How to Open Shopify Payments as a Non-US Resident by Forming an LLC (2024)
You can form an LLC as a non-US resident and access Shopify payments for your eCommerce store from anywhere. Shopify payment is a one-stop payment solution for most online stores, with the main customer base in the USA. The platform has made payment processing convenient, fast, more straightforward, and secure for customers and merchants.
A Limited Liability Company (LLC) is a famous business structure recognized by the law as a separate entity from the owners. Creating an LLC benefits the owner through taxation and protecting them from business liability if the business is in financial debt.
You must understand that Shopify payment isn’t available in all countries, but that doesn’t mean you can’t use the payment solution. People in countries where Shopify payments aren’t supported use a third-party payment gateway to receive payments. Hence, it’s not all lost if you’re a foreigner hoping to use Shopify payments.
So, if you’re wondering how to open Shopify payments as a non-US resident by forming an LLC, you’re lucky, as this is our main focus today. We’ll dissect the topic to provide a clear guide on accessing Shopify payments as a foreigner.
What are Shopify Payments?
Shopify Payments manage online transactions on Shopify. As a Shopify seller, Shopify Payments is the default payment gateway for your store, eliminating the need for third-party payment services.
It sets up your Shopify store to accept payments through all the popular payment methods like:
- Credit cards
- Debit cards
- Gift cards
- Apple Pay
- Amazon Pay, or
- Cryptocurrency
Shopify Payments allow US businesses to accept these credit and debit cards:
- Visa
- Discover
- American Express
- Diners Club
- MasterCard
- Elo
- JCB
How do you set up Shopify payments?
While on Shopify,
- Click on Shopify Settings and Select Payments Provider
- Click on Shopify Payments and then Tap on Activate Shopify Payments
A prompt to ENTER your Employer Identification Number (EIN) and banking details will appear on the screen.
Depending on where your business is located and mainly as a non-US resident, you may be prompted to provide additional information to get verified and set up Shopify Payments. After filling all spaces with accurate information, Tap Save.
Forming an LLC as a Non-US Resident
Creating a US-based company is possible for non-US residents who want to make the American dream come true. Many foreigners have made it happen, and you can, too. It means you can start a US LLC as a foreigner and get the following:
- A US LLC
- A US bank account
- Access to US payments
- Vast international market
An LLC is a pass-through entity, meaning taxes are passed on to LLC owners. Thus, your LLC business isn’t subject to US tax laws if:
- The business is 100% owned by non-US tax residents
- There’s no presence in the US or economic substance
- The income isn’t “effectively connected” to the US
Establishing a Shopify store as an LLC is a wise decision for a non-US resident to launch and operate a business from anywhere. Here are the steps to follow when forming an LLC as a non-US resident.
Understand the Benefits of Forming an LLC as a Non-US Resident
Non-US residents enjoy many commercial advantages by forming a US-based LLC. It’s an attractive option for any foreigner who desires to access the vast international market through the US.
Besides, you’ll also be exposed to a broad list of venture capitalists, investors, and a talent pool. Operating a US-based business also boosts your company’s credibility and reputation to potential customers. These advantages are the same for US residents as well as non-US residents. Here are more benefits for you:
- Personal liability protection
- Pass-through taxation
- Ownership flexibility
- Management flexibility
- Easy and affordable formation
Non-Resident Status for an LLC
Forming an LLC can be complicated for non-US residents, especially those trying to dodge paying US taxes. In the US, even on-resident LLCs are subject to pass-through taxation, where the business income is passed on to the owners, who then report it as a personal tax return. As a result, LLC owners end up paying less taxes, especially if the foreigner belongs to a country that doesn’t tax personal income and is not required to remit federal taxes. According to the IRS, you’re non-US residents if:
- Your country of origin and residency is outside the US
- You are not a permanent US resident with a green card
- Your business doesn’t surpass a substantial presence
Choose a State to Form Your Non-US Resident LLC
Before creating an LLC, you need to pick a state to register your business, noting that you’re venturing into the US to make more profits. Hence, you must select a business-friendly state in taxes and support, like Delaware, Nevada, Texas, Wyoming, or New York. If you’re blurry about choosing, consult a business attorney or consultant to help narrow the states according to your business goals.
Each state in the US is unique and has different laws concerning the formation, ownership, maintenance, and management of an LLC. Thus, you must choose a state with favorable rules and regulations for your business since it will not have a physical presence. The states listed above have an advantage over each other, such as 0% corporate tax and more privacy by not listing members publicly or offering LLC support.
As a US non-resident, you don’t need a physical address to form an LLC; but you need a registered agent with a physical address. They must be reachable within working hours to receive official mail for your business, which shouldn’t be missed. The registered agent is also necessary when opening a US bank account for the LLC.
Name Your LLC
Naming your LLC needs Some consideration to ensure the name is unique and memorable to potential customers. You can name your business by your name if you’re the only owner. However, if multiple of you exist, the name must be unique, unsimilar to any existing business, or use abbreviations, or a Doing Business As (DBA).
Most states will want to check if your DBA is unique in that state. You can also use a name check tool to determine if your chosen name is available and then register it.
