The Stripe Atlas Review: How we Started a US Company as Non-US Residents

Disclaimer: This article is written for informational purposes only and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. It’s purely based on our experience with Stripe Atlas and other services. We won’t be responsible for any loss caused by the advice presented here. We’re neither affiliated with Stripe nor were we compensated to present our views.

We’ve spent countless hours figuring out how to start a company in the US.

The ideal company structure for startups, pre- and post-incorporation processes, extra compliances and requirements for non-US residents, tax implications, paying ourselves, etc.

We wanted to get clarity before we took the plunge.

Six months ago, we finally got our EIN and completed incorporating our startup Rapidr, Inc as a C-Corp as non-US residents, and we did this with Stripe Atlas.

Here’s our end-to-end experience: how we incorporated Rapidr, Inc., a C-Corp with Stripe Atlas, and got set up with a business bank account, mailing address, etc.

Table of contents

1. Introduction
2. Stripe Atlas: Incorporation as a Service
3. Incorporation process
4. Timeline (with dates)
5. Post incorporation
6. Conclusion: Is Stripe Atlas worth it?
7. Commonly asked questions

Introduction

There can be multiple reasons why you’d want to incorporate a business entity. If you’re starting a startup and seeking venture capital, it’s Step 0. Or, like us, you’re a bootstrapped startup and want to charge your customers.

For first-timers, incorporating a business in a foreign country can be a scary and overwhelming journey, and rightfully so.

Many hoops, compliances, gotchas, and regrets leave a sour taste in the mouth. Most things are amendable, but some are not, like filing your 83-B election with IRS.

We started building Rapidr, a customer feedback management software like most technical founders do, by diving straight into planning and coding the product without giving two thoughts about the “business” side.

For bootstrapped companies, charging customers from day one gets the ball rolling. And once we were out of our private beta, we wanted to integrate Stripe as a payment gateway.

We quickly realized charging customers is not as simple as hooking Stripe.js into your app.

We started planning and writing code for Rapidr in early August and onboarding users to our private beta sometime in late November. We were not yet ready to charge the customers, but we knew we had to at some point and started researching the possibilities of adding Stripe to our app.

Reality check: Stripe, in our country of residence, had many restrictions and was limited in certain ways. For one, you had to comply with additional regulations and ongoing duties to accept payments in USD, which was a deal-breaker for us.

Fortunately, Stripe is self-aware and provides an escape hatch to the non-US founders. Enter Stripe Atlas, a done-for-you service, to navigate you through the incorporation process of a business entity in the USA for a fixed fee.

Stripe Atlas: Incorporation as a Service

Stripe Atlas is a platform developed by Stripe that helps you form a legal business entity (C-Corp & LLC) aimed at non-US citizens' founded internet businesses. It minimizes the amount of effort from the founder’s side to almost zero.

Here’s their elevator pitch:

Stripe Atlas is a powerful, safe, and easy-to-use platform for forming a company. Stripe Atlas helps you launch your startup from anywhere worldwide by removing lengthy paperwork, legal complexity, and numerous fees.

Here’s the list of things you’re getting for spending $500.

1. A business entity in the state of Delaware. They create the legal documents, file paperwork, and apply for your EIN / Tax ID number.

2. If you co-own the startup, you might want to split the shares. They set up your company’s initial ownership structure using the in-built tool (on Stripe dashboard), and generate Stock Issuance documents with standard terms like a 4-year vesting period which most VCs have come to accept as the norm.

3. Receive offers and discounts from established market leaders, like $5,000 worth of free credits from Amazon Web Services (AWS). This alone makes it worth it.

4. Forming your company with Stripe Atlas grants you automatic access to the Stripe Atlas Community.

5. A dashboard to safe-keep all the legal documents and paperwork.

6. During the tax season, they go above and beyond to help you file your taxes from the Dashboard itself.

7. Stripe activates your payments account so you can charge customers in 100+ currencies.

8. A year of registered agent fees and Delaware state filing fees.

   
   

What’s not-so-surprising is the lack of inclusion of a business checking account. If you’re a US citizen, you can visit any bank, like Chase, Bank of America, etc., and open an account.

