaware-llc-the-ultimate-guide-to-decide-where-to-form-your-llc
How should I form my LLC?
You have a few options here and I'll walk through each of them.
Stripe Atlas [not possible for non-US residents]
Unfortunately, Stripe Atlas does not serve non-US residents when it comes to forming US LLCs. They only support US residents.
File on your own with the state
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:
- Pick a registered agent. You can do this via a google search and a registered agent is required in each state for an LLC. They charge yearly fees (depending on the state from $25 to up to $200 dollars I've seen)
- Pick a LLC name. Search in your state registry if the name is taken too! It also must end with "LLC" or "L.L.C" (LLC is usually the most popular)
- File your LLC online. You can do this directly through the state as well (google to find their link!) Each state has different filing fees which can range from $50 to $500+. It can take several days if not a week+for the state to get back to you. The state will send you your formation documents which will include your operating agreement as well.
If you'd like to file on your own in Wyoming or Delaware:
- Here is a guide on how to file in Wyoming (there is a $100 filing fee with the state): https://www.startpack.io/blog/how-to-create-a-wyoming-llc
- Here is a guide on how to file in Delaware (there is a $90 filing fee with the state): https://www.startpack.io/blog/how-to-create-a-delaware-llc-the-ultimate-step-by-step-guide
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 tax filings and more + serves as a long-term partner, check out StartPack (https://startpack.io).
How do I get a US Mailing Address?
There are a ton of different options out there to get a US Mailing Address. Here are a few options:
- VirtualPost Mail: https://www.virtualpostmail.com/
- Earth Class Mail: http://earthmail.com/
- StartPack provides a US Mailing Address as part of their package
How do I get an EIN?
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: https://www.startpack.io/how-long-will-it-take-to-get-an-ein
Can I apply for an EIN online?
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.
What is the overall process to apply for an EIN?
- With SSN: If you have a Social Security Number, you can go to this website and apply for your EIN Online. If all your information is valid, you will receive your EIN in minutes!
- Without SSN: If you do not have a Social Security Number, you must fill out an SS-4, and fax it to the IRS. It can take anywhere from 2-4 months from the day of submission
Can I digitally sign form SS-4 (application for an EIN)?
Due to COVID 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 StartPack 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: https://www.startpack.io/blog/can-i-digitally-sign-form-ss-4-application-for-employer-identification-number-ein
What is the latest timeline for how long it will take to get an EIN back?
Check out this website for real-time updates on how long it will take to get an EIN: https://www.startpack.io/how-long-will-it-take-to-get-an-ein
I'm skeptical about these delays, can I confirm them for myself/check-in on the status of my EIN application?
If you want to contact the IRS to check on your EIN Application, here are the steps:
- Call the Business & Specialty Tax Line at 800-829-4933
- The hours of operation are 7:00 a.m. - 7:00 p.m. local time, Monday through Friday.
- Follow the instructions to discuss EIN's
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?
These acronyms can get pretty confusing so thought it'd be helpful to define them!
What is an EIN?
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!
What is an SSN?
SSN stands for Social Security Number.
What is an ITIN?
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.
How do I get an ITIN / do I need one?
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).
How do I get a US Phone Number / do I need one?
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:
- Business Verification: When applying for a bank account, Stripe/PayPal account, Amazon Seller account and more, a U.S. phone number is required
- Proof of Location: Many services will require a utility bill as a proof-of-location to conduct business. If you want to sell on Amazon, this is a must!
- Customer Support: Sometimes customers want to talk to people rather than read a website to search for answers!
- Professionalism: Give your LLC an added element of professionalism with a U.S. Business Phone number instead of an international cell, or no number at all!
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.startpack.io/blog/us-phone-number-with-utility-bill-proof
How do I set up a US Business Bank Account?
Unfortunately, there are very limited options when it comes to banking in terms of who can support:
- Non US residents
- Without a US SSN
- No requirement to travel to the US
The winner here is Mercury and below is a link to a thread on the basics of setting up a US bank account:
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 (www.mercury.com/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 :)
- "We can accept most U.S. companies that aren’t money services businesses or involved with adult entertainment, marijuana or internet gambling. Our product is geared towards tech companies, so it might not be the best fit for some other businesses, especially ones that frequently deal with physical cash. We can't open accounts for sole proprietors or trusts."
- "There are a few exceptions. We can’t currently open accounts for founders living in the following countries: Belarus, Burundi, Central African Republic, Cuba, Democratic Republic of the Congo, Iran, Iraq, Lebanon, Libya, Nicaragua, North Korea, Somalia, South Sudan, Sudan, Syria, Ukraine, Venezuela, Yemen, and Zimbabwe."
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:
- Bank of America
- Wells Fargo
- Silicon Valley Bank
- First Republic
- And more!
Once I have a bank account should I use Stripe or PayPal?
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!
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 of your EIN
- A phone number in that country
- A Government ID from any country
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 :) https://stripe.com/restricted-businesses
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: https://www.startpack.io/blog/how-to-create-a-us-stripe-account
How do I set up a US PayPal Account?
To create a Business PayPal 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
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: https://www.startpack.io/blog/how-to-create-a-us-paypal-account
How do I file taxes / stay compliant with the IRS?
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.
I am a Foreign Single Owner/Sole Proprietor (Foreign Single Member 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.
- April 15, 2021: Deadline for LLC tax returns when filing as Foreign Owned Disregarded Entity (Forms 1120 and 5472) or to request a six-month extension of time to file.
- April 15, 2021: Deadline to file individual tax returns for foreign individuals (Form 1040NR) or to request an extension for an extra six months to file your return.
I am a Multi Owner (Multiple Member LLC)
- Preparation of partnership return (Form 1065)
- March 15, 2021: Deadline for partnership and LLCs owned by multiple members to file tax returns (Form 1065) or to request a six-month extension of time to file.
Do I have to pay a professional CPA to file any needed forms?
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: https://www.startpack.io/blog/us-tax-filing-requirements-for-my-llc
Where do I submit my LLC Annual Report / Filing?
As mentioned above in Wyoming there is a $50 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 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 as well.
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!
- LLC vs C Corporation: The Ultimate Guide to Decide Which Is Best For Your Business
- What is the Best State to Form My LLC In?
- Wyoming vs Delaware LLC: The Ultimate Guide to Decide Where to Form Your LLC
- How to Create a Wyoming LLC: The Ultimate Step by Step Guide
- LLC Filing Fees and Recurring Fees by State