If you're based in India and want to use PayPal to accept payments from international clients, you might have noticed that the Indian version of PayPal has limitations.
While you can send and receive funds through an Indian PayPal account, it doesn't work well with platforms like Gumroad, Teachable, or Shopify—and may not allow recurring payments or full merchant features.
To unlock the full features of PayPal as a global payment processor, many Indian entrepreneurs form a U.S. company and open a U.S. PayPal business account. This approach allows you to integrate with more platforms, bill international clients more seamlessly, and avoid payout delays or restrictions.
However, even with a U.S. entity, PayPal may ask for extra verification—such as a valid business website, a U.S. phone number, and sometimes a U.S. address. These aren't deal-breakers, but it's important to have a credible online presence and valid documentation ready.
What Kind of U.S. Company Should You Form?
To open a U.S. PayPal account, you can form either an LLC or a C Corporation.
An LLC is best for solo entrepreneurs, freelancers, or digital creators. It’s flexible, low-maintenance, and great for smaller operations. If you don’t plan to raise capital or issue stock, this is often the easiest route.
A C Corporation is more structured and formal. It's the right choice if you’re building a startup, planning to raise funds, or issue equity. U.S. investors and accelerators often expect a Delaware C-Corp structure.
If you're undecided, keep in mind that you can start with an LLC and convert to a C-Corp later as your needs evolve.
How to Form a U.S. Business for PayPal
The process is fast and online when using the right tools. You'll need:
- A chosen state—Delaware or Wyoming are top picks
- A registered agent with a U.S. address
- A business name and formation documents
- An EIN (Employer Identification Number) from the IRS—this is critical for PayPal setup
You can use services like Firstbase, Doola, or Clerky to take care of the entire process. These platforms make it easy and hands-off.
Some founders also use Stripe Atlas (even if not using Stripe) to form a C-Corp with bundled support.
Be aware that once your company is formed, you’ll have ongoing tax obligations—which we’ll explain next.
Ongoing Tax Obligations to Keep in Mind
Once you’ve formed your U.S. company, you’ll need to take care of two simple but important annual requirements: one at the state level and one with the federal government.
Let’s start with state taxes. These are basically recurring fees that keep your company in good standing. In Delaware, LLCs pay a flat $300 by June 1 each year, while C-Corps must file a short annual report and pay a franchise tax that starts at $225, due by March 1.
In Wyoming, both LLCs and C-Corps pay a license tax that starts at $60, due on the anniversary month of when your company was formed. These filings are easy to manage, and in most cases, your registered agent can remind you or even handle them for you.
Federal tax filings are a bit more serious. The IRS wants to know what your company has been doing—whether or not you made money. If you’re the sole owner of an LLC, you’ll need to file Form 5472 and a pro forma Form 1120. This tells the IRS that your business is foreign-owned and discloses any money you moved between yourself and the company.
If your LLC has more than one member, you’ll file Form 1065, give each partner a Schedule K-1, and potentially file a 1040-NR if the partners are also non-residents.
For C-Corps, Form 1120 is required, and if you’re a foreign owner, you’ll also need Form 5472.
These forms are due every year by April 15. If you miss a filing—especially Form 5472—the penalties start at $25,000 per form. So while it may not seem urgent at first, staying on top of these obligations is crucial.
You can manage the state filings yourself or through your registered agent, and we recommend working with a U.S.-based accountant like Bookmate to handle the federal side correctly.
How Bookmate Can Help
At Bookmate, we specialize in helping international founders—especially from India—who have formed U.S. businesses to use platforms like PayPal, Stripe, or Shopify.
We’re not a generic accounting firm. We focus entirely on foreign-owned LLCs and C-Corps, and we understand the specific issues non-resident founders face.
One of the biggest reasons our clients choose Bookmate is simplicity. You don’t have to worry about navigating confusing IRS forms, hiring an in-house CPA, or guessing what your filing requirements are.
We offer flat-rate pricing, so you know exactly what you’re paying, and everything is handled online—no physical mail, no printing, no scanning.
Here’s how working with us looks in practice. First, we schedule a free Zoom call to learn about your company, your structure, and your goals. After that, we send you a digital invoice and engagement letter so you can get started easily. You’ll then fill out a secure web form where you upload your EIN, ownership details, and income/expense summaries.
From there, we prepare your tax documents, review them with you so you know exactly what’s being filed, and then we submit them through the proper IRS channel—fax, mail, or e-file. And if the IRS has questions or sends a notice about a return we prepared, we’ll help you respond to it quickly and clearly.
Book a free consultation to get started. Learn more at trybookmate.co
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Each tax situation is unique. Please consult Bookmate or a qualified advisor.