For non-USA residents, the options are limited, and Mercury Bank (also SVB) is the only bank you can work with to open a business checking account. Note: you need to attach a bank account before you can start accepting payments. With a business checking account, you can accept ACH, wire transfers, etc.

Incorporation process

The incorporation process is a fairly straightforward 4 step process.

1. You submit all the information about the business, partners' names & details, stock split, addresses, etc., to Stripe.
2. After submitting the information, they’ll take a few days to prepare the relevant documents and send them via email for you to view and sign digitally. During the time of writing, they used DocuSign to facilitate digital signatures.
3. After the signing process, they’ll file all the relevant paperwork and take care of all the legal formalities, and you’d receive the entity formation documents, the by-laws, etc.
4. After the formation, you’ll receive the EIN / tax ID Number from the IRS.

Timeline

Feb 1, 2021 - Getting started

We have all the required information like entity name, type, founders involved, their roles, stock split, addresses, etc. Most importantly, you need to put in your card details as well. Don’t worry; they don’t charge you until after you’ve received the EIN / Tax ID number from the IRS.

After sending the required information to Stripe, you can track the progress in the Stripe Atlas dashboard.

A note about COVID-19 and the delay in issuing EINs

Please note: your tax ID EIN may be significantly delayed due to the IRS COVID-19 closure. An expedited EIN may be an option if you have a US social security number. An EIN is often needed to open a bank account, to process payments and for other business activities. While the IRS has re-opened, there is a backlog and the timeline for receiving EINs is not yet known. For us, it took four long months to get the EIN.

Feb 8, 2021 - Sign documents

Stripe approved our application and started all the legal paperwork on our behalf. This step included filing essential documents such as Certification of Incorporation, Board Approval, and SS-4. All the members (co-founders) needed to sign the papers digitally.

Everyone who’s a founding team member will get another email from DocuSign to get the signatures. Make sure you read it, but we found them quite generic. Do remember, making custom legal paperwork requires additional effort and attorney fees, which can get both quite expensive & time-consuming quickly.

Feb 11, 2021 - Halfway done

After signing the paperwork, Stripe only took two business days to complete incorporating our company in Delaware.

This is the halfway point in the entire process.

Our company is incorporated, and all the relevant documents, like the filed Certificate of Incorporation, etc., are available for viewing & downloading in the Stripe dashboard.

What’s remaining now is the Tax ID / EIN of the company. Don’t worry; Stripe follows up with the IRS and keeps doing so until you’re assigned a Tax ID / EIN.

An expedited EIN is an option if you have a US social security number or SSN for short, which only US residents have. For non-US founders, getting an expedited EIN is a pipe dream.

Feb 12, 2021 - Issue stocks

The next step is to issue stocks to the founders. While this step can be completed on the same day you get the email from Stripe about successful incorporation; we did it a day later to make sure we’re not shooting ourselves in the foot.

Stripe provides free standard legal templates that many companies use to issue stocks to their founders, with a standard vesting schedule. This can be done via their free tool available on the dashboard. They have step-by-step instructions on how to use the founder stock tool.

You can allocate shares based on the ownership percentage you shared with them when you started with Stripe Atlas.

During this process, you must sign two more documents: Common Stock Purchase Agreement (CSPA) & Confidential Information and Invention  Assignment Agreement (CIIAA). Once the signing is done, you’d have to purchase the stock from the company and optionally (but significantly) file an 83(B) election with the IRS.

Some gotchas:

1. The “free” founder stock tool is only available for the first 90 days after the company’s incorporation date. That means, for us, it’ll be available for free only till May 11th.

2. After issuing, the stocks are not yours until you transfer the purchase amount to your company’s bank account. This amount will ideally be between $1 to $100, given the fair market value of your newly incorporated company (all shares) is $100.

3. The company must keep a record of the payment received for issuing shares. This must be done for all the members receiving stocks.

4. File 83(B) election with IRS if you have a vesting schedule and don’t want to see a huge unexpected tax bill. Here’s an excellent explanation of the basics of 83(B). I highly recommend you research and talk with a tax lawyer.

   
   

This probably doesn’t matter much if you’re a non-US founder who’s not stepping foot on US soil during the entire vesting schedule. Or, isn’t going to become a tax resident who usually stays more than six months in a country.

