LLC for Dropshipping: What You Actually Need to Set One Up

You don’t have to start an LLC to run a dropshipping business, but most dropshippers will start an LLC to limit their business liability and to create a business bank account in the U.S. If you’re not a U.S. citizen, you can still create a U.S. LLC. You would just have to understand which state is best for your LLC and how to get your EIN (Employer Identification Number) without a Social Security Number.

Do You Actually Need an LLC for Dropshipping?

It’s not necessary to form an LLC to start a dropshipping business. You can absolutely run a Shopify dropshipping business without registering a formal business entity.

You can run into problems if you don’t register an LLC. Many payment processors (such as PayPal and Stripe), supplier agreements, and wholesale purchases require a business name, EIN, and sometimes proof of a formal business structure. Shopify Payments will not allow your business to receive payment in any form until you have a business bank account, and most banks (such as Relay and Mercury) will not allow you to open a business bank account if you do not have a registered business and an EIN.

Liability protection is another reason to have an LLC. If a business sells a harmful product through a dropshipping website and a consumer sues, the LLC would protect the business’s personal assets. A sole proprietorship does not protect an individual’s personal assets in any form.

For most dropshippers, forming an LLC is only part of the question. The other part is choosing what state to create the LLC in.

Which State Should You Form Your Dropshipping LLC In?

This is where many founders end up wasting time due to the vast amounts of conflicting information available.

You often hear Wyoming or Delaware mentioned, but the correct answer also depends on whether you have a physical presence in the U.S. or not.

Non-U.S. residents with no U.S. office, employees, or operations: Wyoming is basically the answer. As of May 2025, the state filing fee is $100, the state annual report fee is $60 (minimum), and there is no state income tax. Also, there are strong privacy protections, as you do not have to disclose members’ names in public filings. Approvals in Wyoming typically come through within 1 to 3 business days.

U.S. residents operating from a specific state: You should almost always incorporate in your home state. If you incorporate in Wyoming and then operate in California, you will need to obtain California permission for your Wyoming LLC to operate there. This will cost you $70 plus annual fees on top of the costs for a Wyoming LLC, which means you would be paying twice.

Dropshippers targeting U.S. wholesale or B2B relationships: Delaware has credibility with suppliers and investors, and, for most LLCs, a $300 annual franchise tax, but for a dropshipping business, it rarely makes sense. You should also avoid New York. New York requires LLCs to publish formation notices in two local newspapers for six consecutive weeks. That process typically adds 30 to 60 days and $1,000 to $2,000 in publication costs, depending on the county.

How to Form an LLC for Dropshipping: The Actual Step

Step 1: Pick the state where you want to register your LLC and check name availability. Most Secretary of State websites offer a free name search. Wyoming’s is through the Wyoming Secretary of State. Make sure your name is not already in use, and that it ends with “LLC” or “Limited Liability Company.”

Step 2: Submit the Articles of Organization. For Wyoming, this is a brief, one-page form submitted through the Secretary of State’s website. You pay the $100 fee when you submit the form. In other states, this form may be called a Certificate of Formation (as in Delaware) or a similar term.

Step 3: Choose a registered agent. All LLCs need a registered agent with a physical street address in the state of formation. This cannot be a P.O. box. If you are forming a corporation in Wyoming but do not reside there, you need a commercial registered agent service. These typically run $50 to $150 per year.

Step 4: Get your EIN. This is the step that most non-resident founders get stuck on. You need to apply for an EIN, but a valid SSN or ITIN is required for access. If you have neither, you cannot use the online tool.

For non-residents, the proper method is to complete Form SS-4 and fax it directly to the IRS at (859) 669-5760. Processing typically takes four to six weeks. There is also an international phone option at (267) 941-1099, but in our experience, faxing is the most reliable method for non-residents. The IRS does not accept email for EIN applications.

Step 5: Open a U.S. business bank account. Mercury and Relay are the most accessible options for non-resident LLC owners. You will need your EIN, Articles of Organization, and sometimes a copy of your operating agreement. Mercury may flag accounts that use only a virtual registered agent address and no additional documentation, so be prepared to provide additional verification.

Costs to Expect in an LLC for Dropshipping

Formation itself is not expensive. The recurring costs (registered agent, state annual reports, and any state taxes) are what founders underestimate.

Common Mistakes Dropshippers Make With LLC Formation

Using a personal address as the registered agent address. Your registered agent address becomes part of the public record in most states. If you list your home address, it stays on file permanently. Use a commercial registered agent.

Forming in multiple states unnecessarily. Some founders form in Wyoming and then also register in their home state. Unless your state actually requires you to foreign-qualify because of business activity there, this doubles your fees and paperwork.

Thinking the LLC alone protects them. An LLC only shields you from liability as long as you keep it separate from yourself. That means a separate bank account, no personal expenses paid from the business account, and, ideally, a basic operating agreement, even for single-member LLCs.

Waiting on the EIN before making other moves. You can often file the LLC and get your Articles approved before your EIN arrives. Some platforms allow you to start the setup with just the formation documents. Don’t let a six-week EIN wait stop all other progress.

Choosing a state based solely on no state income tax. Wyoming and Nevada have no state income tax, but that only matters if your LLC elects to be taxed as a corporation and you are paying state corporate taxes. Most single-member LLCs are pass-through entities by default. The state where you personally live typically taxes your income regardless.

Non-Resident Founders: What Is Different for You

If you’re based outside the U.S. and want to form a U.S. LLC for your dropshipping business, there are a few differences in the process.

You cannot use the IRS online EIN portal. Form SS-4 by fax is your path.

You will most likely need an ITIN eventually, especially if you want to file a U.S. tax return or open certain financial accounts. ITIN applications require a certified copy of your passport. The IRS regularly rejects applications where the certification does not meet its specific requirements. Notarized is not the same as certified, as the IRS defines it.

You do not need a U.S. address to form the LLC, but you do need a U.S. registered agent address in the state of formation.

You will need your EIN and Articles of Organization, and in some cases, a passport and proof of address.

Ready to Form Your Dropshipping LLC?

We handle LLC formation, EIN applications for non-residents, BOI filings, and registered agent service for founders in 175+ countries. If you want to skip the back-and-forth with the IRS,

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FAQ

Do you need an LLC to run a Shopify dropshipping store?

Not at all. Legally, you can sell online without forming an LLC. Without one, you are operating as a sole proprietor with no limit of liability, no separation of business and personal funds, and no business bank account. Without a business bank account, your payment processor options will be limited.

Can a non-U.S. citizen form an LLC for dropshipping?

Yes, absolutely. U.S. LLCs can be owned by non-U.S. citizens and non-residents. For this reason, it is common for international founders to set up U.S. LLCs. Wyoming is the most popular for this due to the low cost, speed of formation, and added privacy protections.

Will I be able to set up a dropshipping LLC without a U.S. address?

You need a registered agent address in the state where you are forming your LLC. You do not need to have a physical presence in the U.S. or a U.S. address beyond the registered agent.

How quickly can I form an LLC for dropshipping?

Wyoming typically approves within 1 to 3 business days. Delaware is similar. California can take several weeks during peak periods. New York adds 30 to 60 days due to the publication requirement.

What is an EIN, and why do I need one?

An EIN is a nine-digit tax ID issued by the IRS. You need one to open a U.S. business bank account, apply for wholesale accounts, and file federal taxes. For non-residents, the only way to apply is by faxing Form SS-4. There is no cost to submit the form.