U.S. Bank Account Options for Foreign Sellers
A U.S. Bank account will save you money when it comes to remitting U.S. sales tax. Are you able to do Business in the U.S. without a U.S. bank account? You absolutely can do business without a U.S. bank account, but it will cost you more in fees without one.
Most use Payoneer (or similar options) to move their money from Amazon back to their home country, which saves approximately 50% in fees. However, this does not provide a U.S. business debit card, or the ability to do an ACH pull.
Foreign sellers need to set up several additional steps to have success when selling in the U.S.
As a foreign seller on an e-commerce platform such as Amazon, it is your responsibility to collect and remit sales tax in the states where you have nexus. Yes, you may be protected by a federal tax treaty, but sales tax is at the state, not the federal level.
Now with marketplace nexus, in more states the markeplace facilitator will collect and remit, but not all states.
In order to collect and remit, one is to remit or give the sales tax you collect back to the state and file a state sales tax return. We detail this complicated process for our Sales Tax System Members.
There are several sales tax remitting companies that have software to automate this process. BUT in order for them to automate the process, you MUST have a US bank account for an ACH (automatic withdrawal). If you do not have a US bank account, you will have to manually file your own sales tax returns, or work with a company or tax firm that allows you to wire your sales tax and file on your behalf. The unfortunate challenge with these companies is that you will end up paying DOUBLE the fees to file a sales tax return.
Since profits, is the key to any business, having a U.S. bank account for your business, you will save about $300 to $800K PER MONTH when it comes to remitting sales tax to 30 or more FBA states. That equates to $3,600 to $9K PER YEAR in savings. Simply having a U.S. bank account will save you a fortune in profits over the next few years.
Sales Tax Remitting Costs without a U.S. Bank Account
Here is the math. Most remitting companies charge between $20 to $30 to file a sales tax return per state when they do an ACH pull from your U.S. bank account. If you do not have a U.S. bank account, the filing will not be automatic and it requires a manual process which costs more. The cost per return without a U.S. bank account will range from $50 to $100 per return. Let’s use a spread of $30 per state ($20 vs $50 per return). That is $30 X (the number of states with nexus) x reporting frequency per year. If you are in 25 states filing monthly that is $30 x 25 x 12=$9,000 in ADDITIONAL Costs. These extra costs would be avoided if you opened a U.S. bank account.
Travel is Required BUT Is Still Not Easy
Establishing a U.S. bank account requires travel to the U.S. You can always do this on your own during your next trip for a personal account, unfortunately not for a business account. But why is that?
The U.S. banks rules have changed a lot over the last 12 months. Now, establishing a bank account for a Foreign or U.S. Entity where the signer is from outside the U.S. is almost impossible, EVEN when you travel in person. Most banks want to see your business address with employees doing work, as well as a utility bill linked to a U.S. personal address.
Since 1997, our sister company, NCP, has set up hundreds of bank accounts for foreign clients with various banking relationships. The rules are constantly changing, along with banks, contacts, and the processes.
The Window with our Administration is Closing
Fortunately, there is an option, but the WINDOW is CLOSING to Open a U.S. Bank Account (especially with our current Administration cracking down on everything from immigration to tariffs on imports). More U.S. banks either require an office site inspection, or a utility bill to your personal address. This address must be different from your “office” address. This makes the process almost impossible for a foreign seller unless you are looking to open a personal bank account in the U.S. vs a business account in the name of a foreign entity or a U.S. entity.
The Latest in U.S. Banking Updates
The good news is, over the last couple of months, we have had several foreign clients use our banking service to help them open their U.S. bank account with travel to the U.S. They have been all successful. The bad news, as mentioned above, there are more requirements to prove your local business or you live and work on the U.S.
[Updated August 2019] – All our banks now will only open a US bank account for a US entity which involves a new US entity linked to your foreign entity.
The Solution for E-Commerce Seller that are selling via a Foreign Entity
U.S. banking rules change all the time. This year, compliance has become much tougher. It is very difficult to open a US bank account with a foreign entity. But we have had success over the past 12 months.
If you are selling in your own personal name and need a bank account, that is simple to create. In that specific case, you do not need our help. If you do need our help with the more complex processes, reach out to [email protected] and we will email you our most updated U.S. banking solutions and fees.