You have a HARD deadline for this, and there is no way to file a late election: 30 days after purchasing stocks from the company, meaning after you’re issued the shares, you have to send the payment to the company and file the 83(B) election within the 30 days window. Again, do read about it because it can cause major headaches down the line.

Take the advice given here with a grain of salt. Please talk with your tax lawyer and do independent research.

Since we didn’t have the EIN assigned, therefore, we couldn’t open a business checking account with Mercury Bank. This meant we could not complete the purchase of stocks until after four months, even though we issued them in February.

March 23, 2021 - #1 Unsuccessful attempt at getting EIN

Since we were impatiently waiting for Stripe to return with an EIN, we emailed Stripe support. No Bueno.

April 19, 2021 - #2 Unsuccessful attempt at getting EIN

After waiting for almost three months, we sent another email to Stripe support to see if they can get hold of the IRS and see where we were in the queue. No success, again.

April 29, 2021 - A sliver of hope

Stripe introduced a new process to obtain EIN on our behalf. They required us to sign IRS form 8821, allowing them to call IRS and ask for updates on EIN & expedite the process.

Here’s the mail we received.

May 11, 2021 - Finally getting the Employer Identification Number (EIN)

We finally received the EIN / Tax ID for Rapidr, Inc., after waiting for almost 4 months.

Interestingly, our card was charged US$500 on May 10th. After noticing the charge on the card, we quickly opened the Stripe Atlas dashboard to see if we’d been assigned an EIN, and we indeed did.

We received the official confirmation & receipt of the charge a day later.

May 13, 2021 - Bank account, Mail forwarding address, and US phone number

A business bank account, a business snail-mail address, and a phone number are probably the most important things you need to get once you get your EIN. You’d need all these to activate your Stripe account.

You can purchase the Mail forwarding service and the US phone number way before you get the EIN, as they are independent.

Here’s the order in which we got ‘em.

• Phone number

  
  

  First, we got a US phone number. There are a few higher-end services like OpenPhone ($10/mo), but since we had very limited use cases for a phone number, we went with a cheaper service – Freshcaller, which is a pay-as-you-go service and costs just $1/mo for holding a phone number.

  
  

• Mail forwarding address

  
  

  Secondly, we got a mail forwarding service. Although a US address is not required for a Mercury bank account, they require an address to dispatch debit cards, as there is no international shipping available. Therefore, we wanted to secure an address before applying for a bank account.

  
  

  Some great services like EarthClassMail, recommended by Stripe, have a partner discount, but we went with the VirtualPostMail mainly because of straightforward pricing.

  
  

  For any mail forwarding service, you’d have to provide them with a notarized form-1583. This form authorizes a commercial mail-receiving agency (CMRA) to receive mail on the customer's behalf. It also ensures that a responsible party is linked to the mailbox. We got it notarized from our country of residence. A US notary is not required.

  
  

  Be wary of the address you choose while signing up for such services, as different states in the US have different rules and regulations around state-wise taxes. To keep it simple, we chose a Delaware mailing address.

  
  

• Business bank account

  
  

  Thirdly, we got a business bank account with Mercury Bank. There’s another option of opening an account with Silicon Valley Bank, but we didn’t explore it since we were already sold on the premise of Mercury Bank.

  
  

  Mercury Bank requires a list of information to open your current business account. Here’s a list of major items in no particular order.

  
  

  1. Incorporation documents, which you can access from Stripe’s dashboard.

  2. EIN document, generally CP575, form 147c, completed SS-4. We submitted the completed SS-4.3. Passport, phone number, permanent address, and other details.

  
  

  Once you complete the registration process, they’ll take a few business days to review and approve your account. For us, it took around 3-4 business days.

  
  

  Both C Corps and LLCs are eligible to apply for Mercury accounts. They welcome non-US residents but have restrictions on a few countries. Here’s what their FAQ says at the time of writing:

May 18, 2021 - Activating Stripe

There’s one final step before you can accept payments in live mode. It gives Stripe details about your business. You’ll get a similar email from Stripe to give them essential information like business-related details, support details, fulfillment details, and most important –– your business's current bank account details.

Once submitted, you’ll receive an email informing you that they’ve accepted your account and that you’re ready to start making live transactions.

