Do I Need a US Company to Sell in the US?

Most founders get this wrong. They either rush to form a company before they have a single sale, or they wait far too long and create a massive headache for themselves.

Let’s clear this up. You don’t need a US entity on day one. But you will need one to grow.

What can I do without a US entity?

You can validate your idea. You can set up a store and start making sales without a formal US company. This is the "testing phase."

To do this, you’ll need a payment processor that works with individuals or non-US businesses. Stripe supports businesses in many countries, including India. You can also use a Merchant of Record like Paddle. They handle all payment processing and sales tax compliance for a higher fee.

This setup is purely for market validation. It lets you answer the only question that matters at the start: will anyone in the US buy my product? Once you have a clear "yes" and see a path to consistent revenue (e.g., $1,000/month), it’s time to get serious.

Why do most stores form a US company?

There are three main reasons: payment processing, liability, and partner trust. But the first one is the most urgent.

1. Payment Processing Costs

This is the biggest driver. The default payment gateway on Shopify is Shopify Payments. It’s reliable and has the lowest transaction fees. To use it, you need a US company, a US bank account, and a US address.

Without Shopify Payments, you’re stuck with alternatives like Stripe International or PayPal International. These gateways almost always have higher fees—often 1-2% higher per transaction. That might not sound like much, but it adds up fast.

• On $100,000 in revenue, a 1.5% fee difference is $1,500 lost.
• On $500,000 in revenue, it’s $7,500 lost.

That’s money you could have spent on inventory or marketing. Forming a company costs money, but not forming one costs you margin on every single sale.

2. Liability Protection

A US entity, like an LLC or a C Corporation, creates a legal separation between you and your business. If your business is sued or accrues debt, your personal assets (your house, your car, your savings) are protected. Selling as an individual (a sole proprietor) leaves you personally exposed.

3. Trust and Operations

Having a US entity makes you look more legitimate to American partners. US-based 3PLs (third-party logistics), suppliers, and marketing agencies are more comfortable signing contracts with a US company. It simplifies their legal and accounting processes. It also makes it possible to get a US business bank account (like Mercury or Relay) and a business credit card, which are essential for managing cash flow.

What type of US company should I form?

For non-resident founders, the choice is almost always between an LLC and a C Corporation. The right one depends entirely on whether you plan to raise venture capital.

Most people get this wrong because they read generic advice. The answer is very different for a bootstrapped brand versus a VC-backed startup.

Feature	LLC (Limited Liability Co.)	C Corporation
Best For	Bootstrapped brands, single founders, lifestyle businesses.	Startups planning to raise US venture capital.
Liability	Limited liability protection.	Limited liability protection.
Taxation	"Pass-through." Profits/losses are reported on the owners' personal tax returns. Can be complex for non-residents.	The corporation pays a corporate tax. Owners are taxed again on dividends ("double taxation").
VC Funding	Very difficult. VCs strongly prefer C Corps for legal and financial reasons.	The standard structure for VC investment.
Admin	Simpler. Fewer formal requirements.	More complex. Requires a board of directors, meeting minutes, etc.
Common Choice	Wyoming or Delaware LLC.	Delaware C Corp.

If you are building a bootstrapped ecommerce brand, a Wyoming LLC is often the best choice. It’s cost-effective and provides strong privacy. If you plan to raise money from US VCs, you must form a Delaware C Corp. This is non-negotiable for most investors. In our Basecamp E-Com Foundation Program, we see founders successfully use both, but they choose based on their long-term goals.

How much does it cost to set up and maintain a US company?

Budget for around $500 to $1,000 for the initial setup and then $1,000 to $3,000+ per year for mandatory maintenance.

One-Time Formation Costs:

• Formation Service: $500 - $800. This is for a service like Stripe Atlas, Doola, or Firstbase that handles the paperwork, gets your EIN (tax ID), and provides initial guidance.
• State Filing Fee: ~$90 - $300. This is the fee you pay directly to the state (e.g., Delaware or Wyoming) to register the company.

Annual Recurring Costs:

• Registered Agent Service: $100 - $200. You are required by law to have a registered agent in the state where you are incorporated. They receive official mail on your behalf.
• State Franchise Tax / Annual Report: $60 - $400. This is an annual tax or fee you pay to the state to keep your company in good standing. Delaware's LLC tax is $300. Wyoming's annual report fee is around $60.
• Tax Filing (CPA): $500 - $2,500+. This is the most significant variable cost. You must file federal (and sometimes state) tax returns every year, even if you had no profit. A good CPA who understands ecommerce and non-resident ownership is not cheap, but they are essential to stay compliant.

Do not skip the annual compliance. Forgetting to pay your franchise tax or file a tax return can lead to fines and the eventual dissolution of your company.

What are the biggest mistakes founders make?

We see the same three mistakes over and over.

1. Waiting Too Long. Once you have product-market fit and consistent sales, the math is clear. You are losing money on every transaction by not using Shopify Payments. Rip the band-aid off and get it done.
2. Choosing the Wrong Entity. A founder planning to raise VC money who forms an LLC will have to pay lawyers thousands of dollars to convert it to a C Corp later. A bootstrapped founder who forms a C Corp will deal with more complex taxes and admin for no reason.
3. Ignoring Compliance. Setting up the company is the easy part. The hard part is remembering to file your annual reports and tax returns every single year. Put these dates on your calendar. Hire a professional. Do not assume the formation service will handle this for you beyond year one.