The best company structure for a streetwear brand.

A streetwear brand is a direct-to-consumer ecommerce business defined by high-margin, low-volume sales and culturally specific marketing. Your primary need is to process payments smoothly from a global customer base, but especially from the US, which is often the largest single market.

You need a structure that allows you to open a US merchant account with a processor like Stripe or Shopify Payments. These processors require a legal entity and tax ID number in the country of operation. Without a US entity and its accompanying Employer Identification Number (EIN), you are often forced to use less favourable, higher-cost international payment gateways, which can lead to lower acceptance rates for US customer cards.

Your structure must also allow you to receive payouts in USD without forced conversion or high wire fees. A US entity can open a US business bank account, allowing you to hold USD, pay US-based suppliers or marketing agencies, and repatriate profits on your own schedule. The right structure achieves these commercial goals simply, without creating an unnecessarily complex tax presence in the United States.

A single-member LLC (SMLLC) owned by a non-US person is typically treated as a ‘disregarded entity’ for US tax purposes. This means the LLC itself does not file a US tax return; the US tax authorities look through the entity to its owner. This simplicity is its core strength. You get the commercial benefits of a formal US company, an EIN, the ability to open accounts, and a professional footing with US partners, without the complexity of US corporate taxation.

However, it is crucial to understand its limits. Forming a US LLC does not make you a US resident or citizen. It does not absolve you of tax obligations in your own country of residence; you are still required to report your income according to your local laws. It is a vehicle for accessing US infrastructure, not for avoiding tax. An LLC also does not turn a high-risk business model into a low-risk one. Underwriters will still assess the specific risks of your brand, particularly concerning your supply chain, intellectual property, and sales patterns. Banking is never guaranteed, but this structure provides the correct legal foundation for an application.

For a non-US owner of a disregarded LLC, the central tax question is whether your income is considered US-sourced and whether you are ‘engaged in a trade or business in the United States’ (ETBUS). This is a fact-dependent analysis. For many online businesses operated entirely from outside the US, with no staff, office, or dependent agent in the US, the income may not be considered effectively connected with a US trade or business. In such cases, there may be no US federal income tax liability. This is a primary reason the structure is popular with foreign founders.

However, this must be confirmed with a qualified US tax adviser who can assess your specific situation. The IRS does have a filing requirement for foreign-owned disregarded entities. You must file Form 5472 annually to report transactions between the LLC and its foreign owner, attached to a pro forma Form 1120. This is a reporting form, not a tax bill. Failure to file can result in a significant penalty, starting at $25,000, so compliance is essential. This filing makes the structure transparent to the US Treasury, even if no tax is due.

The two most common states for non-US founders are Wyoming and Delaware. For most online streetwear brands, Wyoming is the more straightforward and cost-effective choice. It has low annual fees, no state-level income or franchise taxes, and a simple, modern online filing system. Its corporate statutes provide strong liability protection and allow for a high degree of privacy, which many founders appreciate.

Delaware is the standard for businesses intending to raise venture capital from institutional US investors. Its Court of Chancery has a deep body of corporate case law, which is what VCs are paying for. However, this is rarely a concern for a founder-owned streetwear brand. Delaware has a higher annual franchise tax and more formal compliance requirements compared to Wyoming. For a bootstrapped or self-funded brand primarily seeking access to US banking and payments, the added complexity and cost of Delaware are seldom justified. The choice of state has little bearing on your banking or payment processing applications; the critical elements are the US entity itself and its federal EIN.

The primary commercial reason to form a US LLC is to get through the door with US financial institutions. Payment processors like Stripe and Shopify Payments determine your eligibility based on your entity's country of formation. A Wyoming or Delaware LLC with a US EIN is a US business for their onboarding purposes. This allows you to access the US versions of these platforms, which typically offer better pricing and higher card acceptance rates for US customers than their non-US equivalents.

For banking, a US LLC can apply for a business account at various institution types. These include US-based fintech banking-as-a-service (BaaS) platforms, which are often the most accessible for non-resident owners, as well as more traditional community banks if you have some link to their service area. The entity can also apply to Bank of Lithuania-licensed EMIs or Puerto Rico-based International Financial Entities (IFEs) that are open to US LLCs. Having a US business account in the LLC’s name allows you to receive payouts from processors in USD, hold a USD balance, and manage payments to suppliers and for marketing without incurring high currency conversion fees.