Choose a Registered Agent
Most US states require that every LLC in any jurisdiction provide a physical address, even those who don't need the services of a registered agent.
The registered agent must have a physical address and be reachable during business hours to ensure all company mailing is delivered and received. As a non-US resident, you must pick a reputable and reliable registered agent to receive your company mail.
Obtain Employer Identification Number (EIN) for Your LLC
The IRS uses an Employer Identification Number or tax ID for tax purposes. The number is also used by the tax body to identify a business. Every business operating in the US needs a tax ID to be able to remit taxes to the IRS.
US citizens use a Social Security Number (SSN) to pay taxes, but non-US residents need an EIN to register an LLC and clear their businesses for taxes. You apply for the tax ID through the IRS website on Form SS-4 and then provide details like business name or DBA and mailing address.
A non-US resident must apply for a Taxpayer Identification Number (ITIN) from the IRS if you can’t apply for EIN.
Prepare Formation Documents for Your Non-US Resident LLC
After taking care of the preliminary steps of creating a non-US resident LLC, you must prepare incorporation documents to make the business legal. All states are unique and the incorporation documents will vary depending on the state your business will be located.
In most states, you must present and file Articles of Association and provide basic company information like the name, EIN, registered address, and members information. LLCs with multi-member ownership must have an Operating Agreement signed by all members to ensure the smooth running of the business.
Once you have all formation documents per your state’s requirements, file them at your State office for registration. State officers will review your application, and if everything is in order, you’ll receive an incorporation certificate within five to ten business days. The time it takes to get registered might vary from state to state and will also depend on the process of business filings in your state.
Open a US Business Bank Account for the LLC
Your non-US LLC will need a US business bank account in your state to receive buyer payment. The bank account is crucial, and you should be open to receiving and processing different payments and bills for your LLC. Operating a local bank account makes it easy for merchants to receive and process payments.
Requirements to Open Shopify Payments as a Foreigner by Forming an LLC
Suppose you’re looking for a way to open Shopify Payments as a non-US resident. In that case, you must meet the criteria to become eligible, like having a US tax ID, a USD checking account, and actual operations in the US.
Fortunately, you have a registered non-US LLC, and as an existing Shopify seller, you can link it to Shopify payments in your country. Here’s an in-depth look at the requirements for a non-US resident to open Shopify payments:
- US Tax ID. You need a US tax ID or EIN for the IRS to collect taxes. In this case, the LLC you created as a non-US resident has an Employer Identification Number (EIN).
- Physical Operations in the US. As a non-US resident, you need a physical presence in the US to prove you’re doing business there. Luckily, your LLC has all the necessary documents to establish your business operations in the US. Shopify qualifies for a PHYSICAL PRESENCE by seeing your name on a utility bill, such as water, gas, electricity, or a current PERSONAL LEASE AGREEMENT.
- According to Shopify, registering a company (LLC) and an address don’t qualify you for Shopify payments in the US. However, actual activity on US soil will make all the difference. Therefore, as a Shopify seller through your LLC, you’ll do fine in your Shopify payments journey.
- Government-issued photo ID with your photo, like a driver’s license or passport for verification. Sometimes, the platform accepts non-US IDs.
- Business Registration Document. Registering an LLC in the US as a non-US resident proves your business is legitimate. Since you’re not located in the US, there’s still a chance you’re eligible for Shopify payments with business operations in the US.
- Proof of US Operation. A bank statement or forwarding service might not prove your US operations. However, a utility bill is more reliable than a lease agreement.
- USD Checking Account. Ensure that your LLC business bank account is real and can handle transactions in US dollars.
Benefits of Using Shopify Payments
Shopify Payments uses Stripe technology to accept payments, manage subscriptions, and verify identities. Stripe makes Shopify Payments fast, more streamlined, and user-friendly for millions of people worldwide and is fully integrated into your store’s dashboard.
Hence, you don’t need approval to use it when you have a merchant account. Setting up Shopify Payments for your business syncs all your finances with inventory and sales. Here are the main benefits that come with Shopify Payments:
1. Seamless Integration
Shopify Payments allows customers to pay for goods purchased on your store without leaving your website. Unlike Shopify Payments, other service providers that use a different payment provider redirect customers to a third-party platform.
As a result, customers find it annoying, time-consuming, and unpleasant to move around different sites to pay for a purchase, especially those who aren’t tech-savvy.
You can TRACK your orders and finances from your dashboard, which is made possible by the Shopify payment backend office. You can easily track your earnings from every product paid for via Shopify Payments in a few clicks.
2. Saving on Transaction Fees
Linking your website to a third-party platform incurs transaction fees, which can be expensive in the long run. The transaction fee is waived using Shopify Payments, meaning customers save substantial amounts while enjoying convenience.
3. Offline Sales
Shopify Payments Point Of Sale (POS) is an offline integration into your website’s dashboard. You don’t have to stress about the sales data because your online and offline sales data is unified. Offline sales support is a feature only available with Shopify Payments and not any other third-party platforms.
