There are many U.S. LLC questions to ask before formation when you expand your e-commerce business to the U.S. These questions are not obvious. Most sellers only anticipate 1-2 steps ahead (or questions) with their U.S. formation and are unaware of these costly mistakes they have already made. Why does this happen?
It appears that forming a U.S. LLC online is simple.
Several online entity formation companies give you this impression. Unfortunately, they leave out all the complicated yet, vitally essential parts to get you to do a filling.
We don’t approach business this way, so we work mainly with more successful 6, 7, and 8 figure sellers. Successful sellers realize there is much more involved than filing the LLC online and obtaining an EIN with the IRS.
Here are the key U.S. LLC questions you should be asking before, during, and after a U.S. formation:
- When is it recommended to form a U.S. LLC? When is it for Amazon, Walmart, Shopify, or setting up a Stripe account? Hint: Most non-resident sellers do not have a U.S. LLC for Amazon unless they cannot obtain insurance from their home country.
- If you form a U.S. LLC, how should it be taxed? I have read about four options, but the S corporation option does not apply to my situation. Which one is best for my situation?
- Who is the owner of the U.S. LLC, and how does that impact U.S. banking?
- How do I know if the operating agreement is correct for my situation? When do I need to file form 8832?
- I read situations where my foreign entity needs an EIN because it will own the U.S. LLC. Is that true or not?
- If so, what happens if my start date on my SS4 application was in prior years? I heard the IRS has huge fines for some forms if late.
- Who should be the manager vs. the member of the LLC?
- What are my U.S. tax responsibilities if I am engaged in a U.S. trade or business? What do I need to do to avoid a permanent establishment?
- Do you have a tax firm that can file protective tax returns in the U.S.? Are they on the same page with these different scenarios?
- What are my U.S. sales tax responsibilities, especially if I sell on Shopify or my own website?
- What happens if I want to sell from my Shopify store from the same legal entity as my Amazon business?
- What impact does that have on my sales tax requirements?
- If I use Taxjar or Avalara will they take care of everything for me regarding sales tax, and what happens if I don’t have a U.S. bank account (FYI, Taxjar and Avalara are both partners)?
- How do I update my U.S. e-commerce account with my new LLC information? Is it even possible to update? Do I need to create a U.S. taxpayer?
- When do I update my new U.S. address on my existing e-commerce account, and what verification measures are currently used? Does that include a utility bill?
- How do I update my tax settings with my new U.S. entity in Amazon or other marketplaces?
- How do I transfer income from my U.S. LLC to my foreign company (to avoid unintended tax consequences)?
- When do I owe U.S. taxes? I have read that I only need to file forms 5472 and 1120 proforma, but when is that not the case?
- I don’t want to know that I had other U.S. tax forms to file, and a U.S. tax treaty does not protect me.
- Where does the ownership show up for the U.S. entity?
These questions are the tip of the iceberg of the filing process.
If you are like most sellers, you likely would rather understand these strategy questions before forming a U.S. company, which we cover in a 30 or 45-minute strategy session. Our strategy calls are 100% credit towards our U.S. entity formations (subject to change in the future). We work with the top companies in the e-commerce industry and attend the top events, such as the ProsperShow and others. Learn more about those paid options here.
Another group of our clients likes working with NCP because they know they can get started and realize they don’t have to clarify these critical questions, especially around which state and entity are best. After all, we include our U.S. entity packages with a very detailed video with the best recommendations for most situations, plus summary slides to form your U.S. entity and your tax responsibilities. Our U.S. entity video, which is part of our U.S. package, includes details on what is recommended and required for Amazon, Walmart, Shopify, Stripe, U.S. tax responsibilities, and which state is best for each situation. Our video training is the most detailed industry and ONLY available to our clients.
All follow-ups and updates throughout the year are part of our service, separating us from everyone else. Our team and I will review every order submitted to make sure your choices make sense before we file the articles and fax your SS4 application to the IRS.
Forming your U.S. legal entity is the substantial first step with the foundation of how you will be taxed in the U.S., especially the filing of your SS4 application after your entity is formed. The real work starts to make sure all the i’s are dotted, and t’s are crossed. Below is our U.S. complete formation checklist, which provides an overview of the U.S. LLC formation steps.
Yes, there are a lot of “low-priced” LLC options online. Still, if any, very few take a comprehensive approach to all these critical issues for a foreign e-commerce seller looking to expand into the U.S., Our support team is first class. We have fully vetted partners if additional support is needed on the back end.
If you have U.S. LLC questions about our process, service, or level of support to help you expand, let’s schedule a call and a time to chat at the button below to see how we can help you with your expansion process and make sure you are protected. If you decide to work with NCP, we will keep you updated on essential changes with U.S. tax changes, sales tax issues, or other areas to make sure you are protected.
For example, we send out recent updates to our clients about Amazon only being able to pull inventory 18 months back and impact sales tax calculations. We have new updates on Amazon and new insurance requirements and a resource, plus updates on digital taxes, those with federal trademarks that are still not protected, and much more.
All follow-ups and updates throughout the year are part of our service, separating us from everyone else. If you are looking for clarity on our fees and services with our U.S. LLC formations, please click the link below to schedule a call with our team. There is no fee to speak with a team member. Click here to schedule a call with our team.