One of the most common questions for entrepreneurs looking to do dropshipping in the US is: “Do I need to form a company?” The answer depends on your business goals, but there are several advantages to setting up a US company. Let’s take a closer look.
Is It Mandatory to Form a Company?
Technically, you can operate as an individual seller. However, for building trust, accessing payment gateways, and managing taxes, forming a company (typically an LLC) is highly recommended.
Why Is Forming a Company Beneficial?
Business Credibility
- US customers and partners view company-based sellers as more trustworthy.
- Platforms like Amazon prioritize business accounts.
Access to Payment Gateways
- Services like Stripe and PayPal are easier to set up with a US LLC or C-Corp.
Clearer Tax Obligations
- Business taxes are clearer and better organized.
- Personal assets are protected from business liabilities.
What Type of Company Should You Form?
LLC (Limited Liability Company)
- The most popular choice for small to mid-sized dropshipping businesses.
- Easy to set up with lower costs.
- Flexible tax treatment.
C-Corp
- Suitable for businesses seeking investment or planning major growth.
- More complex tax structure.
Key Considerations When Setting Up a Company
- Choose the right state: Delaware, Wyoming, and Florida are popular options.
- Apply for an EIN (Employer Identification Number).
- Use a registered agent service.
Can Non-US Residents Form a US Company?
Yes! Non-US residents can easily set up a US LLC online through service providers. The process usually takes a few weeks.
Conclusion
While forming a company isn’t mandatory for dropshipping in the US, it offers significant advantages for building a professional and sustainable business. If you plan to build a brand, access major payment gateways, and manage taxes effectively, forming an LLC is often the best choice.
