Is it necessary to form an llc in Usa for dropshipping?
In fact, it is not necessary in the first stage!
However, since you will have problems receiving payments from Shopify or your online store, it becomes inevitable to form an llc in Usa for Dropshipping just to receive payments.
If global payment gateways such as Paypal, 2checkout or Stripe could be used, payments could be received from e-commerce stores with individual accounts without the need to form an llc, at least in the initial stages. Thus, entrepreneurs would not face a problem such as receiving payment.
There are many payment gateway companies that provide services locally, but unfortunately, when these companies hear about the dropshipping business, they will want to get away from you without providing service. They also have a point; for example, they are afraid of too many refunds or high chargeback rates.
In addition, the 3D secure system, which is not very common abroad, may push customers to give up shopping.
All these negative situations push the entrepreneur to form an llc in Usa, and they have no choice but to do so.
After seeing that it is inevitable to form a dropshipping business for e-commerce purposes in Usa, the most curious question is how much it will cost.
How Much Does It Cost to Form an LLC in Usa for Dropshipping? What Does It Cost?
Below you will find all the expenses of an entrepreneur who will start a Dropshipping business from scratch, including forming an llc and online store.
Costs
- Company formation in Usa: $89 to $140 (depending on state selection)
- A phone number with an American area code Zadarma or OpenPhone : $2 – $15 / Month (Varies Depending on the Selected Service)
- Payment for Shopify store: $29 /Month
- Tax number (EIN): Free ( Free EIN Application Campaign )
- Bank account in Usa: Free
- Payment gateway account (Stripe): Free
- Advertising expenses: Varies
Bank account, tax number and Stripe account are required for a dropshipping business. These are available free of charge, but it is worth noting that they are necessary.
Once you have provided all the above items, you can now start a dropshipping business.
Beyond setting up a dropshipping business, the real issue is do you have the knowledge to be truly successful in the dropshipping business? First of all, you must answer this question yourself. If you do not find yourself sufficiently equipped in this regard, you will have enough time to improve yourself during the company formment phase.
How Long Does It Take to Form an LLC in the USA?
Forming an llc in the USA takes approximately 1 week, and after forming the company, an application for a tax number (EIN) is required2. It takes approximately 2-3 weeks for the EIN number to reach you. It is up to you to spend this waiting period fully productively. During this time, you can improve yourself for dropshipping and e-commerce, attend trainings, and also spice up your newly opened online store. (Like attracting traffic through organic means)
Steps to Start a Dropshipping Business
Since everything is connected to each other in a chain, it is beneficial to perform the operations sequentially. Otherwise, you may experience a major timing problem. To avoid this type of timing problem, it is recommended that you stick to the list below.
Getting a Phone Number with Usa +1 Area Code
It is not necessary to have a phone number with a US area code to form an llc, but those who want to create a corporate identity can obtain it first.
You can get your own landline phone number with a US area code. You can choose Zadarma or OpenPhone for this You can use different services depending on your budget. These are the most commonly used services at the moment.
Forming an LLC in Usa
New Mexico is currently the most cost-effective state to establish a company in the USA . States with slightly larger budgets may also be preferred.
For information about other states, costs and setup steps, be sure to check out our 50 States to Establish a Company in America
The procedure for incorporation is the same in almost all states. You choose a Registered Agent, apply online, provide the company name and required information and make payment, your application will be received and they will set up your company remotely for you.
There are many registered agent options, such as telephone and address services. At this stage, it will be advantageous to work with companies that can provide the most appropriate and quality service. Northwest Registered Agent to you in this process . The first year of registration agency service is free, you only pay the company setup costs and your EIN number free of charge .
Now, after learning the preliminary information and details, you can now apply to establish a company. There is a step-by-step guide on Northwest Agent when applying, which the Establishing a Company in New Mexico link.
Thanks to this guide, dozens of entrepreneurs formed their companies at a cost of around $89 - $140. You can see how realistic this is by looking at the comments under the subject. The cost of forming an llc in the USA is 89 dollars in total for the state of New Mexico, including the State filing fee + Operating Agreement. Northwest also offers you a free company address and customer panel tracking in New Mexico.
Normally, the formment fee costs more, but thanks to the agreement we made with Northwest agent, you can form your LLC company for only 89 USD, including the address.
Get Your EIN, Tax Number
After your LLC company is formed, the next step is to obtain a tax number (EIN). No matter which state you form your LLC in, you must obtain a tax ID number from the IRS.
So why do we need to get a tax number?
