The best company structure for a phone cases brand.

A phone cases brand is a specific type of e-commerce business. Designs are your core intellectual property, but fulfilment is usually handled by a print-on-demand (POD) partner like Printify or Printful. Your primary business activity is marketing: running paid ads on platforms like Meta or TikTok to drive traffic to a Shopify or other e-commerce storefront. This model is capital-light on inventory but heavy on advertising spend.

From a structure, you need three things. First, a formal entity that can own the designs and the domain. Second, a vehicle that payment processors like Stripe and Shopify Payments will accept for business payouts, which requires a legal entity in an eligible country. Third, a legitimate US entity to present to US customers and platforms, allowing you to issue W-9s and receive payments cleanly from US sources. You do not need a complex structure for raising venture capital or holding physical assets in multiple jurisdictions. You need a simple, recognised entity that lets you get paid in USD by US customers and platforms, and move that money efficiently.

A single-member LLC (SMLLC) owned by a non-US person fits the phone case brand model well. It is a formal US business entity, registered in a specific state like Wyoming or Delaware. It can obtain a US Employer Identification Number (EIN), which is essential for opening a US business bank account and being identified by payment processors. For many founders, this is the primary commercial goal: a US entity, with a US tax ID, and a US bank account in the entity's name.

However, it is crucial to understand its limitations. A US LLC does not automatically make a high-risk business low-risk. If your advertising methods are aggressive or your refund rates are high, banks will still see you as a risk. It is not a tool for tax evasion. The LLC structure does not negate your tax obligations in your country of residence; you are still required to report your income and pay personal or corporate taxes locally as required by your jurisdiction's laws. The LLC simply changes how and where your business is formally registered and banked. Banking is also never guaranteed; it depends on a risk assessment by the financial institution.

For US federal tax purposes, a single-member LLC is by default a 'disregarded entity'. This means the LLC itself does not pay US income tax. Instead, the tax liability flows through to the owner. The central question becomes whether the foreign owner has US-sourced income and is 'Engaged in a Trade or Business in the United States' (ETBUS). For many online businesses operated entirely from outside the US, with no US staff, office, or exclusive agents, the activities may not meet the threshold for ETBUS. If the business is not ETBUS, its non-US source income is not subject to US tax. This determination is fact-specific 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 disregarded entity LLC must file Form 5472 and a pro forma Form 1120 with the IRS annually to report transactions with its foreign owner. Failure to file this form on time carries a significant penalty, starting at $25,000. This filing is mandatory regardless of whether the business generated revenue or owes any US tax.

The two most common states for non-US founders are Wyoming and Delaware. For a phone cases brand, Wyoming is often the more practical and cost-effective choice. Wyoming LLCs are known for their strong privacy protections, low annual fees, and straightforward compliance. The formation process is quick and does not require listing the owner's name on the public record if a registered agent service is used. This is well-suited to a simple e-commerce operation where the primary goal is a clean US entity for banking and payments.

Delaware is the standard for businesses intending to raise venture capital from US investors. Its corporate law is highly developed, and its Court of Chancery is the premier venue for corporate disputes, which is why VCs prefer it. However, it has higher annual franchise tax costs and more formal compliance requirements. For a bootstrapped phone cases brand with no plans for institutional funding, the legal infrastructure of Delaware is usually unnecessary. Wyoming provides all the necessary benefits, a legitimate US entity, an EIN, and access to US banking, at a lower administrative cost and with greater simplicity.

The commercial purpose of the LLC is to access US financial infrastructure. With a registered LLC and an EIN, you can apply for a US business bank account. These accounts are often with fintech BaaS (Banking-as-a-Service) institutions fronted by community banks. They provide a US account number, routing number, and a debit card in your company's name. This US bank account is the key that unlocks other services.

Payment processors like Stripe and Shopify Payments have country-specific versions. By forming a US LLC, you can apply for a US Stripe or Shopify Payments account, which often has better pricing for USD transactions and access to more features than versions in other countries. It allows you to receive payouts from platforms like Amazon or Etsy directly in USD to your US bank account, avoiding costly currency conversions. It also simplifies things for US B2B clients or collaborators, who can pay you via ACH and receive a standard Form W-9. It professionalises your operation and embeds your business within the US domestic payment system.

