The best company structure for a UX design consultancy.

A UX design consultancy advises clients on product design, user flows, and interface logic. The business model is straightforward: a consultant or a small team provides services remotely, bills retainers or project fees, and delivers advice and design assets. Key needs for the company structure are therefore client credibility, clean invoicing, and access to professional payment methods.

US clients, especially larger product companies, expect to contract with a formal business entity. They need a signed Master Services Agreement, a Statement of Work, and often a W-9 form for their own tax compliance. Invoicing as an individual from a non-US country can introduce friction, procurement delays, and payment challenges. A US LLC with a US Employer Identification Number (EIN) solves this by presenting as a domestic vendor.

Furthermore, the structure must allow the consultancy to receive payments efficiently in USD. This means having a US business account in the company's name, which can be difficult for a foreign individual or foreign company to obtain directly. The right US structure is primarily a tool to unlock this commercial and financial infrastructure.

A single-member Limited Liability Company (LLC) owned by a non-US person is a 'hybrid' entity. For legal purposes, it is a separate corporate body, which limits the founder's personal liability. If the consultancy were sued, the LLC's assets are at risk, but the founder's personal assets are generally protected.

For US federal tax purposes, a single-member LLC is by default a 'disregarded entity'. This means the IRS does not see the LLC as a separate taxable entity; it looks through to the owner. The tax liability, if any, falls on the owner. This is fundamentally different from a C Corporation, which is a separate US taxpayer. This simplicity is why it is often the preferred structure for non-US founders who do not have a physical US presence.

However, it is crucial to understand the limits. Forming a US LLC does not negate tax obligations in the founder's country of residence. The consultancy's income will likely still be subject to local corporate and personal taxes. An LLC is a tool for accessing US infrastructure, not a mechanism for global tax avoidance. It also does not make a high-risk business low-risk, and banking is never guaranteed.

Because a single-member LLC is a disregarded entity, the US tax question turns on the owner. The core issue is whether the founder is 'Engaged in a Trade or Business in the US' (ETBUS). This is a facts-and-circumstances test, but for a UX design consultancy with no US staff, no US office, and no US-based dependent agent, the work is typically performed from outside the US. The income generated from services performed entirely abroad is generally considered foreign-source income. Foreign-source income received by a non-resident alien is not subject to US tax.

This is why the structure is popular. It creates a US entity for commercial purposes without, in many cases, creating a US tax obligation for the foreign founder. However, this must be confirmed with a qualified US tax adviser who can assess the specifics of your operation.

Critically, all foreign-owned single-member LLCs have a reporting requirement. They must file Form 5472 and a pro forma Form 1120 with the IRS annually to report transactions with the foreign owner. The penalty for failing to file is significant, starting at $25,000. This is a compliance requirement, not a tax payment.

The most common choices for non-US founders are Wyoming and Delaware. Both states offer privacy and a mature body of corporate law. For a UX design consultancy, the choice is rarely critical, but Wyoming is often the more practical and cost-effective option.

Wyoming LLCs are simple to form, have low annual fees, and do not require the owner's name to be public. This provides a degree of privacy that many founders appreciate. The compliance is straightforward, making it ideal for a services business that does not intend to seek venture capital investment.

Delaware is the standard for US tech companies that plan to raise venture capital. Its Court of Chancery is highly respected for resolving complex corporate disputes. However, for a consultancy that is structured as a disregarded entity and is not issuing stock, these benefits are less relevant. Delaware's franchise tax is also more complex to calculate than Wyoming's simple annual report fee. For most UX design consultancies, Wyoming provides all the necessary benefits with lower administrative overhead.

The primary commercial reason to form a US LLC is to access US-dollar financial infrastructure. With an LLC and an EIN, a non-US founder can apply for a US business bank account. This is the key that unlocks the rest of the system.

Most UX design consultancies serve US clients who prefer to pay via ACH transfer into a US bank account. Lacking this, a consultant is forced to rely on wire transfers (slow, expensive) or third-party platforms like Payoneer or Wise, which can be less professional for large B2B transactions. A US business account allows the consultancy to receive client payments directly in the company's name, simplifying accounting and improving credibility.

This US business account also serves as the required settlement account for US payment processors like Stripe or Shopify Payments. These processors require a local bank account in the country of the entity. Without a US entity and US account, a non-US founder cannot access the US versions of these platforms, which offer better rates and features for processing payments from US customers. The LLC is the legal container that makes this possible.

