ECommerce market in the USA has more than 255 million potential online buyers. And this number is increasing every year. Statista predicts that, in 2025, eCommerce market in the USA will be worth more than 536 billion dollars. It’s no wonder that many would like to get a share of this market by starting an eCommerce business there. The USA has a well-organized, flexible and simple business environment together with the corresponding tools.
Nonetheless, starting an eCommerce business in the USA might look like a complicated process. That’s why we’re going to share with you how to do it simply, what things to note and how long everything may take. Here you’ll find the main steps which you need to take in order to register an eCommerce business in the USA and to begin trading in one of the biggest markets of the world.
Preparation before starting an eCommerce business in the new market
If you have decided to set up an eCommerce business in the USA, it’s crucial to properly prepare for it. First of all, you need to conduct market research and evaluation, to create an eCommerce business plan, and to adjust your supply chain for the possibly increasing number of orders. The next big step is to adapt the content of your eCommerce business to the target audience.
It’s also important to note that shipping orders from Europe to the USA and vice versa can be expensive due to the shipping rates offered by international carriers and increasing time and warehousing costs related to the rising number of orders. Luckily, HappyParcel provides eCommerce fulfillment services that can help you to save time and money in this regard.
Registering a legal entity in the USA – 2 days
If you don’t have additional or specific needs, registration of a legal entity in the USA can be done online and takes about 2 days. When registering an eCommerce business in the USA, you can choose out of two business forms – LLC (Limited Liability Company) and a corporation. The main differences between these two forms are related to the protection of private ownership in case of a trial, recognition of ownership (owners of a corporation are called shareholders), and applied taxes (LLC can select to pay the income tax or the personal income tax which the owners pay individually). Read more about the differences between LLC and corporations here.
The choice of the form of legal entity depends on your business needs. But it might be hard to assess it without outside help. HappyParcel’s team of professionals can offer you more than 3PL logistics services. We’re collaborating with professional lawyers and, therefore can help you to start your eCommerce business in the USA simply and quickly.
Things to note:
To register an eCommerce business, a PO Box is not enough. It’s a must to have a physical registration address. Usually, it’s provided by the same lawyers that are taking care of your business registration. This service is called a virtual office. Its biggest advantage is that people working there will receive your mail, scan it and send you the copies. Thus, you won’t ever miss anything important.
Getting an Employer Identification Number (EIN) – 1 day
Once you have registered your legal entity, you’ll need to get an EIN (Employer Identification Number). In the USA, EIN is used for business identification and for tax purposes.
EIN is issued by IRS (Internal Revenue Service). Before the pandemic, it used to take up to 3 weeks to get an EIN. During the pandemic, the time period has extended to 2 months.
But there’s another means of getting an EIN, if you wish to start up your eCommerce business faster. The quicker way to get an EIN for foreign capital companies and non-residents of the USA is via phone. You’ll still need to wait at least an hour until your turn, but it’s the fastest method to get an EIN and to start legal trade in the USA. So arm yourself with patience, get a phone with a speaker or comfortable headphones and a mic, perhaps even some snacks and drinks, and dial the number provided on the official IRS page.
Things to note:
IRS employee will ask you to provide the same information that is required when filling out the paper application for getting an EIN (the SS-4 form). It’ll be easier to answer the questions if you fill in the SS-4 form beforehand. Then you’ll have all the answers in front of you and giving them to the IRS employee will be a piece of cake.
Opening a bank account in the USA – up to 5 days
If you don’t plan on making cash operations, you can open a bank account online. An EIN is required for this purpose. If needed, a virtual bank can also issue you a physical debit card which can be used to make payments and to withdraw money from cash machines. There are a few virtual banks in the USA, including Mercury Bank. It is considered one of the strongest and most reliable virtual banks. Opening a bank account there will take 3-5 days.
Things to note:
One of the things to consider when starting an eCommerce business is whether you’ll be making cash transactions together with online payments. A virtual bank will not be enough if, for instance, you’re planning to open up physical stores where the buyers will be able to pay with cash. In this case, you’ll need to open an account in a physical bank. Non-residents of the USA may get such an account, but you’ll need to go to the bank office in person.
Taxes when trading in the USA
When you start receiving money in your bank account, you’ll be charged taxes. It’s best to hire a local accountant who will inform you of them in the most detail. You can easily find a person who offers these services online.
In the USA, taxes are not the same everywhere and differ based on many variables. The taxes that you’ll be charged when doing a business in the USA depend on the legal form of your business. For example, if your business is an LLC, you won’t need to pay the income tax, but the owner will have to pay the personal income tax. Taxes also depend on the state in which the business is registered and the state in which the actual trade is conducted.
Other expenses when trading in the USA
When you have taken steps to start an eCommerce business in the USA, you should expect these regular expenses:
- legal representation fee;
- monthly virtual address fee;
- accounting services fee;
- bank account fee.
Starting a successful eCommerce business in the USA is not as complicated, time and energy consuming as it might seem at the beginning. All procedures can be done online, so you won’t even need to fly to the USA to set up your business. Instead, you can go there on vacation when your eCommerce business starts to generate profit.
Still, to commence trade in a new market, some aspects of it will require expert knowledge. When starting an eCommerce business, choose experienced and qualified business partners and 3PL providers, such as HappyParcel. Contact us and we’ll help you to begin trading in the USA with ease and with no delays.
