The best company structure for a board games and hobby store.

An online board games and hobby store has specific commercial needs. Your customer base is often concentrated in the US, and you may be launching products via crowdfunding platforms like Kickstarter or Gamefound. These platforms typically require a US entity and a US bank account to receive funds. Furthermore, when selling directly to consumers, US customers expect to pay in USD via standard credit card processors. Using a non-US entity can create friction, leading to higher decline rates and customer service issues.

You also interact with a US-centric supply chain. Game manufacturers, distributors, and logistics partners are often based in the US. They will expect to be paid from a US bank account and may require you to provide a Form W-9, which necessitates a US tax ID number (EIN). Attempting to manage this with a non-US company can lead to operational hurdles and higher currency conversion costs. The right structure is one that embeds your business within this US ecosystem, making transactions with customers, platforms, and suppliers seamless. A US LLC provides the legal and financial rails to operate efficiently in your primary market.

A single-member LLC owned by a non-US person is typically treated as a ‘disregarded entity’ for US tax purposes. This means the LLC itself does not pay US corporate tax. Instead, the tax obligations pass through to the owner. This simplicity is its primary advantage. The structure provides a formal US legal entity, which confers liability protection, separating your personal assets from the business. It can obtain a US Employer Identification Number (EIN), which is the key to unlocking US business banking and payment processing.

However, it is crucial to understand its limitations. A US LLC is not a tool for tax evasion in your home country. You are still required to declare the income and pay personal or corporate taxes as mandated by your local jurisdiction. It does not change the risk profile of your business; if your model involves high-risk elements like unregulated gambling mechanics or problematic supply chains, a US LLC will not make it acceptable to banks. Finally, forming the entity does not guarantee a bank account. Banking access depends on a successful compliance review of your specific business and ownership.

For a non-US owner of a disregarded LLC, the US tax question depends on two main factors: whether your income is considered US-sourced, and whether you are ‘engaged in a trade or business in the United States’ (ETBUS). For many online board game stores operated entirely from outside the US, with no stateside staff, offices, or dependent agents, the business activity may not meet the threshold for being ETBUS. If you are not ETBUS, you generally do not owe US federal income tax on your business profits. The sourcing of income for sales of inventory (like board games) is complex, generally determined by where title passes from seller to buyer.

This is a fact-specific determination that must be confirmed with a qualified US tax adviser. Even if no tax is due, there is a mandatory annual filing requirement. A foreign-owned single-member LLC must file Form 5472 and a pro forma Form 1120 with the IRS to report transactions with related parties. Failure to file this form on time carries a significant penalty, starting at $25,000. This filing obligation is a critical compliance point for all foreign owners of a US LLC.

For most non-US founders running an online hobby store, Wyoming is the most common and cost-effective choice. Its LLC formation process is straightforward, and the ongoing annual fees are low. Wyoming also provides strong liability protection and does not have a state corporate income tax. Its public registry lists the organiser and registered agent but not the members or managers, offering a degree of privacy. This combination of low cost, simplicity, and privacy makes it the default option for businesses of this type.

Delaware is another popular choice, known for its well-established corporate law and specialised Court of Chancery. However, it is more expensive to form and maintain an LLC there, with a higher annual franchise tax. Delaware is primarily advantageous for companies planning to raise venture capital from institutional US investors, as they strongly prefer Delaware C-Corporations. For a bootstrapped or crowdfunded online board game store that is not seeking venture capital, the benefits of Delaware rarely justify the additional cost and complexity. The simplicity and lower administrative burden of a Wyoming LLC are a better fit for the operational reality of most online retailers.

A US LLC with an EIN is the key to the US financial system. Platforms like Kickstarter and Gamefound often mandate a US entity and bank account for campaigns run by non-US creators. For your own ecommerce store on a platform like Shopify, using Shopify Payments (powered by Stripe) in the US requires a US entity, US bank account, and US address. Without this, you are forced onto less integrated, often more expensive international payment gateways, which can lead to lower conversion rates.

Once formed, your LLC can apply for accounts at various institution types. These include US-based fintech banking platforms that are fronted by community banks, as well as state-licensed money transmitters. These accounts allow you to receive payouts from Stripe and crowdfunding platforms in your company’s name, hold USD balances, and make payments to US-based suppliers and logistics partners. This setup avoids forced currency conversions and high wire fees associated with using services like Payoneer or Wise as your primary business account, which some platforms now restrict. It provides a professional financial footing for a business focused on the US market.

