The best company structure for a booking platform.

A booking platform’s primary need from a legal structure is access to reliable, US-facing financial infrastructure. Your business model involves taking payments from customers, holding funds (even briefly), and paying them out to service providers, minus your commission. This flow of funds makes payment processing the heart of the operation. Without a US entity, you are often forced to use aggregators that may offer worse pricing and higher scrutiny, or you may be ineligible for major US payment processors like Stripe or Shopify Payments entirely.

A US company structure, specifically an LLC with a federal Employer Identification Number (EIN), solves this access problem directly. It allows you to apply for a US business bank account in the company’s name, which is a prerequisite for most US payment processors. It enables you to receive USD payments efficiently, bill US clients who may require a Form W-9, and generally present as a credible, US-domiciled business to both customers and financial partners. The structure’s main job is not legal liability protection in a vacuum; it is to unlock the rails of the US economy.

A single-member LLC owned by a non-US person is, by default, a ‘disregarded entity’ for US tax purposes. This means the LLC itself is not a taxpayer. Instead, the tax obligations flow through to the owner. If the owner is a non-US person and the business activities do not meet a specific threshold, this can result in a zero US tax liability. It is this combination of commercial access and tax efficiency that makes the structure so well-suited to online businesses operated abroad.

However, it is critical to understand the LLC’s limits. It is not a tool for tax evasion in your home country. You are still required to report the income and pay tax according to the laws of the jurisdiction where you are resident. Forming a US LLC does not change your local tax obligations. It also does not make a high-risk or prohibited business model suddenly acceptable to banks. Underwriters will still scrutinise your business. Finally, while a properly structured LLC makes you eligible to apply for US financial accounts, it never guarantees approval. Banking and payments placement remains a game of probabilities, not certainties.

For a non-US owner of a disregarded LLC, the US tax question depends on two main things: whether the income is US-sourced, and whether the owner is ‘engaged in a trade or business in the United States’ (ETBUS). For many online booking platforms operated entirely from outside the US, with no US staff, office, or dependent agents, the activities may not be considered ETBUS. If the work of running the platform, arranging suppliers, marketing, customer support, is all performed outside the US, the income generated is generally foreign-source. If the business is not ETBUS and has no US-source income, the non-US owner typically has no US income tax to pay.

This must be confirmed with a qualified tax adviser who can assess your specific facts. Be aware that even with no tax due, a foreign-owned single-member LLC has a mandatory annual filing requirement with the IRS. This involves filing Form 5472, ‘Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business’, attached to a pro forma Form 1120. The penalty for failing to file or filing late is a minimum of $25,000, so this is not an obligation to take lightly.

For most non-US founders of online booking platforms, a Wyoming LLC is the most practical choice. Wyoming offers low maintenance costs, a simple administrative environment, and robust privacy protections. The filing process is straightforward, and the annual reporting requirements are minimal, consisting of a simple online form and a small fee. Because your business is not physically operating in any particular state, you do not need to register in a state with a high tax burden or complex reporting. Wyoming provides all the necessary corporate formalities to be recognised as a valid US entity without unnecessary complexity.

Delaware is another popular option, known for its well-established corporate law and respected Court of Chancery. However, these benefits are most relevant for companies seeking venture capital funding or planning a complex ownership structure, which is not the case for most booking platforms. For a simple, single-owner LLC, Delaware’s franchise tax and registered agent fees make it slightly more expensive and administratively heavier than Wyoming, with little practical upside for this specific business model. The commercial legitimacy with banks and processors is identical. Therefore, Wyoming usually presents a better balance of cost, simplicity, and protection.

The primary commercial benefit of a US LLC is opening doors to US financial institutions. With a registered LLC and an EIN, you become eligible to apply for a business bank account at US-based institutions, from traditional banks to fintech platforms built on a Banking-as-a-Service (BaaS) model. Holding a US business account is a foundational requirement for accessing top-tier US payment processors. It allows you to get approved for a merchant account with platforms like Stripe or Shopify Payments as a US company, which may have been unavailable to you based on your country of residence.

This unlocks several advantages. It allows you to accept payments in USD directly, reducing currency conversion costs. You can provide US clients with a Form W-9 and receive payments via ACH, check, or wire transfer into your company's account. This domesticates your financial operations, making you a more attractive partner for both customers and service providers you need to pay. It removes your reliance on services like Payoneer or Wise as primary accounts, which are often not suitable for holding significant operating capital and can be viewed less favourably by institutional partners.

Underwriters at banks and payment processors view booking platforms with caution due to their specific risk profile. Your business model involves 'delayed delivery', meaning you take a customer's payment now for a service to be delivered in the future. This creates a risk of chargebacks if the service is not rendered as promised or if the customer cancels. Underwriters will want to see clear and fair cancellation and refund policies prominently displayed on your website. They will also assess the legitimacy of your service providers; they need to be sure you are not facilitating bookings for illicit or high-risk activities.

