The best company structure for a mobile app business.

A mobile app business has specific structural needs driven by its distribution channels and revenue model. Your primary counterparties are Apple (for the App Store) and Google (for Google Play). Both act as agents, collecting revenue from end-users on your behalf and remitting it to you, the developer. To do so, they require you to complete tax documentation (like the W-8BEN-E for a non-US entity) and pay out to an account held in the entity's name. The country of your entity determines which payout methods are available and the currency in which you are paid.

A US company structure, specifically an LLC with an EIN, allows you to present as a US entity for these purposes. This unlocks USD payouts to a US bank account, often with lower processing and conversion fees than international wires. Beyond the app stores, a US entity is essential for integrating with US-native payment processors for in-app purchases or web-based subscriptions, which may offer better rates or features than their non-US equivalents. The structure is fundamentally a tool for financial access, simplifying cash flow from US-centric platforms and customers to you, the non-US founder.

For a solo founder outside the US, a single-member LLC is powerful because it combines legal personality with tax transparency. Commercially, it is a US entity. It can have a US address, get a US Employer Identification Number (EIN), and contract with Apple, Google, and US payment processors. For liability purposes, it is a separate entity from you, the owner. This helps protect your personal assets from the debts and obligations of the business, which is a crucial consideration for any app that carries commercial or legal risk. These features make it the go-to vehicle for accessing the US market.

However, it is critical to understand what this structure does not do. It is not a method for avoiding taxes in your country of residence. You will almost certainly still have personal or corporate tax obligations on the income you earn, wherever you live. It also does not magically make a high-risk business model low-risk in the eyes of a bank; compliance teams will scrutinise the app's function regardless of the wrapper. Finally, while it makes you eligible for a US bank account, it never guarantees one. Banking remains a discretionary decision made by the financial institution.

A single-member LLC is by default a 'disregarded entity' for US tax purposes. This means the LLC itself does not pay US federal income tax. Instead, the tax liability 'passes through' to its owner. The core question then becomes whether the non-US owner has US-sourced income and is 'Engaged in a Trade or Business in the US' (ETBUS). For many purely online businesses operated by a founder abroad with no US staff, office, or dependent agent, the income may not be considered effectively connected with a US trade or business. This specific fact pattern is why the structure is so popular among non-resident founders. However, this is a complex determination that depends entirely on your specific facts and circumstances. You must consult a qualified US tax adviser to assess your situation.

Even if no tax is owed, there is a significant compliance requirement. Since 2017, all foreign-owned single-member LLCs must file Form 5472 and a pro forma Form 1120 with the IRS annually. This is a purely informational return that reports transactions between the LLC and its foreign owner. The penalty for failing to file or filing late is a minimum of $25,000, so it is a deadline that cannot be missed.

For a mobile app business run by a non-US founder, the choice of state is often between Wyoming and Delaware. Both states are well-regarded, have established case law, and do not levy state income tax on companies owned by non-residents with no physical presence there. The differences are mostly in cost, privacy, and perception.

Wyoming offers lower annual fees and strong owner privacy, as the public record does not list the owner's name. This makes it a cost-effective and discreet choice for many founders. Its processes are straightforward and modern. Delaware is the traditional home of US corporate law, with a deep body of legal precedent and a dedicated court for business disputes (the Court of Chancery). It is often perceived as the 'gold standard', particularly by venture capitalists. If you plan to raise institutional funding in the future, forming in Delaware from the start can sometimes simplify that process, although converting a Wyoming LLC to a Delaware C-Corporation later is also a standard procedure.

For a bootstrapped app business with no immediate plans for venture capital, Wyoming typically offers the best balance of cost, privacy, and simplicity. If raising capital is a near-term goal, Delaware may be a better fit.

The primary commercial benefit of a US LLC for a mobile app developer is access to US financial infrastructure. When Apple and Google ask for your payout details, providing a US bank account in the name of your US LLC simplifies everything. It allows you to receive your earnings in USD directly, avoiding forced currency conversion and high wire fees that often come with non-US accounts. Having funds land in a US business account makes managing USD-denominated expenses, such as payments to US-based contractors or marketing services, far more efficient.

This same logic applies to payment processors for any web-based revenue. To get a US Stripe or Shopify Payments account, which many founders prefer for their features and pricing, you need a US entity, a US address, an EIN, and a US bank account. Attempting to use a personal Wise or Payoneer account can lead to holds or closures, as these platforms are not intended for receiving business revenue from major corporations like Apple. A properly structured US entity with its own bank account is the foundation for scalable, compliant payment operations. It places your business firmly within the US financial system, where most of your revenue is likely generated.

