Common Mistakes Pakistani Sellers Make When Forming a US Company
By Shaheer Khan, founder of Markify Ecommerce
A US LLC can open doors for Pakistani sellers: Stripe, US business banking, Walmart, TikTok Shop US and US wholesale suppliers. But small mistakes during setup cause big problems later, from rejected bank applications and frozen payment accounts to IRS penalties.
These are the mistakes we see most often, and how to avoid them.
1. Choosing a state for the wrong reasons
Most online sellers do not need Delaware, which is popular with venture-funded startups issuing shares. Its LLC annual tax is $300 a year. Wyoming and New Mexico are common choices for small ecommerce LLCs because of lower ongoing costs and simple filing. Wyoming's annual report fee starts at $60. Some states, such as California, charge a much higher annual minimum tax.
Also remember: if your LLC has a real business presence in another state (for example a warehouse you operate there), you may need to register there too.
Read the full comparison in Wyoming vs Delaware for Pakistani Amazon sellers.
2. Names and addresses that do not match
Banks, Stripe, Amazon and Walmart compare documents automatically. Problems arise when:
- the LLC name on the EIN letter differs from the formation document (even "LLC" vs "L.L.C.")
- the owner's name is spelled differently on the passport and the applications
- the business address on one form differs from another
Before submitting anything, check the exact spelling of the company name, owner name and addresses across the Articles of Organization, EIN confirmation (CP 575 or 147C letter), bank application and marketplace applications. Keep them identical.
3. Using VPNs to look like you are in the US
Some sellers log into banks, Stripe or marketplaces through VPNs or proxies so they appear to be in the US. Financial providers detect this, and when your passport and address show Pakistan, the mismatch looks like fraud. Accounts are often closed and funds held.
Non-resident owners are allowed. Apply from your normal connection and give your real residential address in Pakistan as the owner's address.
4. Treating a mail-forwarding or registered agent address as an office
A registered agent address is for legal mail. Some banks and payment providers will not accept it as the business's operating address. Ask the provider what address they need, and use a real business address service if required. Never claim an address you do not have the right to use.
5. Not filing Form 5472
A US LLC owned by one non-US person is treated by the IRS as a "disregarded entity", but it still must file Form 5472 with a pro forma Form 1120 every year to report transactions with its owner, even if no US tax is due. The penalty for not filing is $25,000 per form. This is the most expensive mistake on this list.
Also watch:
- state annual reports and fees
- the BOI report rules, which have changed several times; check FinCEN's current requirements for your company
- US sales tax if you sell through your own store and pass state thresholds (marketplaces like Amazon usually collect it for you)
See taxes for Pakistani sellers with a US LLC.
6. Mixing personal and business money
Use the LLC's bank account for the LLC's income and expenses only. Mixing personal spending into it makes bookkeeping and tax filing harder, and weakens the liability protection the LLC is supposed to give you.
7. Forgetting Pakistani tax and banking rules
As a Pakistani tax resident, you are taxed on your worldwide income, and you must declare foreign income and assets in your Pakistani return. Bring money home through proper banking channels so it is documented. Speak to a Pakistani tax adviser about how your LLC income is treated.
8. Expecting the company to fix a weak business
A US LLC makes payments and banking possible. It does not create sales, approve you on Walmart automatically, or protect a marketplace account that breaks the rules. Plan the business first, then the structure.
9. Using unreliable agents
Avoid anyone who:
- offers "ready-made" Stripe, PayPal or Amazon accounts
- wants to put their own name or identity on your company or accounts
- keeps your EIN letter or company documents
- promises guaranteed approvals
You should receive every document in your own name: the formation document, operating agreement, EIN letter and all account logins.
10. Choosing the wrong country entirely
If you mainly sell in the UK and Europe, a UK Ltd may suit you better. See US LLC vs UK Ltd for Pakistani sellers.
Frequently asked questions
How long does it take to form a US LLC from Pakistan?
The state filing is often quick. Getting the EIN as a non-resident without an SSN usually takes longer, because it is done by fax or post. See how to get an EIN from Pakistan.
Do I need to visit the US?
No. Formation, EIN and many banking options can be completed remotely.
Can Markify form the company?
Yes. Our US company formation service covers the LLC, EIN, bank and Stripe setup, with every document in your name.
Work with Markify Ecommerce
Markify Ecommerce (listed on Google Maps as Markify Ecommerce - Unicored Technologies) is an ecommerce marketplace management agency in Bahria Orchard, Lahore. We manage Amazon, eBay, Walmart, Shopify, Etsy and TikTok Shop accounts, and we set up US LLCs and UK Ltd companies for Pakistani sellers.
- Office: Central Block, Bahria Orchard, Raiwind Road, Lahore 55150, Punjab, Pakistan
- Phone & WhatsApp: +92 321 3131641
- Free account audit: Send us your store or account details and we will reply with the first fixes we would make.