Forming a Software Company in Usa

Selling Software to the Whole World by Forming a Software Company in Usa

Many software engineers develop their own software projects and sell software abroad as a freelancer. Software developers often use platforms like Upwork, Fiverr, Toptal or Freelancer.com to find new clients.

Developers using freelance platforms try to become an llc after a certain period of time in order to sell their own special software, mobile applications or SAAS projects.

Fixed costs such as accountant fees, virtual office expenses, withholding tax, taxes, etc. of a new local company can cause quite high costs at the beginning. In this case, many entrepreneurs have some hesitations about starting a new business.

Difficulties in Doing Business with a Freelance Logic

Freelancing without an llc is very restrictive for both software developers and those doing similar work and brings great difficulties. Here are the main difficulties:

• Not giving a corporate impression
• Not being able to open a business bank account in USD and many other currencies
• Failure to instill trust in customers
• Not being able to benefit from some startup supports such as servers and software provided to entrepreneurs
• Not being able to receive payments online from credit cards
• Not being able to pay invoices
• Not being able to create a corporate identity
• Difficulties receiving payments from freelance platforms
• Problems registering mobile applications to application markets

If you are a software developer or have plans to expand your business, forming a local company may seem quite costly at the first stage. In addition, you need to consider the ongoing costs, taxes and expenses after installation.

Doing business as a freelancer, not being able to issue invoices, and not being able to receive payments from credit cards in global markets restricts you greatly. Forming an LLC company in Usa will take you to a different point, especially for tax advantages, low startup costs and accepting payments from all over the world.

 How Does Taxation Work?

Foreign-owned and single-member LLC companies formed in the United States are considered a structure that is not taken into account. As it is known, single-member foreign LLC companies do not pay state taxes. If the company's income originates from the United States (that is, your customers reside in the United States), after a certain limit, you only pay federal income tax after deducting your expenses.

Foreign-owned LLCs pay taxes only on income earned in the United States. This is called ECI (Effectively Connected Income ) . If your customers are not in the United States or your US-sourced income is at a certain level, your LLC will likely be tax-exempt and you will not be subject to any federal taxes.

Tax is a separate and long topic. at our LLC Tax Guide for Non-US Residents to fully clarify the US tax system in your mind .

When you regularly transfer income earned abroad to a personal account at your local bank, this cash flow may attract the attention of a tax auditor. You will be ignored during audits, provided that you report the income you have received from abroad to your bank within the framework of the asset peace that has lasted for approximately 2 years As long as wealth continues, those who earn this type of income do not have any problems with transferring money. If the financial settlement ends, you can go to your local tax office and get information on how to pay your taxes as an individual.

 In Which State Does It Make More Sense to Form an LLC?

If you are going to form a single-member LLC company as a foreigner, it does not matter in which state the company was formed. Because you are not physically in the United States and your LLC is a disregarded entity, it will not pay any income taxes to the state. For this reason, you can form a single-member LLC company in Usa in any state you want.

Online, you can form your company in any of the 50 states without going to the USA. Although there are no restrictions on state selection, there are some points to consider. The most important of these is the annual report fees to be paid to the states and the other is the high initial setup costs.

Many states in the US have annual charges called annual report, annual franchise tax, or something similar. Of course, except for a few states, these are;

• Arizona
• Missouri
• New Mexico
• Ohio
• south carolina

There are no annual charges after installation in any of the above states. This means there is no need to report every year, franchise tax or submit an annual report. Among these, the state with the lowest installation costs and the most entrepreneur-friendly state is New Mexico.

To form an LLC in the state of New Mexico, you only need to pay a $50 filing fee. Apart from this, there is no annual payment or any payment cycle requiring reporting.

Due to these advantages, the most advantageous state where you can form your software company is New Mexico.

Costs

Compared to local companies, the cost of forming an LLC company in the USA (when a suitable state is selected) is truly ridiculous.

You can order your company online through a Registered Agent. the Northwest Registered Agent that we will recommend to you is a well-established company that is very affordable and provides premium service.