When a bank or fintech institution considers an application from a mobile app business, its compliance team focuses on the specific risk profile of the app itself. They will download it and test its functionality. The underwriter's main goal is to understand how you make money and to ensure the business is legitimate and compliant with financial regulations.

They will look for a clear privacy policy and terms of service, accessible within the app and on an accompanying website. They will assess the business model: is it a simple one-time purchase, a subscription model, or does it rely on in-app purchases of consumable digital goods? Subscription models are generally well-understood. Businesses involving user-generated content, social features, or complex virtual currencies receive much higher scrutiny, as they can present risks related to content moderation and anti-money laundering (AML) rules. The underwriter will also look for a professional website that clearly explains what the app does and who is behind it. Vague or anonymous presentations are a significant red flag. They need to see a real, operating business run by a credible founder.

For a non-resident founder, the choice between Wyoming, Delaware, and Florida as a filing state has practical downstream effects. Wyoming offers low annual fees, strong privacy through its registered agent shield, and a perception of being modern and lightweight. This aligns well with solo app developers and bootstrapped startups.

Delaware carries a higher annual franchise tax and its privacy features are comparable to Wyoming's. Its key memetic advantage is its reputation as the gold standard for US corporate law, making it the default for venture-backed companies. However, for a disregarded LLC not seeking investment, this is often an expensive signal to send for no tangible benefit.

Florida presents a more complex picture. While it has no state income tax, its annual report fees are higher than Wyoming's. Crucially, forming an LLC in a high-fraud-risk state like Florida can introduce friction when opening financial accounts. Underwriters may apply greater scrutiny to applications from Florida-domiciled entities owned by non-residents, particularly if the founder resides in a high-risk jurisdiction. For most mobile app businesses, Wyoming offers the most straightforward, cost-effective path.

Payment processors apply different standards to foreign-owned US LLCs. Stripe is the most common and accessible option for app developers, integrating cleanly with many platforms. Onboarding requires the LLC's formation certificate, EIN confirmation letter (CP 575), and the founder's foreign passport. Stripe's primary risk concern is chargebacks. While mobile apps generally have low dispute rates compared to physical products, a sudden spike can trigger a rolling reserve, where a percentage of payouts is held for a period.

PayPal's underwriting is more opaque and can be challenging for this model. It often requests proof of US address or a US social security number, which a non-resident founder will not have. Accounts are prone to sudden limitation or closure if their automated risk systems flag the non-resident ownership structure.

Direct payouts from the Apple App Store and Google Play Store are more straightforward. Once the LLC and its US bank account are established, you submit the entity details and tax forms (like the W-8BEN-E) to Apple and Google. Payouts are sent directly to your US bank account. The entity's country, the US, determines the payout rails available, which are typically more robust than those for other jurisdictions.

Setting up a US LLC for your mobile app involves several third-party costs and a multi-week timeline. The initial state filing fee is a public cost, typically around $100 for Wyoming. Annual costs include the state's annual report fee (around $60 in Wyoming) and the registered agent service, which generally ranges from $100 to $250 per year. Obtaining an EIN from the IRS as a foreign applicant without a social security number is free, but the processing time is the main bottleneck, currently taking several weeks.

The critical path runs from company filing to receiving your first payout. Week 1: LLC formation. Weeks 2-5: Waiting for the IRS to issue the EIN. Week 6: Applying for a US business bank account. Weeks 7-8: Bank underwriting and account opening. Week 9: Connecting the new US bank account to Apple, Google, and any payment processors like Stripe. Your first payout can then be initiated. The most common delay is the EIN issuance. A secondary delay can occur if a banking provider requests additional 'know your customer' documents, such as a detailed business plan or source of funds verification for your initial deposit.

Establishing your US structure is a multi-step process. First, the LLC is formed in your chosen state, typically Wyoming or Delaware. This is the fastest part, often taking just a few business days. Next, we prepare and file the application for your Employer Identification Number (EIN) with the IRS. This is the longest pole in the tent; as of late 2023, the IRS processing time for non-US founders is several weeks. The EIN is a mandatory prerequisite for opening a business bank account.

Once the EIN is issued, we begin the banking placement process. Xavion prepares and positions your application with institutions suited to your business model, such as US fintech BaaS platforms or traditional banks. This stage involves submitting detailed information about your app, your ownership structure, and your expected activity. Approval is never guaranteed, and the timeline can range from a few days to several weeks, depending on the institution's backlog and risk appetite. Xavion manages this entire sequence, from filing the LLC to liaising with financial institutions on your behalf, ensuring each step is completed correctly to maximise the probability of a successful outcome. For a clear starting point, see xavioncapital.com/start.