It’s 2023, and digital payment options are the backbone of international trade. As such, having an e-payment solution is critical for entrepreneurs, especially those operating internationally.
Every business owner today, including freelancers in India, eCommerce merchants in Nigeria, and even agency owners in Brazil, needs to access a reliable payment system.
Of all the payment systems, PayPal continues to be amongst the most recognized and utilized. But what happens if you’re not a resident of the US? Can you still open a US PayPal Business account?
The answer is yes, PayPal gives this opportunity to everyone, but it comes with having a specific set of requirements. This article will detail everything non-residents need to know in order to legally open a PayPal Business account in the United States.
What are the motivations for non-residents opening a U.S. PayPal Business Account?
Many entrepreneurs outside the US are keen on opening a U.S.-based PayPal Business account for the following reasons:
1. U.S. represents true global trust and credibility.
Many international clients/customers perceive businesses operating from U.S., and having a U.S. PayPal account, as more professional and more trustworthy. Thus, a PayPal Business account located in the U.S. increases legitimacy, and reduces hesitancy for customers making online payments.
2. Access To More Relavant Features
Merchants with a U.S. PayPal account have access to more functions than merchants operating from other countries. Such functions include recurring billing, shop integrations with Shopify and WooCommerce, developer API integration, and simplified payment receiving.
3. Access To Higher Account Limit
Most non US PayPal accounts have very low initial limits, or are very easy to flag for “suspicious activity”. On the other hand, U.S. PayPal Business accounts are known for offering higher limits on sending, receiving, and withdrawal after going through the verification process.
4. PayPal Accounts Eliminate Extra Fees
Generally, business U.S. PayPal accounts incur also significantly lower transaction fees, especially on payments made in United States dollars, or for funds linked via a U.S. business bank account. This difference can result in considerable savings over time due to lower operating costs.
5. Connecting Other Financial Tools With PayPal
There are multiple platforms such as Stripe, Square, Amazon, and Etsy that require US PayPal or Bank accounts, or would work better with one. A U.S. PayPal Business account opens opportunities to connect your business with some of the most advanced U.S. services and platforms.
Is It Really Possible for Non-Residents to Open a U.S. PayPal Business Account?
Yes. It is indeed possible for non-U.S. residents to legally open a PayPal Business account. However, they cannot do so as individuals. You will need to set up a U.S business with the appropriate documents and ensure that PayPal can verify your identity and your business.
PayPal enforces rigorous KYC (Know Your Customer) and AML (Anti-Money Laundering) rules. That means your account must meet U.S. compliance standards irrespective of your nationality.
This is very possible, and non-resident business people achieve this every year as long as they follow the right procedures.
What You Need: Requirements for Non-Residents
This is a comprehensive checklist of requirements that you need to open a PayPal Business account as a non-resident:
1. Form a U.S. Company (LLC or Corporation)
The first step is to formally incorporate a business in the U.S, which is usually a Limited Liability Company (LLC). You do not have to reside in the U.S. to possess a U.S company. States like Delaware, Wyoming and New Mexico are especially welcoming to non-resident incorporators.
- Delaware is known for its expeditious processing of LLCs (Limited Liability Companies) as well as it’s wide array of business friendly laws.
- Wyoming’s claim to fame is the anonymity it provides as well as low annual fees.
- New Mexico is a cost-effective state that does not need annual report filings.
The next step after forming a business entity is the issuance of Articles of Organization, which serves as evidence of the business’s existence.
2. Obtaining an EIN or Employer Identification Number (EIN)
The business equivalent of a Social Security Number, an EIN, is issued by the Internal Revenue Service (IRS). The following require an EIN:
- Opening a U.S. business bank account.
- Filing taxes, even if the amount is zero.
- Registering for business accounts with Paypal and Stripe.
Foreign business owners can submit applications by fax, postal mail, or through a service provider. This process can be expedited by Bizstartz.
3. USPS Business Address
A physical office is not a requirement. A virtual business address, or that of the registered agent in the state of formation, is sufficient. This address will be used for all official business communication and for verifying the business with Paypal.
Note: Avoid using PO boxes. PayPal typically requires that a real street address be used, as opposed to a PO box.
4. Needed US Phone Number Services
A US phone number is required to set up two factor authentications, for notification from PayPal, and for customer service communications. Services where you can acquire numbers are:
- Google Voice (when used with VPN)
- VoIP providers like Grasshopper also provide phone numbers.