When a bank’s compliance team reviews your application for a board games store, they focus on specific risks. The largest is pre-order liability. Crowdfunded projects and pre-sales campaigns create significant future delivery risk. Underwriters will see a large influx of funds from a Kickstarter campaign as a liability that exists until you have manufactured and shipped the games. A high chargeback ratio could wipe out those funds, leaving the bank exposed. They will want to see a clear production plan, supplier agreements, and a realistic fulfilment timeline. Your website and crowdfunding page must be transparent about delivery dates and refund policies.

They will also scrutinise the games themselves for any content that could be considered related to gambling, which is a prohibited category. Ambiguous mechanics or themes could be flagged. Finally, they will verify your identity and that of any other owners, ensuring you are not on any sanctions lists. They need to understand the business model: where you source your games, who your typical customer is, and your expected monthly revenue and transaction volumes. Providing clear, verifiable documentation is key to a successful review.

For a foreign-owned board game or hobby store, the choice between Wyoming, Delaware, and Florida is less about tax and more about perception and cost. Wyoming is the default for most non-US founders. Its low annual upkeep, strong privacy, and minimal reporting requirements make it efficient. Underwriters at US financial institutions are familiar with Wyoming LLCs formed by international founders, so it presents no friction.

Delaware offers a different signal. Its higher annual franchise tax and more formal reputation can be perceived as more substantial by partners, though this is a soft factor. For a board game company planning to seek venture capital investment in the future, a Delaware entity can be converted to a C-Corporation more easily. For a simple e-commerce or Kickstarter-funded project, it is usually an unnecessary expense.

Florida is a less common choice. While it has no state income tax, this is not relevant to a foreign-owned disregarded LLC. Its public registry and higher annual report fee offer no specific advantage for a board game business over Wyoming. Some payment processors may perceive a Florida nexus, asking for more documentation to prove the business is not physically operating in the state, which can add friction to account opening.

Stripe is the primary choice for most board game stores selling direct. For a US LLC owned by a non-resident, Stripe will require the EIN confirmation letter (CP575 or 147C), foreign passport, and evidence of a US business address via the registered agent. Crowdfunding creates a key risk for Stripe. If you run a large Kickstarter campaign and process pre-orders, Stripe will see this as future-dated fulfillment risk. They may place a significant percentage of your balance in a rolling reserve until you provide proof of shipping to backers. This can be 10-30% of funds held for 90 days or longer.

Shopify Payments, which is powered by Stripe, follows similar rules. If you sell through a Shopify store, expect the same document requests and potential for reserves based on pre-order volume. PayPal requires the same core documents. Their risk models are sensitive to sudden spikes in sales, a common pattern for game launches. A successful crowdfunding campaign can trigger account reviews and holds. Having clear manufacturing and shipping timelines to share with their review teams is critical.

For marketplaces like Etsy or Amazon, the LLC and its EIN are used for tax reporting. Their internal payment systems will vet your entity, but their primary concern is product and fulfilment compliance within their own terms of service.

Setting up a US LLC for your board game store involves several third-party costs and a multi-week timeline. State filing fees are a direct cost: Wyoming's is approximately $100, while Delaware's is around $90. You will also need a registered agent in your chosen state, with annual fees typically ranging from $100 to $250. Wyoming LLCs must file an annual report costing about $60, while Delaware's annual franchise tax is a flat $300.

Obtaining an Employer Identification Number (EIN) from the IRS is the main bottleneck. Without a Social Security Number, the application must be faxed or mailed. As of late 2023, the processing time for non-resident applications is typically 15 to 30 business days, but can extend longer during peak periods.

Once the EIN is issued, you can apply for a US business bank account. Week 1: LLC formation. Weeks 2-5: Waiting for EIN. Week 6: Bank and payment processor applications. Week 7-8: Processors review your site, products, and pre-order model. A crowdfunded game may trigger a reserve, meaning your first payout from a large launch could be 90+ days after the charge, while smaller direct sales may settle in 2-3 days. The most common delay is the EIN application.

The process is sequential and takes time. First, the LLC is formed in your chosen state, typically Wyoming. Once the state confirms the formation, we file for your Employer Identification Number (EIN) with the IRS. This step can take several weeks, as processing times vary. The EIN is the critical piece of documentation required for the next stage.

With the approved formation documents and EIN in hand, Xavion begins the placement process. We prepare and submit applications to appropriate US banking and payment institutions that we have identified as a potential fit for your business profile. We guide you through the compliance review, which involves Know Your Customer (KYC) verification and a thorough underwriting of your business model, website, and crowdfunding history. We manage communication with the institutions and help you respond to any requests for information. The entire process, from LLC formation to having an open and funded business account, realistically takes several weeks to a few months. Our role is to navigate this complex sequence efficiently on your behalf. To begin, visit xavioncapital.com/start.