Expect scrutiny of your transaction patterns. High refund rates or a sudden spike in chargebacks are major red flags. Because you hold customer funds before paying suppliers, compliance teams will assess your process for managing these funds and your company's financial stability. They may impose a 'reserve', holding back a percentage of your revenue for a period to cover potential chargebacks. Having a well-capitalised business account and transparent, documented agreements with your suppliers can help mitigate these concerns and improve your chances of approval and favourable terms.

While Wyoming and Delaware are standard choices for non-resident LLCs, Florida presents a third option with specific trade-offs for a booking platform.

Wyoming offers the lowest annual costs and strong privacy. Its state fee is negligible and registered agent costs are competitive. For a booking platform with no US-based staff or operations, this lean structure is efficient. However, some payment processors and banking partners view a Wyoming LLC from a non-resident founder with extra scrutiny, precisely because it is a common choice for asset protection rather than substantive trade. Expect requests for evidence of your platform's activity.

Delaware carries a higher annual state tax, but its corporate law is the most developed and respected in the US. This can lend credibility during account underwriting. For a complex booking platform, perhaps one raising venture capital or with a sophisticated equity structure, a Delaware LLC is the default choice. For a simple foreign-owned disregarded entity, its advantages are less pronounced.

Florida has no state income tax and its filing is straightforward. Its primary drawback is a lack of privacy; owner details are public. For a booking platform founder comfortable with this, Florida can appear more grounded and less abstract to compliance teams than a Wyoming filing, potentially smoothing onboarding.

Each payment processor has its own risk appetite for booking platforms, particularly those with a foreign owner and a US LLC.

Stripe is the most common choice. Onboarding requires your EIN confirmation letter (CP 575), LLC formation certificate and operating agreement. Stripe's primary concern with booking models is future-dated performance obligations. A customer pays today for a service delivered months from now. This creates chargeback risk. Be prepared for a reserve, typically a rolling percentage of your volume (e.g., 10%) held for a period (e.g., 90 days), especially if your platform has high ticket values or long booking lead times.

PayPal and Braintree function similarly, requesting the same core documents. Their risk models are often more sensitive to dispute rates. A sudden spike in cancellations or 'service not as described' claims can trigger an account limitation or hold. It is critical to have clear, consistently enforced cancellation and refund policies visible on your platform's site.

Marketplace-native solutions like Shopify Payments or Etsy Payments are bound by their parent platform's rules. If you are using a Shopify template for your booking service, Shopify Payments is streamlined. However, their risk assessment is often opaque. A decline can happen with little explanation. In all cases, having a professionally presented website and clear terms of service is not optional; it is a core underwriting requirement.

Founders often underestimate the time required to get from LLC filing to a settled payout. A realistic timeline for a booking platform is 8 to 12 weeks, though this can vary. The first week is for filing the LLC in your chosen state. Wyoming is typically faster than Delaware. Obtaining an EIN from the IRS without a Social Security Number is the main delay, currently taking 3 to 5 weeks.

Once the EIN is issued, you can apply for a US business account, which can take another 1 to 3 weeks for underwriting. This is a common stalling point. Onboarding teams will review your website, booking flow, terms, and beneficial ownership. Any ambiguity here will add weeks of back-and-forth communication. Only after the account is open can you connect it to your payment processor. The processor's own verification can take a few days, and your first payout is often held for 7 to 14 days for security review.

Public costs include the state filing fee (around $100-$300), the first year's registered agent fee ($100-$250), and annual report fees in subsequent years ($62 in Wyoming, $300 in Delaware). Processor reserves are a working capital consideration, not a fee, but they tie up cash. A 5% to 15% rolling reserve is standard for booking platforms until a payment history is established.

The process of setting up a US LLC and its financial infrastructure follows a logical sequence. First, the LLC is formed in your chosen state, typically Wyoming. This takes a few business days. Once the state confirms the formation, we file for an Employer Identification Number (EIN) with the IRS. As of late 2023, EIN issuance for foreign-owned LLCs is a slow, manual process that can take 8-12 weeks or longer. This is the main bottleneck in the timeline.

Once the EIN is issued, Xavion begins the banking and payments application process. We package your business information, including your website, business model, supplier agreements, and compliance policies, and submit applications to financial institutions that have an appetite for your specific business model. This stage is not instantaneous; it involves correspondence with compliance analysts. A realistic timeline from starting the LLC formation to having an open and funded business account is approximately 3-4 months. It is a marathon, not a sprint. Xavion manages this entire sequence, from formation to final placement, navigating the administrative hurdles on your behalf. You can get started at xavioncapital.com/start.