Numerous entrepreneurs globally dream of starting an online store. With websites like Shopify, Etsy and Amazon, it has never ever been simpler to launch a U.S based e-commerce business - even if you live outside the nation. But the big question is, can a non-US resident legally own and run a U.S e-commerce store?
The short answer is: You can.
However there are a couple of rules you must follow - particularly when you are starting your business, filing taxes, and keeping up your accounting in order. This article will explain the procedure with some accounting tips - such as when you should employ an accountant or a personal accountant.
Can You Own a U.S E-commerce Store Without Being a U.S Citizen?
Yes, you don't need to become a U.S. citizen or even exist in the U.S in order to have a U.S e-commerce store. The United States is among the most business friendly countries on the planet and foreigners can own companies here.
There are two common types of businesses non-residents set up:
- LLC (Limited Liability Company) - This is probably the most popular option. It is flexible, simple to administer and offers you legal protection.
- C Corporation - This is much better for getting cash from U.S. investors or issue stock.
All non-US business people choose an LLC unless they have a compelling reason to pick a C Corp.
Steps to Start a U.S E-commerce Business As a Non-Resident
Here is a step by step guide for getting Started :
1. Pick a State to Register your company
You can form Your LLC anywhere in the United States but many global business owners prefer Delaware, Wyoming, and Florida. These states have simple rules and reduced fees for business.
2. Register Your LLC
In case you've no clue just how this works, many online services can help you set this up for a fee.
3. Obtain an EIN
Get a Social Security Number for your business. It is needed to pay taxes, open a U.S. bank account and employ workers. You may apply on the internet or by way of a tax specialist for an EIN.
4. Open a U.S. business account
You need a U.S business account to get payments and also to handle your cash. Some banks require you to come in person, others accept applications on the internet or even through fintech businesses like Mercury or Wise.
5. Pick an E-commerce Platform
Choose an E-commerce Platform where you wish to sell: Shopify, Etsy, Amazon, WooCommerce etc. Check that the platform allows non-US residents and supports your product type.
6. Set Up Your payment processor
To get paid, you want a Payment Processor like Stripe and PayPal. These types of services usually request business registration documents, a U.S bank account and quite often a photograph.
Guidelines on Taxes for Non-US E-commerce Owners
Even in case you do not reside in the U.S, you might owe taxes here no matter the way your business is organized and exactly where your consumers are located.
The key points are:
- U.S Sales tax: You may collect sales Tax from U.S. customers. That depends upon where your customers reside and whether your business has "nexus" (a tax connection) in those states.
- Federal income tax: In case your U.S business generates a profit, you are likely to pay U.S Income Tax. The rate varies in case you run an LLC or a C Corporation.
- State Taxes: Some states charge income tax while Some charge sales tax. That is why picking out the right state is important.
- Double Taxation: If your home nation has a tax treaty with the U.S, you might avoid paying double Taxation (in the U.S. and also in your country).
Why Hiring an Accountant Is a Smart Move?
Navigating U.S taxation and accounting rules as a non-resident can quickly become complicated. That is exactly why employing an accountant - someone who understands international business - is among the most wise things you could do.
How a professional accountant can help:
- Set up your books properly from the start.
- File the proper tax forms on time (Form 5472, 1120, etc.
- Help ward off IRS fines.
- Make your financial records clean and audit-proof.
- Use business deductions to lower your taxes.
In case you are just getting started and want somebody to handle your numbers personally, find an individual accountant who specializes in small international business proprietors.
Bookkeeping Tips for Non-US E-commerce Owners
If you do not track your money correctly, you may spend much more in taxes than you ought to - or even worse - get in trouble with the IRS.
How to avoid such mistakes:
- Use accounting software: popular tools include Wave, Xero, and QuickBooks Online.
- Track expenses: Save receipts for web hosting, software, shipping, advertising, etc.
- Keep personal and business finances separate using your business bank account.
- Monitor cash flow: Know how much cash is going in and out every month.
- Make monthly reports: Get assistance from your accountant or make them yourself with software.
Even in case your business is small , clean bookkeeping makes you appear professional and your business grows more quickly.
Mistakes to Avoid as a Non-U.S Resident Starting Business In The U.S
These are mistakes non-resident business owners generally make:
- Skipping U.S tax returns: You owe tax, Missing forms like 5472 could result in big fines.
- Mixing personal and business money will confuse your records and create tax problems.
- Using the wrong business structure: The choice between an LLC and C Corp is costly.
- Not hiring a professional accountant: DIY accounting may cause errors that cost more to correct later.
Avoiding these mistakes saves you money and stress.
The Benefits of Owning A U.S E-commerce Store as Non-Resident
Despite the regulations and paperwork, establishing a U.S e-commerce store can have many advantages :
- Access to the biggest consumer market on the planet.
- Trusted U.S. company presence.
- Faster shipping inside the U.S.
- Better payment processing.
- More investor interest/brand credibility.
With the correct guidance, such as an experienced accountant, you can focus on growing your business.
Also Read | How Offshore Accounting Supports E-commerce Businesses in USA
Conclusion
So now you know how a non-U.S resident can own a U.S E-commerce store. All you need is the setup, a little legal documents along with a plan for handling your taxes and accounting.
Making use of an accountant, be it a professional or an individual - can make the procedure simpler, safer and more lucrative after a while. Try not to do everything yourself. Develop your store and leave the numbers to the experts.
In case you have passion and a great product to sell, the U.S. market is for you. Just ensure that your business is set up correctly and your books are organized.