When a bank or payment processor underwrites a streetwear brand, they are assessing specific risks. The biggest operational red flag is the ‘drop’ model. A sudden spike in sales volume from zero to tens or hundreds of thousands of dollars overnight is classic high-risk behaviour for a new merchant account. It can look like credit card fraud or a bust-out scheme. Underwriters will want to see evidence that this is a legitimate launch. This means clear marketing materials, a professional website, and a social media presence that corroborates the launch date and product.

They will also scrutinise your supply chain and fulfilment. Are you using a reputable print-on-demand provider, or are you managing your own inventory and shipping? Proof of supplier relationships and shipping arrangements is key. They will also look at your intellectual property. Are you using original designs, or are there potential trademark or copyright issues with your branding or graphics? A clean, professional operation with verifiable logistics and original IP is more likely to be approved and less likely to face a sudden reserve or hold on its funds after a successful launch.

For a non-US founder, the choice of state for a streetwear brand's LLC is primarily a cost and compliance decision, not a tactical one. Wyoming is the most common choice for its low annual fees and strong privacy. Its annual report fee is minimal, and using a commercial registered agent keeps the founder's personal details off the public record. For a streetwear brand with no US presence, this is clean and efficient.

Delaware offers a prestigious image, but at a higher annual cost via its flat franchise tax. Its privacy protection is equivalent to Wyoming's when a registered agent is used. Some founders believe a Delaware LLC appears more credible to partners, but for payment processing and banking, the entity's beneficial owner, business model and compliance profile matter far more than the state of formation. Florida has gained attention for its low initial filing fee, but its mandatory annual report fee is higher than Wyoming's. Crucially, Florida offers no meaningful corporate privacy, requiring public disclosure of manager details, which is a significant drawback for many non-resident founders.

Ultimately, processor and bank underwriting teams focus on the founder's identity, the nature of the streetwear business, and where the founder physically operates. The LLC's state is a secondary detail. For most streetwear brands, Wyoming offers the best balance of low upkeep costs and privacy.

Payment processors apply intense scrutiny to new streetwear brands due to their history of high chargeback rates and the drop-shipping model's fulfillment risks. For a non-US founder with a US LLC, a US bank account and Employer Identification Number (EIN) are the baseline requirements for platforms like Stripe and Shopify Payments. Braintree and Adyen have similar, though often stricter, underwriting for this model.

Expect to submit your passport, EIN confirmation letter (CP 575), and proof of your non-US home address. The most common trigger for a hold or reserve is a sudden sales spike, typical of a product drop. A new account going from zero to five figures in sales overnight is a classic red flag. Processors will likely impose a rolling reserve, holding 10-30% of your funds for 30-90 days to cover potential chargebacks. To prepare, have supplier invoices or proof of inventory for your initial collection ready to show you are not simply drop-shipping. Clear shipping and returns policies on your Shopify or e-commerce store are also non-negotiable.

PayPal and marketplaces like Etsy or Amazon have their own specific onboarding. They may initially allow sales but can limit or freeze accounts pending a full review of your LLC documents and personal identification, especially as volume grows.

Setting up a US LLC for a streetwear brand involves a sequence of steps with variable timing, largely outside your direct control. The state filing is fast, often 1-3 business days. The bottleneck is securing the EIN from the IRS for a non-resident without a Social Security Number. This process takes 3-5 weeks on average. Only after the EIN is issued can the business bank account application be submitted.

From filing to the first settled payout, a realistic timeline is 7-10 weeks. This can stall if the EIN application contains errors or if banking compliance teams have extensive questions about your business model, supplier arrangements or personal identity verification. Rushing this process is not possible. Typical third-party costs include the state filing fee (around $100-$180), the first year's registered agent service ($100-$250), and subsequent annual state report or franchise tax fees ($62 in Wyoming, $300 in Delaware). Payment processor reserves are a cost of doing business; anticipate having 10-30% of revenue from a launch held for up to 90 days. This is a working capital consideration, not a fee, but it impacts cash flow for inventory and marketing.

The process is sequential. 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 immediately apply for the Employer Identification Number (EIN) with the IRS. This tax ID is the key that unlocks everything else. The EIN application for a foreign-owned LLC is a manual process that can take several weeks.

With the formation documents and EIN confirmation letter in hand, we prepare and manage the banking and payment processing applications. Xavion positions your brand's profile with institutions most likely to understand your business model, including the realities of drop-model sales. We ensure the application highlights the legitimacy of your operation, pre-empting underwriter concerns. The entire sequence, from formation to having an open bank account, realistically takes several weeks to a few months, with EIN issuance being the primary variable. We manage this entire workflow, providing a single point of contact and ensuring each step is completed correctly and in the right order.