You cannot make any transactions in Usa or online with an llc without a tax number. For example, you cannot open a bank account or sign up for a payment gateway like Stripe and receive payments from your online store via credit card. In short, it will be of little use to you without the company EIN number.
EIN is a free service. You can fill out a form called SS4 yourself, remotely fax the form to the IRS online and apply.
The step-by-step process to obtain an EIN number Getting an EIN Number from America guide. You can quickly complete the steps here. If you have established an LLC company through Northwest with our reference, already making your EIN application free of charge .
Getting an EIN can take 2-3 weeks, and you actually have a lot of work to do in your new job during this time. If you have no idea how to get through this waiting period, we recommend you take a look at the recommendations below.
What Can You Do to Improve Your Business?
- Improve your website: Improve your website both in design and functionality. Prepare, install and test tools such as graphics, product descriptions, necessary pages for the site, contracts, message bots and contact forms.
- Focus on SEO: It takes a few months for a newly opened website to reach a certain level in Google. At this stage, while you have time, create a blog in your online store and publish long blog posts about your business. Creating content with a blog is a very powerful ranking technique. You can provide the traffic that everyone expects from advertisements through organic means by writing long blog posts. Be sure to write a blog post every day or every other day.
- Improve yourself in digital marketing: During these waiting periods, follow the innovations in Facebook and Google ads and try to improve yourself. Install Google analytics, Facebook pixel and learn to read these tools. Focus on these topics on how to advertise cost-effectively on Facebook ads and Google ads. You can undergo serious training because I can say that this side is the side that will make you make or lose money.
- Optimize your website: Optimize your online store or website, speed it up, and reduce opening and loading times. Make sure your site opens faster for the user by performing tests with tools such as Gtmatrix and Google page speed. Improve your site by making the necessary optimizations. For example: Make images smaller, remove unnecessary plugins and codes, compress scripts, etc. etc.
- Do product and market research: Research new products and check trends. Try to foresee a few months from now rather than current trends. Find new products, check their salability and take measurements. Find new suppliers and complete your agreements. I especially recommend measuring competitors and keywords by using trial versions of market research software. For example, I think you should start using tools such as ahrefs and semrush immediately.
- Set up social media accounts: Create your accounts on all social media platforms of your business, open your Google My Business account, and start sharing your posts. Open your YouTube channel and upload product videos, and be sure to add your site link to the product descriptions.
- Start getting backlinks to your website: In order for your website to rise in Google rankings, you need to work on backlinks after a certain period of time and supporting it with content. Start getting free or paid backlinks if your budget allows. You can start SEO work slowly by allocating a budget for this work, as if you were advertising during this two-month period. At this stage, a few links per week would not be bad without taking on too much.
Set Up Your Online Store (Shopify, Woocommerce or Others)
After you submit your tax number (EIN) application, you have a lot of time in this waiting period. After finding a domain name suitable for your company (in fact, you can consider this before forming the company), you now need to decide which platform you will use and make a radical choice. Based on the principle that the best way is the known way, if there is an e-commerce platform you have used before, you can start preparing your online store by continuing on it.
The most preferred platform here is Shopify. Shopify is preferred because it is a ready-made system and the most used platform in the Dropshipping business. If you have shopify experience before, you already know what to do. Sign up now, open an account and start setting up your store. By the way, keep in mind that Shopify charges you a $29 store operating fee every month after the trial period.
If you say you have no knowledge about Shopify and are open to different platforms, the second option may be Woocommerce. You can set up your own online store by purchasing domain and hosting Here is a quick start guide, although it does not teach you exactly Woocommerce, you can at least get an idea of what it is. You can get started by reviewing the Dropshipping Guide with WordPress
If you are one of those who say you know both platforms but are undecided, then Shopify? Woocommerce? that let's compare the pros and cons, take a look at our article as a guide to help you decide.
Setting Up a Credit Card Payment Gateway (Stripe)
Once you have your EIN number, you can now sign up for a Stripe account to charge your customers via credit card. In order to open a Stripe account, your company formation document, ID, EIN number and phone number are required. You do not need to pay any fee, the services are free. They just charge some commission per transaction, that's all. So there are no monthly or annual expenses.
If you have your EIN number and your online store ready, you will have a payment gateway where you can receive payments by credit card by following the steps in Opening a Verified Stripe Account After opening your Stripe account, when you reach the stage of adding a bank account, you need to complete the next step, which is to open a bank account, and define the relevant account information.