Post incorporation

Spending company money

When you apply for a current business account with Mercury Bank, they’ll send your debit card. You can use that to make payments online or withdraw via ATM. You can still generate virtual cards from their dashboard and make payments if you didn’t opt for a debit card during registration.

A welcome benefit of having a business entity in the USA is access to its flourishing and innovative financial infrastructure. You get access to fantastic credit card companies like Bento, Privacy.com, American Express, Brex, and Wise (formerly known as Transferwise), where you can apply for a credit card when ready.

Paying yourself and hiring employees

Chances are you want to hire full-time employees or contractors or pay yourself as an employee. These are called Professional employer organizations (PEO) or Employer of record (EOR) companies.

There are, again, many notable startups doing a spectacular job in this field, the few we recommend are Remote.com, Pilot.co, Deel, etc.

Registering your business locally

Some cities and states (including California) require businesses to register with the state or local government. Talk to your lawyer to learn if this is required for you.

Bookkeeping and accounting

You need to keep track of your revenue (earned income) and expenses. Excellent guide by Stripe here, which will explain this better than we can.

Business taxes

As a US-based business, you have to file taxes in the US. It’s an ongoing legal obligation and also a responsibility for a business. You’re subjected to a few taxes and compliances like Delaware franchise tax, corporate income tax (or LLC federal income tax), Sales tax, etc.

Reading material: PwC’s tax guide and Stripe’s official guide.

Conclusion

Overall, our experience with Stripe Atlas was phenomenal and mostly painless.

If you look into the competitors, Stripe Atlas might look a tad bit expensive, but with that, you get access to world-class support and brand. Before the entire process, we contacted a competitor, but they never responded to the inquiry. Ouch. We sent two support inquiries to Stripe, which were responded to within 24 hours.

As a batteries-included done-for-you service, they live up to the mark. And that's a considerable achievement. They’ve tried to make the entire process seamless, and it shows. The community is the cherry on top.

We highly recommend using Stripe Atlas to incorporate your company.

Some common questions

After sharing this tweet, we’ll address some of the common questions we get on Twitter.

And we have our EIN now. 🎉

Things are gonna get busy with @rapidr_io 😅

— Khushbu (Rapidr.io) (@oktuned) May 17, 2021

How much does it cost to incorporate a company through Stripe Atlas?

Stripe Atlas costs US$500. It’s a one-time, flat fee. They sometimes discount their services, so keep an eye out. We also spent $20 for mail forwarding, $5 for a US phone number, $10 for getting the debit card forwarded to our country, $6 for getting the form-1583 notarized, $50 for a CPA consultation, and 40-50+ hours researching online.

Should I use Stripe Atlas?

Stripe Atlas was the perfect solution for us, but I recommend seeing other alternatives. It might be different for your use case. It was a perfect fit for us since a.) we wanted to charge customers via Stripe payment gateway and b.) we trusted their brand.

Again, your mileage may vary depending on the type of business entity, your technical know-how, etc. We went in knowing a little more than a layman. At least to say, the entire process (except for EIN) was flawless, and they did the best they could in every situation.

Can I incorporate it in the USA as a non-US resident?

Yes, you can. That’s precisely the premise of Stripe Atlas. You shouldn’t have to let your country of residence hold you back from starting a startup in the US. Throughout the entire process, we never felt that we were held back because we’re non-US residents. In some cases, obtaining an EIN from IRS can be a bit faster if you have an SSN, but that’s about it.

Why register a company in the USA instead of the country of residence?

Great question. It mainly comes down to a few things:

1. The USA, undoubtedly, has the best banking infrastructure in the world. If innovation happens, it happens here. All experiments start here so that you can access them sooner than the rest of the world.
2. Being an LLC or a C-Corp gives you instant credibility and looks like a legit business.
3. If you’re trying to get funded, most, if not all, VCs want your business entity to be a Delaware C-Corp. It opens so many avenues just by incorporating there.
4. The USA has a vast talent pool, brilliant minds, and savvy people who have built multiple 7-8 figure businesses. You get to hire them without thinking about cross-border hiring.

Where can I get more details on the legalities?

You can read more about the legal FAQs and the nitty-gritty details here. Stripe also has some excellent documentation which we highly recommend reading at least once.