4. Flexible Payment Methods
Activating Shopify Payments doesn’t bar you from adding other customer payment methods. Adding popular payment methods like PayPal or Amazon Pay allows your customers to choose the best payment method. The flexibility of enabling other payment methods ensures customers can make payments at your store as they wish, even when Shopify Payments is set up.
5. Fraud Analysis
Shopify Payments has advanced fraud analysis features that help merchants identify fraudulent orders. They filter payments in two ways to detect fraud. These ways are:
- Address Verification System (AVS) - The AVS filter cross-checks a customer’s address information with the information in the credit card issuer’s database. It verifies the numeric data in the zip codes or billing addresses with the card company. Mostly, customers shopping with another person’s credit card have no idea this is happening, but Shopify flags such orders as potentially fraudulent.
- Card Verification Value (CVV) - The CVV is a three or four-digit number at the back of every credit card, debit, or visa card, and it’s unique. Card issuing companies don’t store the CVV, and any individual trying to use stolen card information will likely miss this detail.
- Shopify Payments requests the customer to provide CVV for online payment processing, reducing the chances of us using unauthorized credit cards. Plus, the security measure makes Shopify payments a much better choice than competitors while working towards fulfilling legitimate orders. It also boosts transparency, fast transactions, and lower processing fees.
Setting Shopify Payments Features
Not everyone might qualify to use Shopify Payments after completing the verification process. WHY? The Shopify payments service isn’t available in every country across the world.
Plus, setting up Shopify Payments can be daunting for a non-US resident, especially when you have to provide a utility bill or lease agreement in your name. But with your LLC existing and operating in the US, it’s easy to give these requirements. Here are Shopify Payments features that make it stand out.
1. Multi-Currency Support
The list of countries that Shopify Payments supports is extensive, meaning the service can accept multiple currencies. The multi-currency feature allows merchants to cater to a global customer base by accepting payment in different currencies. Support of multi-currencies boosts Shopify’s shopping experience for international shoppers.
2. Security Measures
Shopify mandates a two-step verification authentication process for all customers to ensure the utmost security for all shoppers and prevent potential financial inconsistencies. These security measures prevent misdirected payouts and cut down on fraud cases and other economic losses. Without this two-step authentication process, merchants are warned their payouts might be on hold.
When Shopify Payments is Inaccessible for Non-US Residents
If your effort to activate Shopify Payments turns futile, the platform endorses alternative payment gateways. Before integrating third-party alternatives into your retail store, we recommend checking which countries are supported to ensure compatibility.
Understanding Shopify Payments’ international features and requirements helps merchants make informed decisions that ensure a smooth checkout process and a seamless shopping experience for customers. Third-party alternatives to Shopify Payments increase costs on a product, which is unfavorable to many customers. Here are the Shopify fees:
- Processing fees for credit card payments are the money shoppers pay to Shopify Payments to execute a successful transaction. The steps include data transfer between the acquiring bank, buyer, and seller. These charges depend on your Shopify plan, number of sales, and order value.
- A transaction fee is the money you pay Shopify for cash transactions on your store, and after activating Shopify Payments, you don’t pay the fee. Even when a customer chooses a different payment method at checkout, you still don’t pay the fee.
Frequently Asked Questions
How can a non-US resident set up Shopify Payments?
As a non-US resident, you must provide legal entity documents to activate Shopify Payments. By forming an LLC, you’ll have documents like EIN, proof of US address, or a government-issued photo ID on a driver’s license or passport. These requirements might vary with your country of origin, but you’ll get it done with careful adherence.
Why does Shopify require my SSN?
Shopify needs your SSN to ensure compliance with tax reporting, prevent fraud, and adhere to age restrictions. Your SSN is proof of authenticity and operation with tax laws and regulations in the US.
What does Stripe do?
Stripe is a technology that provides different programs and tools to facilitate payments and pay out sellers internationally. The technology helps marketplaces and eCommerce platforms verify the sellers’ identities to route payments, making it easy to manage costs and stay compliant.
Can I use Shopify’s POS internationally?
Yes, you can use Shopify POS internationally as long as it’s in a country where Shopify supports credit card payment providers.
Can I set up a Shopify store outside the US?
You can set up your Shopify store in a different country since Shopify Markets allows merchants to expand their business and sell products in multiple countries. Shopify provides a streamlined method to optimize international sales by offering customers localized experiences in different regions.
In Summary
Creating a thriving Shopify store takes time and a lot of trial and process, but it’s doable even by non-US residents. If you were stuck on how to open Shopify Payments as a non-US resident by forming an LLC, you must be in a better place after reading our guide.
After successfully establishing your LLC as a non-US citizen, it’s time to activate your Shopify payment gateway. The business information you got from your LLC formation is crucial. Before activation, update your store address to match the US address on your LLC documents.
The US has a global unmatched reputation for being business-friendly, even to non-US residents. The country boasts a highly competitive corporate tax system and a straightforward business structure that’s easy to form and manage, such as a Limited Liability Company (LLC).
The low startup costs of starting a business in the US make the country more attractive to international investors than other countries.
During the activation process, enter your ITIN or EIN in the space they’ll be requesting for SSN, complete the process as directed, and then submit the form. Once the Shopify team is done reviewing your application, they’ll alert you or ask for more information from you.
