Get paid · 5 min read
Getting paid: payment processing for a US company
For a lot of founders this is the whole reason the company exists. Here's how the payment stack fits together, what gets accounts restricted, and where the money goes at the end.
The short answer
A US entity, an EIN and a US business bank account together unlock Stripe, PayPal, Shopify Payments, Amazon and the app stores. New accounts face payout delays and rolling reserves for the first weeks. Founders abroad route payouts to a US account first, then move funds home via a multi-currency provider.
Ask a founder in Lagos, Karachi or Buenos Aires why they formed a US company and the answer is rarely about tax. It is that Stripe does not operate where they live, or it does but will not pay out locally, or their customers want to pay a US entity in dollars, or the App Store will not onboard them at all.
The payment stack is the point of the exercise. Here is how it fits together.
The stack
| Layer | What it does | What it needs from you |
|---|---|---|
| Processor | Takes card payments — Stripe, PayPal, Square | Entity, EIN, US bank account |
| Merchant of record | Sells on your behalf and handles global tax — Paddle, Lemon Squeezy | Entity, tax details; no processor relationship needed |
| Marketplace | Sells and pays out — Amazon, Etsy, app stores | Entity, EIN, bank account, tax interview |
| Bank account | Receives payouts, pays vendors | Entity, EIN, KYC documents |
| Cross-border | Moves money to your country — Wise, Payoneer | Personal and business verification |
Card processing
Stripe and PayPal are the default pair, and they are not really substitutes. Stripe is a processor you build on; PayPal is also a consumer wallet your customers may already trust. Plenty of businesses run both.
| Stripe | PayPal | |
|---|---|---|
| Best at | Custom checkout, subscriptions, platforms | Consumer familiarity, buyer trust |
| Integration | Developer-first, excellent documentation | Simpler, less flexible |
| Payout speed | Rolling, typically 2 days once established | Varies; instant to own balance |
| Dispute handling | Structured, evidence-based | Historically buyer-favourable |
| Freeze risk | Real, usually volume- or category-driven | Real, and widely complained about |
When to use a merchant of record instead
A merchant of record legally sells your product to the customer, then pays you. The practical consequence is that they, not you, are responsible for collecting and remitting sales tax and VAT in every jurisdiction where your customers live.
For a small software business selling to consumers in thirty countries, that is a substantial problem to hand to somebody else. The cost is a higher percentage than a raw processor, and less control over checkout and customer data.
| Use your own Stripe when | Use a merchant of record when |
|---|---|
| You sell mainly B2B, mainly domestically | You sell to consumers in many countries |
| Margins are thin and fees matter | Global VAT compliance would otherwise fall on you |
| You need full control of checkout and data | You would rather not register for VAT anywhere |
| You have accounting support | You are a solo founder without tax support |
Getting the money home
This is the step guides skip. Your US company receives payouts to a US account. You live somewhere else. Moving that money is its own decision with its own costs.
- International wire. Universally available, slow, and the fee is usually charged at both ends plus an exchange margin.
- Multi-currency provider. Wise, Payoneer and similar services hold balances in several currencies and convert at rates that are typically much closer to the mid-market rate.
- Keep it in USD. If your costs are in dollars, converting is a loss you do not need to take. Convert what you actually spend locally.
Payment processing
Processor selection, application preparation and payout routing set up for your entity and your country — including the reserve and payout terms before you commit.
See what's includedKeeping accounts alive
Restrictions almost always follow a surprise. Reduce surprises.
- Describe the business accurately at signup, including what you sell and to whom. A mismatch between the description and the transactions is the most common trigger.
- Warn them before a spike. A launch that takes you from $2,000 to $60,000 in a week looks like fraud to a monitoring system. Telling them in advance costs one support ticket.
- Keep chargebacks under 1%. Clear billing descriptors, obvious refund policy, fast support. Above roughly 1% you enter monitoring programmes.
- Do not process for anyone else. Running another business's payments through your account terminates it, and the terms are explicit about this.
- Have a second processor configured before you need it.
The 1099-K
Payment platforms report your gross payment volume to the IRS on Form 1099-K. Two things founders get wrong: it reports gross, before fees, refunds and chargebacks, so it will not match your revenue; and receiving one is not itself a tax bill. It is information reporting. The reporting thresholds have changed repeatedly in recent years, so check the current IRS guidance rather than an older article.
Where to go next
Money coming in means books to keep — bookkeeping is next. If you sell physical goods or on marketplaces, e-commerce covers the payout and sales-tax specifics.
Frequently asked questions
- Can a non-US resident use Stripe with a US LLC?
- Yes. Stripe supports US-incorporated businesses with foreign owners. You need the entity, an EIN and a US bank account to receive payouts. Stripe verifies the business and the beneficial owners, and it can request additional documentation depending on your industry and expected volume.
- Why is my first payout taking so long?
- New accounts are on a longer payout schedule while the processor builds a risk profile — commonly seven to fourteen days for the first payouts, shortening as history accumulates. Some accounts also carry a rolling reserve, where a percentage of each payment is held for a set period.
- What is a merchant of record?
- A company that legally sells your product to the customer and then pays you. Paddle and Lemon Squeezy work this way. They take a higher percentage than a raw processor but assume responsibility for sales tax and VAT collection worldwide, which for a small software business selling internationally is often the better trade.
- Can I send Stripe payouts directly to my foreign bank account?
- Stripe's supported payout destinations depend on the country your account is registered in. A US Stripe account generally pays out to a US bank account. The common pattern is a US business account for payouts, then a multi-currency provider to move funds to your home country.
- What gets a payment account restricted?
- A sudden change in volume, a chargeback rate above roughly 1%, a mismatch between your stated business and your actual transactions, selling a prohibited category, or customer complaints. Most restrictions follow a change the processor did not expect.
Topics in this guide
- Stripe account restricted or rejected: causes and recoveryRestrictions almost always follow a surprise. Understanding which surprise you caused is most of the recovery.
- Stripe vs PayPal: fees, payouts and approval oddsThese are not really substitutes. One is infrastructure you build on; the other is a wallet your customers already trust.
- Merchant of record vs your own StripeA merchant of record costs more per transaction and removes an entire compliance problem. Whether that is worth it depends almost entirely on who your customers are.
- Getting paid by US clients from abroadUS clients default to methods that only reach US bank accounts. That is usually the real reason founders form a US entity.
Sources
- IRS — Understanding Your Form 1099-K
- Federal Reserve — ACH and payment systems
- CFPB — Prepaid and payment products
Last reviewed . Fees, deadlines and government processing times change — verify against the primary source before acting.