Opening a Bank Account in Usa
Once you have formed the company, obtained an EIN (if applicable) and set up your store, it is now time to open a bank account. Since you'll be using a payment gateway like Stripe, you'll need a bank account to deposit your money into. By the way, you cannot open a bank or Stripe account in Usa before the EIN arrives, you have to wait for the EIN to arrive. At this stage, there are a few options where you can open a bank account remotely online in the USA.
Option 1: Opening a Bank Account in America (Mercury Bank)
Option 2: Opening a Payoneer Company Account
Both options work for you. If you want, Mercurybank account and use it, or you can use Payoneer Business or AirWallex. All digital banks here are powered by Stripe.
Conclusion
When you complete this process by spending approximately $89 to $140, you will have an Usan company, a tax number, an online store, a virtual stripe and an Usan bank account.
The next process depends on your knowledge, skills and potential. You can attract customers to your online store with advertisements and other digital marketing methods, and run your business by shipping the products you sell without stock to your customers. When you come to the end, the following question may come to your mind;
I am an llc owner and I run a business. Will I pay any taxes?
Tax is a completely different issue, but it is not as troublesome a process as you fear or hear from those around you. If you understand the process and fulfill your obligations, you may pay taxes or not pay at all, depending on the situation. in this category that contain in-depth information about tax . , it would be better to first Taxation in America
We hope this article was useful for those who plan to do Dropshipping business in Usa.
20 Comments . New Comment
Good day, as you mentioned, I bought a mailing address in Wyoming for 15 USD, I applied for company formation from Northwest Registered Agent with your link, the agency responded in this way, can you direct me? How do I proceed, I used my Wyoming mailing address on the application. Here it asks for my address in Turkey, should I share that?
Our legal requirement as the Registered Agent is to have the Communications Contact physical address (where they or their business are physically located) on file in our private, secure online system. Virtual Offices, Co working spaces, PO Boxes, UPS Stores, and other Mailbox Facilities are not acceptable as your physical address. Our Registered Agent address will not suffice.
Though we do not share this physical address, with anyone, we are required by Wyoming law to have it on file. We can be fined for each entity that is out of compliance, so it's a pretty big deal. If you'd like to learn more about our obligation, you can research WY statutes 17-28-104 and 17-28-107 through 109.
Please fill in the 'Services Requiring Attention' questionnaire within your online account, so you may list the physical address for the Communications Contact. Once done, please reply to this email to let us know and we will promptly complete your order.
Hello,
You will see a red “Services Requiring Attention” warning at the top of your Northwest panel. There is a final form in your panel to verify your ownership. You are asked to fill it out. In fact, you will only need to select your name, select both as member managers and save the form.
If the subject is unfamiliar to you, you can follow the method in the guide below to implement it:
https://startupsole.com/northwest-you-have-services-requiring-attention-cozumu/
Thank you, I replied and sent :)
A message like this came again, I used the 15 USD mailing address I got from Wyoming.
“Thank you for your response! Please complete it with your own verifiable physical address either where you are located or your business is located. A Registered Agent address will not suffice.
Once this has been completed and the address has been verified, we will be able to proceed with your filing request.
“You can access your account here: Northwest Registered Agent LLC”
If an address outside Usa is accepted, I can share these: Does he want my address in Turkey? I also have an llc in England, I can share its address.
They ask you to fill in your physical address in your current country.
If they do not ask for your UK address, please enter your correct physical address in your country of residence. Then, reply to the e-mail and let us know that you have filled in the required information. You can even upload your residence permit pdf document to the email and then they will start the installation.
Okay, thank you, we applied for the EIN number together with you. When registering the company, something called BOI Report Compliance was written. No one asked me for a photo or ID. Was Northwest supposed to do such a thing?
After accessing the Northwest panel, you will see a red warning message called services xxxx at the top. Click on that message, you will see a form, fill out that form for the BOI report, upload your ID or passport and complete. However, fill out this form after receiving the EIN number.
Greetings, SMS verification is required for phone confirmation for Paypal and Wise accounts. Company number is obtained through Twilio, can we use that number? You suggested Sonotel, why is there a need for those numbers, do they receive SMS codes? There are fax, sms, mms and call features via Twilio, that's why I mentioned it.
You can use Twilio, in fact, all platforms that receive SMS can be used.
Hello, a while after I founded my company, I received an email from Inc Authority about tax obligations. I was going to make an appointment and a consultant would inform me about my tax liabilities. I made an appointment, but I guess I didn't receive a call because I got my phone number from sonetel. Is this an important location? I already got your spouse's number. I added Shopify. I opened my accounts. Is there anything else I need to do? Thanks
Hello,
If you need a tax expert, we can talk to you, but you are not obliged to talk to this company's accountant. They will only give information and suggest that you receive service.
