Entity depends on who the owner is and how the money goes home. When the owner is a Chinese company or an individual living in China, a C Corp is the usual choice: the company pays federal corporate income tax, profits go home as dividends withheld at 10% under the U.S.–China treaty, and the owner never enters the U.S. individual filing system. A single-member LLC wholly owned by a Chinese individual is "disregarded" for tax: the company's U.S. business income lands on the individual, who needs an ITIN and a Form 1040-NR, while the LLC itself still files a pro forma Form 1120 with Form 5472. For a non-resident individual that is more work than a C Corp, not less. An LLC with two or more owners defaults to partnership treatment (Form 1065, Schedules K-1) and must prepay withholding for foreign partners quarterly (Form 8813, with annual Forms 8804 / 8805), which is more complex still.
State depends on where the people and the inventory are. The state of formation does not decide where you pay tax. The state where you have a warehouse, an office or employees has jurisdiction over you regardless of where the company was formed. So the rule is register where you actually operate: inventory in California means a California company, a manager in Texas means a Texas company, and only one state to maintain. Forming in Delaware or Wyoming and then foreign-qualifying in the operating state just adds a second annual report and registered agent for a company with real operations. California waives the $800 minimum franchise tax for a corporation's first taxable year (not for an LLC); Texas has no corporate income tax but a franchise-tax report; Nevada and Wyoming have no income tax but still have sales tax. A cross-border seller with a U.S. warehouse forms in the warehouse state; see the cross-border seller solution.
The real work starts after formation. Within 90 days of the state's approval: the EIN (a non-resident owner without an SSN can still get one on Form SS-4, about a week by fax, about four weeks by mail, same day through the international phone line; a responsible party with an SSN gets it online the same day); the bank account (banks and payment platforms this year generally want "real operations" evidence from non-resident-owned companies: a warehouse contract, employees, a U.S. address, business correspondence, and a registered-agent address alone rarely passes); sales-tax registration in the warehouse state (from the day goods arrive); the bookkeeping system; a decision on whether the parent's or owner's wire is equity or a loan before it is sent (see the comparison table on the U.S. subsidiary page); and, for any company 25% or more foreign-owned, Form 5472 with the 1120 the following year whenever there was a related-party transaction, including a capital contribution or expenses paid by the owner, even with no revenue.
