The best company structure for an online course business.

An online course business primarily needs a structure that allows it to collect payments efficiently from a global customer base and integrate with the key platforms that host and deliver its content. Your business model involves selling digital products, often through platforms like Teachable, Kajabi, or Thinkific. These platforms require a recognised business entity to pay out your earnings, and they typically settle funds to a bank account held in the name of that entity.

Commercially, the structure must be credible to US customers and payment processors. A US entity with a US Employer Identification Number (EIN) satisfies the onboarding requirements for US payment processors like Stripe and Shopify Payments. This is crucial, as many founders outside the US find their local Stripe accounts are not supported by course platforms, or that they face higher currency conversion costs. A US company structure solves this by making your business a US entity for the purpose of these platforms. It also simplifies receiving payouts from marketplaces and enables you to provide a Form W-9 to US clients or partners, which is a standard requirement for doing business in the US.

A single-member LLC works well because it is a simple, credible legal structure that separates you personally from the business, while being 'disregarded' for US tax purposes in most cases. This means the LLC itself does not pay US tax. The US entity, with its EIN, provides the formal identity needed to open accounts with US financial institutions and payment processors, which is the main objective.

However, it is crucial to understand its limitations. Forming a US LLC does not eliminate your tax obligations in your country of residence. You are still required to report the income from the LLC according to your local tax laws. The LLC is a US legal entity, but its profits are generally taxed where the owner resides. Furthermore, it does not make a high-risk business low-risk. If your course content touches on sensitive areas or makes claims that attract regulatory scrutiny, the entity structure alone will not solve that. Finally, while a US LLC makes you eligible for US banking, it does not guarantee an account. Banks still conduct their own risk assessments.

For a non-US owner with no US staff, office, or other dependent agent, the LLC is typically treated as a 'disregarded entity'. This means the IRS effectively looks through the LLC to you, the owner. The tax question then becomes whether you, as a non-resident, are 'engaged in a trade or business in the United States' (ETBUS). For many online course creators who operate entirely from outside the US, their business activity may not meet the threshold for being ETBUS. If you are not ETBUS, your business income is not considered US-sourced and is not subject to US income tax. This is a key reason the structure is popular.

This determination depends on your specific facts and must be confirmed with a qualified US tax adviser. Even if no tax is due, there is a critical compliance requirement. A foreign-owned single-member LLC must file Form 5472 annually with a pro forma Form 1120 to report transactions with its foreign owner. The penalty for failing to file this is significant, starting at $25,000, so it absolutely cannot be missed.

For an online course business owned by a non-US founder, Wyoming is often the most practical choice. It offers low maintenance costs, a straightforward filing process, and strong privacy protections for members. The annual report fee is minimal, and there is no state-level income tax. Because your business has no physical presence or operations in any particular state, the choice of state is driven by administrative efficiency and cost, not by proximity to customers.

Delaware is another common choice, known for its established corporate law and Chancery Court, which is highly regarded for resolving complex corporate disputes. However, for a single-founder online business, these benefits are less relevant. Delaware also imposes a franchise tax on LLCs, which is an added administrative step and cost compared to Wyoming. While Delaware has a strong brand, the practical benefits for a simple, foreign-owned online course business are often outweighed by the simplicity and lower cost of Wyoming. The choice of state has little to no impact on your ability to open a US bank account or get approved by payment processors.

The primary benefit of a US LLC for a course creator is access to the US financial ecosystem. Platforms like Teachable or Kajabi often restrict payouts to bank accounts in specific countries. With a US LLC and its associated EIN, you can apply for a US business bank account in the name of your company. This allows you to receive USD payouts directly, without forced currency conversion or reliance on services like Payoneer or Wise, which some platforms may not support for direct settlement.

A US entity makes you eligible for a US Stripe or Shopify Payments account, which is a condition for using their integrated payment processing on many course platforms. This not only solves a logistical problem but can also lower your transaction costs and reduce settlement friction. It allows you to present a US face to your customers and banking partners, which simplifies everything from receiving payments to managing refunds. You move from being a foreign individual trying to access US rails to a US-domiciled business, which is a much more straightforward proposition for financial institutions to underwrite.

When a bank or payment processor underwrites an online course business, they focus on specific risks. The clarity of your refund policy is paramount. Because the product is digital and delivered instantly, disputes often centre on customer satisfaction. A clear, easily accessible, and fair refund policy on your website is non-negotiable. Underwriters will check for it immediately. They also assess the content of your courses. Vague promises of wealth, unsubstantiated health claims, or courses in high-risk verticals like credit repair or crypto trading will likely lead to a decline.

