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Company Setup Guide for Merchants (zero paperwork?)
Step-by-step Incorporation + Turnkey Legal Services for US & Non-US Merchants
Daniil Andreev
July 18, 2024
Hey there!👋
We know, setting up a company is daunting — endless paperwork, filled with legal jargon nobody wants to read, wasting days of your time hopping through bureaucratic hoops, and all of it being so confusing.. 😵
But it actually isn’t all that difficult, as long as you know exactly what to do — that’s what today’s post is for.
We’ll show you the exact steps to set up your own company in the U.S., so grab a drink, and let’s go! 🔥
Psst.. You can even start a company without doing paperwork or touching a single gov agency doorknob, we’ll touch on that later. 👀
1.Incorporation in U.S 🏢
To incorporate a company in the U.S., you need to first choose a company type and a state. The most common business structures are:
1️⃣ Limited liability company (LLC)
An LLC is an organizational business structure in the U.S. that helps business owners separate their own liabilities from the company’s liabilities.
2️⃣ Corporation
A corporation is a separate legal thing owned by shareholders. It's responsible for its own debts and legal issues, not the shareholders.
The corporation pays its own taxes, and shareholders pay personal taxes. If the corp has problems, the shareholders' personal money and property are usually protected.
When it comes to corporations, there are two types: S-corps and C-corps.
C-corps are taxed at the corporate level, with the corporation paying corporate income tax, and shareholders then being taxed on any dividends received, resulting in double taxation.
Meanwhile, S-corps pass their taxable income, losses, deductions, and credits through to shareholders' personal tax returns, avoiding the double taxation seen with C-corporations.
As for states, the most common are Delaware & Wyoming.
Delaware is the gold standard for startups seeking funding from angel investors and venture capital firms, while Wyoming offers very low costs, manageable regulations, and flexibility for growth — we’ll get into the tax specifics of both states soon.
The most common option is an LLC incorporated in Delaware since overall it offers the best balance of liability protection, tax advantages, and credibility for startups and small businesses looking to attract investment while maintaining flexibility and control.
❗️ For Non-U.S Residents
The process and requirements for incorporating a company in the U.S. for non-residents may differ. Consider the factors of visa requirements, tax implications (different tax laws, potential double taxation), legal representation, and other factors.
2. Apply for EIN & Business Licenses 🏛️
After picking your business type, name, and state: the next step is to
1️⃣ Get an Employer Identification Number
An EIN is like a social security number for your business — you'll need one for tax and banking purposes, and it can protect your personal assets from business debts.
You can apply for an EIN online through the IRS website, or through a turnkey legal service, like firstbase (referral), which we’ll cover more extensively soon.
2️⃣ Business Licenses for eCom Stores
When it comes to eCom businesses, the good news is that many don't require specific licenses.
To be more specific, the eCom businesses that don’t need a license include:
Dropshipping stores
Print-on-demand businesses
Digital product sellers (eg., ebooks, courses)
Most online retail stores selling products that aren’t regulated
❗️ Licenses May Be Required In These Cases:
Selling regulated products (eg., food, alcohol, cosmetics)
Operating in certain states or localities with stricter requirements
Conducting business under a name other than your legal name (may need a DBA)
If you do require a license (or multiple), you need to:
Determine the required licenses based on industry, location, and business activities (eg., professional licenses, industry-specific licenses, and general business permits)
Contact issuing agencies for specific requirements and application processes.
Collect the necessary docs (e.g., insurance proof, zoning approval).
Fill out applications and pay fees (which vary by license and location).
Allow several weeks for approval, and once you get the licenses, display them at your business if required.
You’re not crazy to think that this is an insane amount of paperwork to do. 😭 Hang in there, you’ve almost got a company up & running!
3. Getting a Business Bank Account & Registered Agent 🙃
Once your company is formed & an EIN is obtained, you can apply for a business bank account.
You’ll need a registered agent, too — it’s someone who receives important legal docs on behalf of your business and makes sure you get them quickly.
Firstbase can also help with that, as they appoint an agent to keep all of your compliance docs in one neat place.
4. Taxes for U.S. & Non-U.S. Residents 💵
We’ll cover the taxes for Wyoming & Delaware first, as they are the most popular locations for LLCs and corporations.
Delaware:
Annual Franchise Tax — for LLCs it’s a flat $300/year, and for corps its anywhere from $175-200,000 based on authorized shares;
Corporate Income Tax — flat 8.7% rate;
Gross Receipts Tax — rates can vary from 0.0945% to 0.7468%, depending on business type;
No sales tax;
For non-residents that have an LLC in Delaware — the LLC itself does not pay income tax, and non-U.S. members are not subject to state income tax if the LLC itself does not conduct business in Delaware. The annual franchise tax of $300 is still the same for non-residents.
As for corporations, non-U.S. shareholders are subject to 30% federal withholding on dividends paid from U.S. source income. The flat 8.7% income tax still applies.
Wyoming:
No state corporate and franchise tax;
Annual report filing fee — $60 minimum or $0.0002 per $1 of assets in Wyoming;
Sales tax at 4%, plus local taxes up to 2%;
Non-residents who own an LLC in Wyoming are subject to a 30% federal withholding tax on their share of the LLC's U.S. source income (this applies to profits, not gross revenue). This also applies to non-U.S. shareholders of a corporation in Wyoming.
❗️The following applies to both, Wyoming and Delaware:
Federal income tax filing with the IRS — for corps, it’s a 21% flat rate, and LLCs are taxed as pass-through entities (unless elected otherwise).
Employer taxes (if you have employees) — federal payroll taxes (FICA) at 15.3% (split between employer & employee).
Federal unemployment tax (FUTA) at 6% on first $7,000 of each employee's wages.
If you want more than a bit of help with tax filing & bookkeeping for your business, check out firstbase.
5. Skip The Paperwork Entirely — Popular Turnkey Legal Services 👀
After seeing just how long it takes, you’re probably getting second thoughts about setting up a company in the U.S. — and that’s why turnkey legal services exist!
A popular option is firstbase — they can take care of everything for you, from opening a business bank account without an EIN to even creating a virtual mailbox to manage your letters online.
Check out firstbase using our referral link & see what they can do for you:
You can also watch this video where I show how to open a Shopify Store with firstbase:
@0gdao How to open a company in US 🇺🇸 with $400 and 1 month 🔥 Best service for startups and eCommerce projects 🥇 LINK IN BIO 🥇 #startups #company... See more
As for alternatives, Stripe Atlas is great if you are Delaware-based, Osome if you want to set up in Singapore, and Clerky if you’re looking to create a C-corp in Delaware.
Wrapping Up
Creating a company in the U.S. is only difficult if you don’t know what to do. Whether you’re going for a hands-on approach & setting one up yourself, or going to a turnkey legal service to do it for you, we covered both.
Of course, it’s important to do your own research, especially when it comes to taxes & company setup! 😄
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