When you apply for a business account for your phone cases brand, the bank's compliance team will conduct due diligence. For this niche, they focus on specific risks. First is intellectual property. Are your designs original, or are they using copyrighted characters, logos, or artwork without a license? A store full of unlicensed Disney or Nike-themed cases is an immediate red flag for IP infringement and will be rejected. Second, they review your advertising and marketing. Aggressive, misleading ad copy or shady 'free plus shipping' funnels are viewed negatively. They will look at your website for clear refund policies, shipping times, and customer service contacts.

Third, they consider the fulfilment model. Using established print-on-demand providers like Printful is a positive signal, as it's a known, legitimate business model. If you claim to have your own manufacturing but have no evidence, it raises questions. Be prepared to show supplier agreements or invoices from your POD partner. High chargeback or refund rates are a major concern, so having clear policies and good customer service is vital not just for your brand, but for your banking relationship.

For a non-US founder selling phone cases, the choice of US state for their LLC is not just a compliance checkbox. It affects real-world operations, costs, and how payment processors perceive the business.

Wyoming is often the default, offering low annual fees and strong privacy through a nominee structure. This is ideal for a print-on-demand model where physical nexus is minimal. However, some merchant processors and banking partners are beginning to view a high concentration of Wyoming LLCs with non-US owners as a higher-risk segment, potentially leading to more scrutiny during onboarding.

Delaware, with its higher annual franchise tax, projects a more established corporate image. For a phone case brand aspiring to secure significant intellectual property protection for its designs or eventually seek investment, Delaware's well-regarded corporate law structure provides a stronger foundation. This can be a subtle but important signal to payment partners like Stripe or Shopify Payments.

Florida has gained traction as an alternative. While its public records are more transparent, its annual costs are competitive and it is perceived by some underwriters as a more 'normal' place to register a straightforward e-commerce business, potentially reducing compliance friction compared to Wyoming.

Platform-specific rules govern how a non-US owned LLC can access US payment processing. Stripe, integrated via Shopify Payments, is the most common path. They will require the LLC's formation documents, EIN confirmation letter (CP575), and the personal details of the foreign owner. A US business bank account in the LLC's name is non-negotiable. Sudden spikes in sales, often driven by a viral design or successful ad campaign, are the primary trigger for reserves or payout holds with phone case brands. Stripe's automated systems may flag this as high-risk, temporarily holding 25-30% of rolling revenue.

PayPal scrutinises these setups closely. They may request proof of fulfilment from your print-on-demand partner, tracking numbers, and evidence of a business address. Account limitations are common in the initial months. Using a personal PayPal account for business sales is a frequent cause of permanent suspension.

Marketplaces like Etsy or Amazon have their own integrated payments. They combine sales data with operational metrics like shipping times and customer disputes, giving them a more holistic view. For these platforms, negative customer reviews about case quality or long shipping times from a print-on-demand supplier are more likely to trigger a review than sales velocity alone.

Budgeting for a US LLC involves more than just a formation fee. The public, third-party costs are predictable. State filing fees are a one-off expense (e.g., ~$100 in Wyoming). Annual costs include the state report or franchise tax (ranging from ~$60 in Wyoming to $300 in Delaware) and a registered agent service, which typically costs $100-$250 per year.

The critical path timeline starts with LLC filing, which can take 3-10 business days. Obtaining the EIN from the IRS without a US social security number is the main bottleneck; expect a 4-5 week wait. Only after the EIN is issued can you apply for a US business bank account. This takes another 1-2 weeks for review. Simultaneously, you can apply for Stripe or Shopify Payments. The first payout is often held for 7-14 days for verification. A realistic end-to-end timeline from starting the LLC filing to receiving the first settled payout in your US bank account is 7-9 weeks. Delays often occur when founders submit banking applications before the EIN has been issued.

The process is sequential and takes time. First, the LLC is filed with the state (e.g., Wyoming). This typically takes a few business days. Once the state approves the formation, the next step is to apply for the Employer Identification Number (EIN) from the IRS. This is the most variable step; while it can sometimes be quick, backlogs can cause delays of several weeks or even months for non-US founders without a US Social Security Number. The EIN is mandatory for opening a business bank account.

Xavion manages this entire sequence. We prepare and submit the state filing and handle the EIN application on your behalf. Once the EIN is issued, we use our knowledge of the market to position your banking application with institutions that understand your business model. We compile the necessary documentation, formation certificate, EIN confirmation, owner ID, and a clear description of your business activities, to present a complete and professional package to compliance teams. While we cannot guarantee an account, this careful preparation increases the probability of a successful outcome. To get started, visit xavioncapital.com/start.