Your marketing practices are also under scrutiny. Aggressive sales tactics or misleading claims about outcomes raise red flags. Underwriters want to see a professional website that clearly describes what the course contains, who it is for, and what students can expect to learn. They will verify that the business owner's identity matches the LLC formation documents. The goal for compliance is to ensure the business is legitimate, transparent, and operates in a way that is unlikely to generate high levels of chargebacks or regulatory complaints. Your online presence is their primary source for this assessment.

For a non-resident running an online course business, the choice of state for your LLC influences both upkeep costs and how your company is perceived. A Wyoming LLC offers the lowest state renewal fees and strong privacy. Its registered agent and filing fees are modest. Because the state has no income tax, it is a common choice for holding companies and digital businesses, a fact understood by most financial institution compliance teams.

Delaware carries a higher annual franchise tax and typically higher registered agent fees. Its corporate law is famously robust, but this complexity is not a significant advantage for a simple, foreign-owned disregarded LLC selling digital courses. Some founders prefer its premium reputation, believing it aids in securing US banking, but in practice, for this specific model, the difference in perception is negligible when the beneficial owner is non-US.

Florida has no state income tax but does require an annual report with a higher fee than Wyoming's. Its main drawback is a lack of privacy; director and manager information is public. For a solo course creator, this can be an uncomfortable level of disclosure. It offers no distinct advantage for banking or payment processing access over Wyoming, making it a less common choice for non-resident course businesses.

Stripe is the primary target for most course creators. For a non-resident-owned US LLC, Stripe will require the EIN confirmation letter (CP575 or 147C), the beneficial owner’s foreign passport and proof of a foreign home address. They verify the entity's existence directly with the state. Sudden spikes in sales, often from a successful launch, can trigger a rolling reserve, typically holding 10-20% of funds for 90 days. A clear refund policy, visible on your checkout pages, is critical to passing their initial account review.

PayPal, if used as a primary processor, has similar onboarding requirements. However, its account limitations can be sensitive. If you receive a chargeback rate above 1% or a sudden influx of disputes, PayPal may freeze payouts pending a review of your course delivery and customer service responses.

Platforms like Kajabi or Teachable often have their own integrated payment solutions, frequently built on Stripe. When using these, you are subject to both the platform's rules and Stripe's underlying requirements. The platform will require your LLC's EIN and banking details for payouts. Ensure the name on your receiving US bank account exactly matches your LLC's legal name to avoid settlement failures.

Setting up a US LLC and its financial plumbing involves several stages with variable timing. The state filing for a Wyoming LLC is typically confirmed within three business days. Obtaining an Employer Identification Number (EIN) from the IRS without a Social Security Number is the most significant delay, currently taking 15 to 25 working days on average. This step cannot be expedited.

Budgeting for third-party costs is straightforward. A Wyoming state filing fee is approximately $100. Annual costs include a $60 state report fee and a registered agent service, which ranges from $100 to $250 per year. There are no state-level income taxes to file for a foreign-owned disregarded entity with no US-based activity.

Once the EIN is issued, you can apply for a US business bank account. This takes one to two weeks, depending on the institution's backlog. Payment processor onboarding (e.g. Stripe) can then begin, usually taking a few days. The most common stall point for a course business is the processor's initial review, where they may request tweaks to your website's refund policy or delivery promises before approving your first payout. From filing the LLC to receiving your first settled customer payment often takes six to nine weeks.

The process is sequential and must be done in the correct order. First, we form the LLC in the chosen state, typically Wyoming. This involves drafting and filing the Articles of Organization and securing a Registered Agent. Once the state confirms the formation, we prepare and file the application for an Employer Identification Number (EIN) with the IRS. The EIN is essential; no bank accounts can be opened without it.

With the formation documents and EIN in hand, we begin the process of positioning your application for a US business account. Xavion manages this process by preparing a comprehensive brief on your business and presenting it to institutions in our network, such as US fintech BaaS platforms. We handle the communication and follow-up, ensuring your application is presented clearly and professionally. The realistic timeline from starting the formation to having an open bank account is typically several weeks, depending on state and IRS processing times. We provide a clear, managed path through these administrative steps. To begin the process, please go to xavioncapital.com/start.