Hello, we formed the company, we got an e-in number, we opened the store, we opened a bank account, we became a member of stripa, now you have sent the number and can we apply to paypal?
You can apply for itin, there is no obstacle to this. For Paypal, see this article. https://startupsole.com/paypal-hesabi-acmak/
Open an account and test it until it works. Sometimes, when you write to the support system when they ask for a push, they approve it manually (I applied for a push, I'm waiting, etc.), you can continue using PayPal with VPS.
Hello, I am doing research on dropshipping and I have questions.
1. Canada account is recommended for dropshipping system.
Do I have to have a US account to open a Canadian account?
2. Is a company absolutely necessary to open an amazon.com individual account?
3. There is information that a company is not required for UAE and Singapore accounts. Can an account be opened directly in those countries without connecting it to a global account?
Hello
First of all, I would like to state that, in my personal opinion, I do not recommend dropshipping. I won't go into detail here.
1- Since I am not interested in dropshipping, I do not know which market it is recommended for. Canada is included in Amazon's "North and South Usa" group, and when you open an account from any country in this group, you have the right to sell in all countries in the group. The “North and South Usa” group includes Usa, Canada, Mexico and Brazil. By opening an account in any of these countries, you have the right to sell in these 4 countries. My advice is to open from Usa. Since Brazil has a different procedure, you will neither be able to open an account in this country nor will you see Brazil on the list when you open an account in other countries. I'm not going into details.
2-Open an individual or professional account on Amazon.com, you do not need to be an llc. Unless different procedures are applied to citizens of different countries. I wasn't quite sure.
3-I don't know if there is a need for an llc. However, there is no obligation to connect any store globally. You can open an account in all stores after paying the fee one by one.
Let me give you additional information: Generally, not many people talk about this issue. When you open an account on Amazon from all stores, you will pay an average of 180 USD per month. If you do this globally, you will only pay this fee in the first month. In the following month, you will continue to pay only the US store fee of 40 USD.
Good luck.
Mr. Şakir, thank you very much for your contribution. You enlighten us very well with your experiences on Amazon.
Hello,
I want to do dropshipping via Amazon. I know that it is free of charge by opening an individual account in Singapore and UAE. If I want to do it via Canada, is the situation the same? Do I need to open an account in the USA first to sell to Canada? If so, is it enough for the account to be opened in the USA to be an individual or should it be a company account? I would be very pleased if you could help. Thanks.
Hello
First of all, I would like to state that, in my personal opinion, I do not recommend dropshipping. I won't go into detail here. Coming to your question, there is a monthly fee of S$30 for the Amazon Singapore store. I have no information about whether he charges individuals. As you said, UAE is free.
On Amazon, each country belongs to a continent or group of continents, and when you open an account from a country in this group, you will automatically be able to sell in other countries. For example, Usa is in the “North and South Usa” group. Also included in this group are Canada, Mexico and Brazil. If you open an account in any of these 4 countries, you will have the right to sell in these 4 countries. However, you will not see Brazil on the list, this country has a different procedure.
Additionally, some countries may have only one country in a group. For example, like Türkiye.
Individual and company accounts should not be confused with individual and professional packages on Amazon. Individual and professional accounts on Amazon are an account package. You can open individual or professional packages on Amazon, either with an individual or company account. I strongly recommend the professional package. Keep in mind that the individual package is suitable for people who make a few sales a month or a year, and that the primary goal of people in this group is not to make a net profit or trade.
What are the accounting procedures when you open an llc?
If you sell outside the US, you have an llc that is tax-exempt to a certain extent. When you sell within the USA, there are limits based on the states in which you make annual sales as a foreign LLC (Nexus). As long as you don't exceed these limits, you don't have to collect sales tax.
If you are thinking of going one level ahead or your business is large enough to exceed the limits, you can hire an accounting firm and have all sales tax records recorded by them.
There is a list here: https://startupsole.com/amerika-muhasebe-firmalari/
But first, I recommend you to read this article https://startupsole.com/amerikada-vegilatma/ in detail. If you are just starting out, I do not think you will need an accountant in the first place. By the way, there is a declaration form called 5472 that every company owner must fill out annually. At this stage, you can get support from a professional mid-year. Details are here: https://startupsole.com/amerika-disindaki-lccler-icin-form-5472-gercegi/