When a UX design consultancy applies for a business account, the bank or fintech's compliance team will conduct due diligence. Their goal is to understand the business model and ensure it complies with their risk appetite and anti-money laundering (AML) regulations.

For a UX consultancy, underwriters look for a clear, professional online presence. This includes a well-designed website, a clear description of services, and a public profile for the founder (like a LinkedIn profile). They want to see that this is a legitimate professional services business. They will verify the LLC's registration and EIN.

The underwriter will assess the nature of the client base and transactions. UX consulting with retainers from US product companies is a very low-risk model. The source of funds is clear, and the service is legitimate. The key is providing transparent documentation. Be prepared to show a sample client contract or Statement of Work. Vague descriptions of services, an inability to show work, or a lack of professional presence are red flags that can lead to an application being declined.

For a non-US citizen operating a UX design consultancy, the choice between Wyoming, Delaware, and Florida as a state of formation has practical consequences for banking and payment processing. Wyoming offers strong privacy by not listing manager details publicly, which can simplify compliance declarations. Its low annual report fee ($60) is a key advantage. Delaware filings are also private, but its franchise tax, while minimal for this model, is a more complex calculation than Wyoming's simple annual report. Some underwriters at more conservative financial institutions may perceive a Delaware LLC as marginally more premium, but this is rarely a deciding factor for a service-based consultancy.

Florida presents a challenge. Because it is a high-fraud state and a common domicile for individuals, forming your consultancy's LLC there when you do not live there can create a perception of nexus or raise questions during underwriting. Processors like Stripe are more likely to request proof of a US business address and may scrutinise applications from Florida LLCs with foreign beneficial owners more intensely. Given that a UX design consultancy has no physical footprint, choosing a state like Wyoming or Delaware avoids this unnecessary friction.

For a UX design consultancy, Stripe is the most common payment processor. When onboarding a foreign-owned US LLC, Stripe will require the EIN confirmation letter (CP 575), the LLC's articles of organization, and the foreign founder's passport. A key step is the address verification; you must provide a real US business address, not a mail forwarding service. Stripe's risk teams may place an initial reserve on the account, often 25% for 90 days, particularly if you are in a country deemed higher risk. This is to cover potential disputes. To reduce this, ensure your client contracts are clear about deliverables and revision rounds.

PayPal operates similarly, though its account reviews can be more frequent and are often triggered by large, unexpected payments typical of project-based work. Braintree, a PayPal service, offers more robust underwriting for established consultancies. For all processors, clearly describing your service as 'UX/UI design services' or 'digital product design consulting' on their application forms is critical. Vague descriptions like 'consulting' are a common reason for decline. Having a professional website that clearly outlines your services is non-negotiable for approval.

Setting up a US LLC for your UX design consultancy involves several third-party costs. The initial state filing fee is approximately $100 in Wyoming or $90 in Delaware. Annually, you will have a registered agent service, which typically costs between $100 and $250 per year, plus the state's annual report fee, which is about $60 in Wyoming or a $300 flat tax in Delaware.

The timeline from starting the process to receiving your first client payment is often longer than founders expect. Forming the LLC takes a few business days. Obtaining the EIN from the IRS without a Social Security Number is the longest step, currently taking 15 to 20 business days. Only with the EIN can you apply for a business bank account, which can take another week for approval. Connecting that account to a processor like Stripe and getting it approved might take a further 3 to 5 days. A realistic timeline from LLC filing to first payout is therefore five to seven weeks. Delays are common if the IRS misplaces the EIN application or if a processor requests additional documentation.

Setting up the full structure for a non-US-based UX consultancy involves a sequence of dependent steps. Attempting these out of order causes delays.

Xavion Capital manages this entire process. The first step is forming the LLC in the chosen state, typically Wyoming. This takes 1-3 business days. Next, we prepare and file the application for an Employer Identification Number (EIN) with the IRS. As of mid-2024, EIN processing for foreign-owned entities can take 20-30 business days. This is the longest waiting period in the sequence.

Once the EIN is issued, we can begin the application for a US business account. We package the consultancy's information, LLC documents, EIN confirmation, founder's ID, and business description, and submit it to a suitable US financial institution. The underwriting process can take anywhere from a few days to a few weeks, depending on the institution. The entire sequence, from formation to having an open and funded US business account, realistically takes 6-9 weeks. Our process is designed to minimise delays by ensuring all paperwork is correct and complete at each stage.