Let $A(z)$ be a formal powerseries with $a_0=0$. Show that the reciprocal of $1-A(z)$ is given by
$$B(z) := \sum_{n=0}^\infty A(z)^n = 1 + A(z)^1 + A(z)^2 + \ldots$$
I realise that when we rewrite $C(z) := 1-A(z)$, then the reciprocal of $C$ has to exist since $c_0 \ne 0$. If we let $D(z) := C(z)B(z)$ we are done if we can show that $d_0 = 1$ and $d_n = 0$ for all $n > 0$. We can readily see that $b_0, c_0 = 1$, so $d_0 = 1$. So we are left to compute the remaining $d_n$ for $n > 0$ via the formula
$$d_n = \sum_{k=0}^n c_k b_{n-k}.$$
It is clear that $c_0 = 1$ and $c_n = -a_n$ for $n > 1$, but I do not see how to find a formula for the $b_n$ with $n > 1$. Could you please help me?
We consider $\mathbb{C}[[z]]$, the ring of formal power series with coefficients in $\mathbb{C}$ and show for $A(z)\in\mathbb{C}[[z]]$ with $a_0=[z^0]A(z)=0$: \begin{align*} \color{blue}{\left(1-A(z)\right)^{-1}=\sum_{n=0}A^n(z)}\tag{1} \end{align*} We can show (1) essentially in two steps.
In this proof we use two facts about formal power series
The calculation of the coefficients of the product of two formal power series is done using the Cauchy product in the same way as for ordinary generating functions. \begin{align*} A(z)B(z)=\left(\sum_{k=0}^{\infty}a_kz^k\right)\left(\sum_{l=0}^{\infty}b_lz^l\right) =\sum_{n=0}^{\infty}\left(\sum_{k=0}^n a_kb_{n-k}\right) z^n \end{align*} In (3) we have $A(z)=1-z$ and $B(z)=\sum_{n=0}^{\infty}z^n$.
Two formal power series are equal iff their coefficients are equal for all $n\geq 0$. \begin{align*} A(z)=B(z)\qquad\longleftrightarrow\qquad [z^n]A(z)=[z^n]B(z)\quad n\geq 0 \end{align*} This is used in (3) with $A(z)=(1-z)\sum_{n=0}^{\infty}z^n$ and $B(z)=1$.
Intermezzo: We want to use (3) by substituting $z$ with a formal power series $D(z)$. To guarantee that this kind of substitution is valid we have to assure that always a finite number of operations is involved when doing the calculation. \begin{align*} A(z)=\sum_{n=0}^{\infty}a_nz^n\qquad\longrightarrow\qquad A(D(z))=\sum_{n=0}^{\infty}a_nD^n(z)\tag{4} \end{align*} This finite number of operations does not refer to the countably infinite number of terms in $A(D(z))$ we usually have, but to the number of terms we have to consider when calculating a coefficient $[z^k]A(D(z))$. In fact this is assured iff \begin{align*} \color{blue}{[z^0]D(z)=0}\tag{5} \end{align*} because then we have \begin{align*} [z^n]A(D(z))&=[z^n]\sum_{k=0}^{\infty}a_kD(z)^k\\ &=[z^n]\sum_{k=0}^{\infty}a_k\left(d_1z+d_2z^2+\cdots\right)^k\\ &=\sum_{k=0}^n[z^n]\left(d_1z+d_2z^2+\cdots\right)^k\\ \end{align*} Since the coefficient $[z^0]D(z)=0$ the smallest power of $z$ in $D(z)^k$ is greater or equal to $k$ and we can restrict the calculation of $[z^n]$ in $A(D(z))$ to the finite number of the first $n+1$ summands of the formal power series.
It turns out that a substitution (4) with a formal power series $D(z)$ is valid whenever the family $\{D^n(z): n\geq 0\}$ is locally finite. We are now well prepared for the second step.
In order to prove the equality of the right-hand side in (6) we have to show that $[z^n]A(D(z))B(D(z))=[z^n]C(D(z))$ for all $n\geq 0$. We obtain \begin{align*} \color{blue}{[z^n]}&\color{blue}{A(D(z))B(D(z))}\\ &=\sum_{k=0}^n[z^k]A(D(z))[z^{n-k}]B(D(z))\\ &=\sum_{k=0}^n\left(\sum_{q=0}^na_q[z^k]D^q(z)\right)\left(\sum_{r=0}^nb_r[z^{n-k}]D^r(z)\right)\\ &=\sum_{q=0}^n\sum_{r=0}^na_qb_r\sum_{k=0}^n[z^k]D^q(z)[z^{n-k}]D^{r}(z)\\ &=\sum_{q=0}^n\sum_{r=0}^na_qb_r[z^n]D^{q+r}(z)\tag{7}\\ &=\sum_{{0\leq q+r\leq n}\atop{q,r\geq 0}}a_qb_r[z^n]D^{q+r}(z)\\ &=\sum_{m=0}^{n}\sum_{q=0}^{m}a_qb_{m-q}[z^n]D^{m}(z)\\ &=[z^n]\sum_{m=0}^{\infty}\sum_{q=0}^{m}a_qb_{m-q}[z^n]D^{m}(z)\\ &\;\color{blue}{=[z^n]C(D(z))} \end{align*} and the claim (6) follows.
Comment: In (7) we observe that $[z^n]D^{q+r}=0$ if $q+r>n$, so that we can restrict the index region in the next line.
Note: This approach is nicely elaborated in chapter 7 of Discrete Calculus: Methods for Counting by C. Mariconda and A. Tonolo.