Where to form your company.

The place where a company is registered shapes much of what an online store can do. It determines which banks will consider opening an account, since most banks serve companies registered in their own country. It determines which payment providers are available and under what conditions. Stripe and Shopify Payments are available to companies in the United States, the United Kingdom and Hong Kong, each subject to the provider’s own verification.

Jurisdiction also affects currency and customer trust. A store that charges in the currency of its customers and settles into a local account in that currency avoids conversion at each step. Customers and suppliers often feel more comfortable dealing with a company registered in a country whose rules they know, and marketplaces and advertising platforms ask for company details as well.

Finally, each jurisdiction carries its own obligations every year. Some ask for a short annual report, and others require annual accounts or an audit. These recurring duties, and the cost of the professionals who carry them out, are as much a part of the choice as the formation itself. The sections below describe what each of the three jurisdictions involves.

A US company is commonly chosen by founders whose customers are in North America, who want to charge and settle in US dollars, or who expect to raise capital from American investors. Non-US residents can own an LLC or a C Corporation with no visa and no Social Security number. The company is filed remotely with a state, and a complete file is typically formed within 24 hours, depending on the state.

Locally, every state requires a registered agent with a physical address in the state to receive official and legal mail. The company also needs an EIN from the IRS. When the responsible party has no Social Security number or ITIN, the application is made by fax or mail and typically takes from several days to a few weeks.

Yearly obligations depend on the state and the structure. A Delaware LLC pays a flat annual tax of $400. A Wyoming LLC files an annual report with a minimum fee of $60, and New Mexico requires no annual report from an LLC. At federal level, a foreign-owned single-member LLC must generally file Form 5472 with a pro forma Form 1120 each year. Sales tax is handled state by state, based on where the store has nexus.

A UK private limited company is commonly chosen by founders who sell to British and European customers, who want to settle in pounds sterling, or who value a company form that is recognized worldwide. It is registered at Companies House, and online incorporation is typically completed within 24 hours of a complete application.

The company needs at least one director who is a natural person and at least one shareholder, and neither has to live in the United Kingdom. It must have a registered office address in the UK and a registered email address. Companies House now requires identity verification for directors and for persons with significant control, so each of these people completes a check before or shortly after formation.

Each year the company files a confirmation statement and annual accounts with Companies House and a Company Tax Return with HMRC. The main rate of corporation tax is currently 25%, with a lower rate of 19% for small profits. VAT is a separate matter with its own registration rules. The accounts and the tax return are prepared by an independent licensed professional.

A Hong Kong private company limited by shares is commonly chosen by founders who buy from suppliers in Asia, who sell across the region, or who want a base close to their manufacturing. It is registered with the Companies Registry, typically within a few working days, and the Certificate of Incorporation and the Business Registration Certificate are issued together.

The company needs at least one director who is a natural person and at least one shareholder, and neither needs to live in Hong Kong. Two local elements are required, which are a company secretary based in Hong Kong and a registered office there. Both are services that continue for as long as the company exists, and their cost appears in your quote as a recurring item.

Hong Kong asks more of a company each year than the other two jurisdictions. It files an annual return with the Companies Registry, renews its business registration, has its financial statements audited and files a profits tax return with the Inland Revenue Department. Profits tax is territorial, at a standard rate of 16.5%, with 8.25% on the first HK$2 million under the two-tier regime. There is no VAT or sales tax.