Indian online company wish to open a LLC in USA

Asked by: cma  — 25 May, 2011

We have a online (ecommerce) business in India selling handicrafts. Most of our sales are in USA.

We firstly need a USA bank account to enter US market (selling on amazon etc). Secondly, we need a warehousing to reduce our shipping time and costs.

Please advise :

1. Shall we open a company’s branch office in USA or a separate USA entity ?

2. Which way will be more profitable as taxes and warehousing are concerned.

3. We plan to incorporate in Wyoming? Is it most beneficial?

4. Can we get EIN without social security?

5. Can we ope n bank account online or can my cousin sister who resides in USA can go to a bank and help us open a LLC.

Please advise?

Answered by: admin  — 25 May, 2011

Let’s start:

1. It is generally recommended to open a separate US entity for your business. It will be easier to register and maintain, and would require much less paperwork than an option of registering a Foreign Entity for your Indian company in the US. Please consult this question, asked by our Canadian visitor: “Should I register a US company or a branch of my Canadian company?

2. I would generally recommend you to consult an accountant for all questions related to income taxes. I know there is a tax treaty between US and India (but this link leads to a 50 page PDF which I’m not sure you want to read), but for details, as I said, you should consult an accountant. With that being said, I believe it will be much easier to run two separate companies, and organize the relationship between the two with a simple trade contract.

Let’s discuss your need to have a warehouse. Since you mentioned Amazon as your marketing channel I want to point you to another great service provided by Amazon, called Fulfillment by Amazon (FBA). Simply put, Amazon rents you space in their warehouses, where you can ship your products, they take over management of your inventory, packaging and shipping to your end buyer. It’s particularly convenient for businesses that are not located in the US but sell to the US clients. I would recommend you to read our answer to a question about online business that wants to use Amazon FBA for answers related to sales tax collection.

3. Wyoming would be an excellent choice for forming your LLC, and its a choice of many online business nowadays (especially since you are not located in the US). Learn here about advantages of incorporating in Wyoming.

4. Yes, you can (please read our answer to “Getting EIN without SSN“).

5. I know its difficult to open bank accounts online, but if you have a trusted relative who resides in the US it is possible to have that person open a bank account for your company (you will need to authorize her, so I would suggest you or she consult with the bank where you plan to open the account and see what are their requirements for such arrangement are).

I hope that helps you with your future business decisions.

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