The best company structure for a cybersecurity consultancy.

Cybersecurity consultancies serving US enterprise clients have specific commercial needs. The structure must be a vehicle that a US company’s procurement and legal teams can comfortably contract with. This means a US entity, with a US address, and a US Employer Identification Number (EIN) for filling out forms like the W-9.

Consultancies in this field often need to pass vendor risk assessments. A properly formed US LLC provides the formal container for this. It is the entity that holds the business bank account, signs contracts, and obtains professional indemnity and cyber insurance. For many consultancies, the US entity is a prerequisite for being considered by larger clients, who may be unable or unwilling to engage and pay a foreign individual or a non-US company.

Finally, the structure needs to efficiently receive payments in USD from US clients. Relying on cross-border wire transfers to a non-US bank can introduce delays, high fees, and compliance friction. A US entity that can open a US business account allows for domestic USD receipts, making payments simpler and cheaper for your clients, and giving you more control over your cash flow. The structure’s primary job is to solve these commercial problems.

A single-member LLC owned by a non-US person is a ‘disregarded entity’ for US tax purposes. This means the LLC itself does not file a US tax return or pay US tax. The tax liability, if any, passes through to the owner. This simplicity is its core strength. It creates a US legal entity sufficient for commercial and banking purposes without creating a complex US tax footprint by default.

This structure directly addresses the procurement needs of enterprise clients. It provides a US entity with an EIN, allowing your consultancy to pass vendor onboarding and receive payments domestically in the US. This is the main reason it is the default choice for this business model.

However, it is crucial to understand its limits. Forming a US LLC does not negate your tax obligations in your country of residence. You are still required to report the income according to your local laws. It does not make a high-risk business low-risk in the eyes of a bank, nor does it guarantee a US bank account. Banking is always subject to the bank’s own risk appetite and due diligence process. The LLC is a powerful tool for unlocking US infrastructure, not a tool for avoiding tax or compliance obligations elsewhere.

For a foreign-owned single-member LLC, the US tax question depends on whether the owner’s activity is ‘engaged in a trade or business in the United States’ (ETBUS). If the consultancy has no US-based staff, no US office, and no ‘dependent agent’ in the US acting on its behalf, it may not be considered ETBUS. If the work is performed entirely from outside the US for US clients, the income is generally considered foreign-sourced.

If the business is not ETBUS and the income is foreign-sourced, there is typically no US federal income tax liability for the foreign owner. This is the central reason the structure is attractive. However, this determination depends heavily on your specific facts and must be confirmed with a qualified US tax adviser.

Even with no tax due, the structure has a critical filing requirement. A foreign-owned single-member LLC must file Form 5472 and a pro forma Form 1120 with the IRS each year to report transactions with its foreign owner. The penalty for failing to file or filing late is substantial, starting at USD 25,000. This is not a DIY task and requires professional assistance to ensure compliance. It is an administrative cost to factor into your decision.

For a non-US founder running a cybersecurity consultancy online, the choice of state is less critical than for a US resident. The LLC will be used to engage with US clients and banks, none of whom will be sensitive to whether it is a Wyoming or Delaware entity. The best state is usually the one that is most efficient and cost-effective to administer from abroad.

Wyoming is often the preferred choice. It offers low annual fees, a straightforward filing process, and strong privacy protections. For a single-member LLC providing online services, Wyoming provides everything necessary without unnecessary complexity or cost. The address and registered agent services are reliable and inexpensive.

Delaware is famous for corporate law and is the standard for venture-backed startups that intend to issue stock and raise capital. However, its advantages are most relevant for complex entities with multiple investors or public ambitions. For a single-member consultancy, Delaware’s franchise tax can be more expensive and its administrative requirements offer little practical benefit over Wyoming. For this specific business model, Wyoming is typically the more pragmatic and economical option.

The primary commercial benefit of the US LLC is access to US-facing financial infrastructure. With an EIN, the LLC can apply for a US business bank account. This account can receive USD payments from your enterprise clients via domestic ACH and wire transfers, which are faster and cheaper than international wires. This eliminates a major point of friction for your clients’ accounts payable departments.

This US banking footprint also allows your consultancy to connect to US payment processors and platforms. While consultancies are less reliant on platforms like Stripe than ecommerce businesses, having a US entity and bank account can be a requirement for certain software marketplaces or partner payment systems. It allows you to hold and manage funds in USD, avoiding forced conversions and high FX fees charged by many non-US banks or payment gateways.

Institutions that serve this structure range from US fintech BaaS (Banking-as-a-Service) platforms fronted by community banks to certain international financial institutions in jurisdictions like Puerto Rico. These providers are accustomed to underwriting foreign-owned US LLCs. Having the correct corporate structure is the first step in positioning your application for a successful outcome.

