The best company structure for a skincare brand.

A skincare brand selling online to US customers requires a structure that does three things. First, it must be a credible counterparty for US suppliers. Contract manufacturers and 3PLs will require a formal entity for supply and service agreements. Second, it needs to unlock US-native payment processing. Platforms like Stripe and Shopify Payments determine eligibility by the country of the legal entity, and a US entity is the simplest way to access the US versions. Third, it must enable access to a US business bank account for payouts and to hold USD balances, which simplifies operations and reduces currency conversion costs.

Beyond these commercial needs, the structure must provide liability protection. Skincare products carry inherent product liability risk, and while insurance is the primary shield, a corporate structure that separates personal assets from business debts is fundamental. The best structure for a skincare brand founder is one that solves these commercial and legal requirements cleanly, without creating an unnecessarily complex or costly tax footprint in the United States.

A single-member LLC owned by a non-US person is a hybrid entity. It provides the legal protection of a corporation, meaning your personal assets are generally shielded from business debts and lawsuits. This is crucial in the cosmetics industry where product liability is a consideration. Commercially, it is a registered US business entity, capable of obtaining a US Employer Identification Number (EIN), entering into contracts with suppliers, and applying for US financial accounts.

For tax purposes, the US Internal Revenue Service (IRS) treats it as a 'disregarded entity' by default. This means the LLC itself does not file a US corporate tax return. Instead, the tax obligations flow through to you, the owner. This pass-through nature is what makes it a simple and powerful tool for many international founders.

It is important to understand what the LLC does not do. It does not eliminate your tax obligations in your home country. You are still required to report your income and pay taxes according to your local laws. It also does not guarantee banking; it only makes you eligible to apply. The entity simply provides the correct corporate foundation.

A single-member LLC owned by a non-resident is taxed in the US only on certain types of income. The core question is whether the business activity is considered 'engaged in a trade or business in the United States' (ETBUS). For many purely online businesses managed from outside the US, with no US staff, offices, or dependent agents, the activities may not rise to the level of being ETBUS. If the business is not ETBUS, its non-US owner is generally not subject to US federal income tax on its operating profits.

This determination depends entirely on your specific facts and circumstances and requires a professional tax opinion. However, even if no tax is owed, all foreign-owned single-member LLCs have a significant filing requirement. They must file Form 5472 (Information Return of a 25% Foreign-Owned US Corporation or a Foreign Corporation Engaged in a US Trade or Business) annually, attached to a pro forma Form 1120. The penalty for failing to file or filing late is substantial, starting at $25,000 USD. This is a compliance requirement, not a tax payment, but it is not optional.

The two most common states for non-resident founders are Wyoming and Delaware. Both offer a mature corporate legal system and do not levy a state income tax on companies that do not physically operate there. For most online skincare brands managed from abroad, the choice between them is less critical than the overall structure.

Wyoming offers lower formation and annual fees and provides greater owner privacy, as owner details are not required on the public record. This makes it a popular, cost-effective choice for straightforward e-commerce businesses. Its LLC statute is robust and modern.

Delaware is the traditional standard for US corporations, particularly those intending to seek venture capital investment. Its Court of Chancery has a deep body of corporate case law, which is why it is favoured by investors. For an LLC structure that does not plan to issue stock or take on VC funding, Delaware's advantages are less pronounced, and its franchise tax and registered agent fees are higher. For the typical online skincare brand, a Wyoming LLC is often the more practical and economical choice, providing all necessary features without the complexity and cost associated with Delaware's investor-focused ecosystem.

A US LLC with an EIN is the key to US financial infrastructure. Payment processors like Stripe and Shopify Payments make their US products available to US-domiciled entities. Applying with a Wyoming or Delaware LLC allows you to access these, enabling you to accept payments in USD and benefit from domestic processing rates. This is often a primary motivator for forming the company.

For banking, a US entity is a prerequisite. Most non-US founders will open an account at a US-based financial technology company, which typically partners with a community bank to hold deposits. These institutions are accustomed to working with US LLCs owned by non-residents. An account allows you to hold USD, receive payouts from processors without forced conversion, and pay US-based suppliers and 3PLs efficiently. It also provides the US bank details needed for Amazon payouts or to receive ACH and wire payments from wholesale clients.

Without a US entity, founders are often forced to use services like Payoneer or Wise to receive funds, which can be less stable and more expensive for operational banking. The LLC structure provides a more durable and professional financial foundation in the US.