- Skype Number
- Twilio
5. US Business Bank Account
To withdraw funds from PayPal, a US checking account is mandated. Fintech companies such as:
allow non residents to open business accounts without having to step foot in the US. Free of charge, these firms, along with others, provide business bank accounts that are backed by the FDIC and have seamless payment integration with PayPal.
6. ID of Government with Validity
To validate your identity on PayPal, some form of accountable identification is needed. Usually a passport or a drivers license or a national identification issued by the country of one’s residence suffices.
Identification must bear name of profile in PayPal with no changes at all.
Step-by-Step Guide: How to Open a U.S. PayPal Business Account as a Non-Resident
This is the sequence crafted within the preceding steps in order to attain the goal:
Step 1: Build Your Company Based in The States
Settle on a state like Delaware or Wyoming then proceed to draft Articles of organization go solo or enlist the assistance of formation companies like Bizstartz who do the paperwork along with compliances for you.
Step 2: Apply for Your EIN
Once your LLC is set up, apply for your EIN with the IRS. Currently, processing with fax applications takes anywhere from 2-5 weeks, while filing agents can expedite this to 1-3 business days.
Step 3: Open a U.S. Business Bank Account
With your EIN, you can now obtain a business checking account from a digital bank like Mercury or Relay, which supports foreign owners. This account will be connected to your PayPal for withdrawal purposes.
Step 4: Register for PayPal Business
Go to paypal.com and do the following:
- Choose “United States” from the dropdown menu.
- Type in your business name in the U.S along with the EIN and business address.
- Input your phone number and email associated with the U.S.
- Fill in your personal details (Full name, country of citizenship, passport ID).
- Choose your payment preferences and finish the first verification steps.
Step 5: Submit Verification Documents
These documents will most likely be requested by Paypal:
- Articles of Organization (proof of business)
- EIN confirmation letter (Form CP 575)
- Valid ID (passport)
- Proof of address (utility bill, lease, or virtual office confirmation)
You will be able to submit these documents over the PayPal Resolution Center once you are prompted.
Step 6: Link Your U.S. Bank Account
Once your account has been confirmed, move to ‘Wallet‘ and select ‘Link a Bank Account‘ to add your U.S. business account. As a means of verification, PayPal will initiate two nominal payment deposits.
Common Problems Non-Residents Face (And How to Avoid Them)
1. Knowing Payment Verification
It is possible that PayPal does take some time to review documentation. It is wise to submit clear scans, complete all processes, and align your documents with your business as well as ID records.
2. Limitation Of Accounts
PayPal has the right to place a hold on an account if they believe that large transactions are being processed or some documents do not align during the initial stages. One way to mitigate this risk is to begin transacting on a more intimate level that allows for the building of trust.
3. Misinformation
Make sure that the name of the business, its address, the EIN and banking information is the same on PayPal, the bank, as well as on the documents used to set the business up.
4. Unsupported Regions
If you are from a high-risk region or PayPal banned region such as (Iran, North Korea and certain parts of Africa) you could face restraining obstacles. Nevertheless, if you form a U.S compliant company with compliant documents this gives you a way to facilitate the legal opening and business management.
Alternatives If PayPal Isn’t an Option in Your Country
If you’d like alternatives as to how to deal with PayPal not being an optional tool in your region, I suggest:
- Stripe Atlas: Incorporate your U.S. company and gain access to Stripe’s payment gateway.
- Payoneer: Offers global payment solutions and integrates with Amazon, Fiverr, and other platforms.
- Wise Business: Allows local currency withdrawals from USD with low conversion fees.
- Revolut Business: Operates in Europe and globally, offering multi-currency accounts.
- Skrill: E-wallet alternative with more accessible country restrictions.
Final Thoughts
It’s 100% feasible to start a non-residents’ PayPal Business account, but the process isn’t casual or quick.
Creating a legitimate U.S. business, compiling appropriate documents, and ensuring compliance with PayPal’s procedures have to be meticulously followed.
Nevertheless, you’ll have powerful tools after the setup: sending, receiving, and managing payments internationally under a trusted U.S. business brand.
Want to Skip the Hassle?
At Bizstartz, we assist clients in forming U.S. companies, obtaining EINs, opening business bank accounts, and setting up compliant PayPal Business accounts for entrepreneurs worldwide.
From freelancers and startup founders to e-commerce sellers, we can guide you through every step.
👉 Start your U.S. business journey with Bizstartz today!
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