When a bank’s compliance team underwrites an application from a cybersecurity consultancy, they are assessing several specific risk factors. First is the clarity and specificity of the services offered. Vague descriptions like ‘IT services’ are a red flag. You must clearly define your offerings: penetration testing, SOC 2 compliance advisory, incident response planning, security audits. Your website and corporate documents must be precise and professional.

Second, they scrutinise your client profile. Underwriters want to see legitimate, verifiable business clients. Be prepared to show a pipeline of potential clients or existing contracts. Enterprise clients are generally viewed positively. The bank needs to be confident that the funds flowing through the account are payments for legitimate, documented consulting services.

Third, they will look for signs of a real, operating business. This includes a professional website, LinkedIn profiles for the principals, and potentially professional indemnity or errors and omissions insurance. For a cybersecurity firm, showing that you have appropriate insurance can be a significant positive signal to an underwriter, as it demonstrates a commitment to managing professional risk. They are trained to distinguish a genuine consultancy from a shell company, and these details are critical.

Wyoming is the default choice for its low annual cost and strong privacy. A Wyoming LLC gives your cybersecurity consultancy the same US corporate entity as any other, insulating you from personal liability. Underwriters at payment processors and banks understand its utility for non-US founders. There is no 'Wyoming problem' in practice; a professionally prepared application presenting a legitimate cybersecurity operation will be judged on its own merits, not on its filing state.

Delaware offers a marginal perception benefit at a higher annual cost. For a cybersecurity consultancy dealing with enterprise clients, the 'brand name' of a Delaware entity might seem appealing. In reality, it rarely makes a difference. Procurement departments care about your insurance, your operational security, and your ability to pass vendor risk assessments, not your LLC's home state. A Delaware filing only makes sense if you plan to seek venture capital funding and convert your LLC to a C-Corporation, a scenario that does not apply to most consultancies.

Florida is a poor choice. While its warm climate is famous, its corporate transparency is a liability for a non-US founder. Florida public records expose more personal information than Wyoming or Delaware, creating unnecessary privacy risks. This can be a particular concern for founders in the security space. Processors and financial institutions gain no extra confidence from a Florida LLC, so there is no upside to offset the privacy downside.

Stripe is the standard for most cybersecurity consultancies. Onboarding a foreign-owned US LLC requires your EIN confirmation letter (CP 575), your passport, and proof of foreign residency. Stripe's risk teams are familiar with the model. Sudden spikes in revenue, such as a large upfront project fee, may trigger a manual review or a temporary reserve, typically 10-20% of the transaction value. Have your client contract and the signed statement of work ready to submit if this occurs.

PayPal is useful as a secondary option but should not be your primary processor. Its underwriting can be less predictable for services-based businesses, especially those with high-value intangible deliverables like security audits. Funds are more likely to be held for longer periods pending review, which can disrupt cash flow. Use it for smaller, recurring retainers rather than large one-off project payments.

Direct bank transfers (ACH and wire) from enterprise clients are your primary payment rail. The compliance process happens with your US business account provider, not a payment gateway. The institution will require the client contract and invoice to clear large incoming wires, verifying the source of funds. Ensure your client's payment reference includes the invoice number to simplify reconciliation.

The public costs are predictable. State filing fees are a one-time expense, typically around $100. Annual costs include the state report, which is about $62 for Wyoming, and the registered agent service, which ranges from $100 to $250 per year from a reputable provider. The EIN is free from the IRS, though the application process for a non-US founder without an ITIN or SSN takes several weeks of processing time.

A realistic timeline from start to first payout is eight to twelve weeks. Week 1: LLC filing. Weeks 2-6: IRS processes the EIN application. Delays are common here. Week 7: With your EIN, you can apply for a US business account; approval takes a few days. Week 8: You can now sign your client contract and invoice from your US LLC. Weeks 9-10: Client procurement approves your LLC as a vendor and processes the invoice. Week 11-12: The first wire lands in your US account, and after any compliance checks, the funds are available to you. Stalls typically happen at the EIN stage or during client vendor onboarding, which can be unexpectedly bureaucratic.

The process of setting up a US LLC and its bank account follows a specific sequence. First, Xavion prepares and files the formation documents with the chosen state registry, typically Wyoming. State processing times vary but usually take a few business days. Once the state confirms the formation, we obtain the Employer Identification Number (EIN) from the IRS. This is a critical step that can take several weeks, as it is dependent on IRS processing queues.

With the approved LLC and EIN in hand, we begin the banking placement process. We do not just pass you a list of banks. We prepare a comprehensive application package that accurately presents your consultancy to institutions within our network that we know have an appetite for this specific business model. The application is submitted, and we manage communication with the bank’s compliance teams on your behalf.

Realistically, the entire process from company formation to having an open and funded bank account can take from six to ten weeks. The timeline is highly dependent on the IRS for the EIN and the specific bank's underwriting queue. Xavion manages this entire sequence, providing transparency and handling the administrative burden so you can focus on your clients. To begin the process, please go to xavioncapital.com/start.