When you apply for a payment processor or bank account, your skincare brand will be reviewed by a compliance team. For this niche, they focus on two main areas: product claims and transaction patterns. Cosmetics are generally considered a low-risk category, but this changes if your marketing makes medical or therapeutic claims. Stating a moisturiser 'reduces the appearance of fine lines' is a cosmetic claim. Stating it 'eliminates wrinkles' could be seen as a medical claim, which requires drug-level approval and will lead to an immediate decline. Underwriters will scrutinise your website and product descriptions for claims that cross this line. Ensure all ingredients are clearly listed and compliant.

They will also assess your business model for signs of stability. A clear, professional website with shipping and refund policies is essential. They will want to see the legal entity name matching on the website footer and policies. For brands using a contract manufacturer, having a manufacturing agreement can be a positive signal. High refund or chargeback rates are a major red flag, so it is important to manage customer expectations and fulfilment effectively from the start.

Wyoming and Delaware are the standard choices for foreign-owned skincare brands for good reasons. Both offer strong liability protection and a clear legal framework that suppliers and banks recognise. Wyoming's low annual fees ($62 from the second year) and high degree of owner privacy make it a cost-effective default. Delaware's franchise tax is higher, but its corporate case law is famously robust, which can be a subtle signal of seriousness to institutional partners or future investors.

Florida is sometimes considered for its perceived link to logistics and fulfilment, but this is a misunderstanding of corporate nexus. Simply using a 3PL in Florida does not require a Florida LLC. For a non-US founder, a Florida LLC can create a state-level tax filing obligation and is less private than a Wyoming equivalent. Onboarding teams at certain US financial institutions may ask additional questions about a Florida filing from a foreign founder, perceiving it as an unusual choice without a clear connection to the state. Sticking with Wyoming or Delaware simplifies the narrative.

Stripe is the primary target for most skincare brands. Onboarding a foreign-owned US LLC requires the EIN confirmation letter (CP575 or 147C), the LLC's articles of organisation, and the foreign owner's passport. Stripe's compliance team will verify that the person applying owns the LLC. A common failure point is a mismatch between the website's stated operator and the LLC's legal name. Skincare brands often see a standard 7-10% reserve placed on their Stripe account for the first 90 days, especially with high average order values.

Shopify Payments, which is powered by Stripe, has a similar onboarding process. PayPal requires the same core documents but is more sensitive to any perceived medical claims on the product website, which can trigger account limitations. Marketplaces like Amazon or Etsy have their own verification. They will ask for the LLC's documents and EIN, and may require a utility bill or bank statement in the LLC's name to pass their address verification checks, which can be a hurdle before your US bank account is active.

Setting expectations is crucial. The third-party costs are predictable. A Wyoming LLC filing costs $100. A registered agent service, which is mandatory, ranges from $100 to $300 per year. Obtaining an EIN from the IRS as a foreign applicant without a US social security number currently takes 15 to 20 business days, and this is often the longest single delay in the entire sequence.

The timeline from starting the LLC formation to receiving your first customer payout can realistically take six to nine weeks. Week 1: LLC filed. Week 2-4: waiting for the IRS to issue the EIN. Week 5: EIN received, you apply for your US business bank account. Week 6-7: bank performs its own compliance review and opens the account. Week 8: Account open, you link it to Stripe or another processor and begin customer transactions. Your first payout is often held for 7-14 days. Delays typically happen during the EIN application or the bank's compliance checks, which can be more rigorous for skincare brands selling products for sensitive use.

The setup process follows a logical sequence. First, the LLC is formed in the chosen state, such as Wyoming. This involves filing the Articles of Organization and appointing a registered agent. Once the state confirms the formation, which can take a few business days, the next step is to apply for the Employer Identification Number (EIN) from the IRS. This is the tax ID number for the business and a crucial piece of documentation. The EIN application for a foreign-owned LLC must be submitted by fax or mail, and the processing time at the IRS can vary significantly, from two to eight weeks or more.

Xavion Capital manages this entire process. We handle the state filing, provide the registered agent service, and prepare and submit the EIN application. Once the EIN is issued, we use the complete company package, formation certificate, operating agreement, and EIN confirmation, to prepare and submit applications for banking and payment processing on your behalf. From the start of the process to having an LLC formed, EIN secured, and bank account open can realistically take between eight and twelve weeks, with the IRS processing time being the most variable component.