If you form an LLC company in New Mexico with Northwest, you can use the agency's address in New Mexico as your business address free of charge. In this case, you will be saved from costs such as a monthly virtual address or virtual office. They scan the mails coming to your address on the same day and digitally upload them to your panel free of charge.

Let's take a look at installation costs and other requirements with Northwest, including address;

New Mexico company setup: $89 including US company address. You can set up with Northwest

Getting an EIN for Your Company: Free. Get an EIN, a tax identification number for your company. You can apply for this as soon as the company is established. If you want, a step-by-step guide here, you can apply yourself for free. the Free EIN Application Campaign during the campaign we are currently running. With our reference, we make EIN applications free of charge for LLC setups made through Northwest.

Opening a Bank Account: It is free. ( Digital banks like TransferWise or MercuryBank

Opening a Stripe Account for virtual POS: It is free. In order to receive payments from credit cards, you need a payment gateway such as Stripe. You can open an account

, you will spend around 89 USD for this type of formation

LLC Setup Steps 

Below is a step-by-step guide to setting up an llc with Northwest. This guide will guide you through the process of setting up your LLC company. The guide you will find in the link below includes Wyoming LLC installation steps, but you can continue by selecting New Mexico as the state, the steps are almost the same.

For this guide, you can take a look at our content below and set up your company by following the steps in the content. In the state of New Mexico, the LLC company formation process is completed in 2-3 days in total. Next, you need to apply for a tax identification number (EIN) for the company and wait for the EIN to arrive.

Applying for a Tax Identification Identification (EIN)

After your company is established and your documents arrive digitally, the first thing you need to do is to apply for an EIN. What is EIN? our related article to find out . Every company incorporated in the USA – must have an EIN because it is required to open a bank account, apply for virtual POS (stripe), Paypal, etc. You need to obtain an EIN to become a member of the platforms.

There are two methods to get Ein;

• Applying on your own: After your company is established, you can apply for an EIN yourself by following the steps in the Getting an EIN Number from America But be careful when applying, as even the slightest mistake in the form will set you back another 2 months.
• Take Advantage of Our Campaign: the Free EIN Application Campaign during the campaign we are currently running. With our reference, we make EIN applications free of charge in LLC setups made through Northwest.

Opening a Bank Account

Once you have established your software company in the USA and obtained your EIN, you can now open a bank account in the USA. There are a few options for this. The most well-known of these are Mercurybank , Payoneer Business and Wise Corporate.

These digital banks allow you to open an account without going to Usa. You can easily open an account free of charge with your EIN number and company information.

Receiving Payments from Credit Cards with Virtual POS (Stripe)

After the company installation, EIN provision and bank account opening are completed, it is time to join a payment gateway (virtual POS) system so that you can receive payments.

Stripe is the undisputed world leader in this regard. It is completely entrepreneur-friendly, both in terms of the tools it contains and its convenience in the approval process for a US LLC.

We will not go into long details about opening a Stripe account on this page because there is already a detailed guide that includes this. Once all the requirements are completed, you can now open your Stripe account. You can access the Stripe account opening guide from the link below.

Benefiting from Software Supports (Perks) for Startups

Amazon AWS provides startup loans of $1,000 to entrepreneurs under the Amazon Activate In terms of content, you can access AWS cloud systems and also have the opportunity to participate in some special offers offered by large companies.

Activate Portfolio can be very useful for entrepreneurs. If you are an AWS Activate member, you may be accepted into a venture capital program. In this context, startups affiliated with the Activate Portfolio business incubator or other startup supporting organization will receive up to $100,000 in AWS credits, up to $10,000 in AWS Business Support credits, pre-built infrastructure templates, training, carefully selected content, special offers, and more. provides more.

You can also benefit from the startup ecosystem offered by Stripe in collaboration with AWS Activate. For this, check out the guide below.

Conclusion

established a foreign Software Company that is very affordable, has tax advantages, and where you can create a corporate identity .

you can take a look at our turnkey contact us at any time if you would like to get consultancy and support.