The best company structure for a white-label software business.

A white-label software business resells another company’s product under its own brand. This core fact drives the structural requirements. First, the underlying software provider often contractually requires its resellers to be US or other onshore entities. Second, the business model relies on seamless payment processing. To capture US customers, you need to offer USD payments via credit card and ACH. This means satisfying the strict underwriting of a US payment processor like Stripe or Shopify Payments, which is far more likely with a US entity and US banking.

Furthermore, the flow of funds is often complex. You may be collecting the full transaction value from the end customer and remitting a revenue share to the software owner, or the platform may split the payment automatically. These multi-party fund flows demand robust banking that can handle high volumes of incoming and outgoing transfers without being flagged. Finally, your corporate structure needs to be legible to partners and enterprise clients. A US LLC with a registered address and EIN provides a level of commercial credibility that a foreign individual or offshore company often cannot match, simplifying procurement and enabling you to issue Form W-9s as a US entity.

A single-member LLC (SMLLC) owned by a non-US person and treated as a ‘disregarded entity’ for US tax purposes directly addresses the commercial needs of a white-label software business. The LLC is a distinct legal entity, protecting your personal assets from business liabilities. It can enter into contracts, such as reseller agreements with software providers. Crucially, obtaining a US Employer Identification Number (EIN) for the LLC allows it to be identified as a US entity for banking and payments, unlocking access to the US financial system.

However, it is critical to understand its limitations. A US LLC does not erase your tax obligations in your country of residence. You are still required to report your income and pay taxes according to your local laws. The structure does not make a high-risk business model low-risk; it simply provides a compliant wrapper. If the underlying software facilitates high-risk activities, financial partners will see through the structure to the activity itself. Finally, forming an LLC does not guarantee a bank account. Banking is a privilege, not a right, and approval always depends on the bank's risk appetite and your business's specific profile.

For US federal income tax purposes, a single-member LLC is by default a ‘disregarded entity’. This means the IRS does not see the LLC as separate from its owner. The tax liability flows through to the owner. If the owner is a non-US person, the question becomes whether their income is subject to US tax. This generally depends on two factors: whether the income is ‘US-sourced’ and whether the owner is ‘engaged in a trade or business in the United States’ (ETBUS).

For many online businesses operated entirely from outside the US with no staff, office, or dependent agents in the country, the income may not be considered ETBUS. If so, no US federal income tax is due. This is a key reason the structure is popular. However, this determination depends on your specific facts and must be confirmed with a qualified US tax adviser. Regardless of taxability, a foreign-owned SMLLC has a strict annual filing requirement with the IRS: Form 5472 and a pro forma Form 1120. The penalty for failing to file is substantial, starting at USD 25,000, making compliance essential.

The choice of state for a non-US-resident founder of a white-label software business usually narrows to Wyoming and Delaware. Both states have established, respected corporate law and do not tax income at the state level for LLCs owned by non-residents with no state-sourced income. Wyoming is often the default choice for its simplicity, lower annual fees, and strong privacy protections. Its filing process is straightforward, and the annual report is a simple re-confirmation of your details.

Delaware is the prestige choice, home to the majority of Fortune 500 companies. Its Court of Chancery is highly sophisticated in resolving corporate disputes. This is rarely a factor for a single-founder online business but can be relevant if you plan to raise venture capital from US investors, who strongly prefer Delaware C-Corporations. For a disregarded LLC, Delaware's main advantage is its name recognition. However, it has a higher annual franchise tax and slightly more complex reporting. For most white-label software businesses that plan to remain founder-owned, Wyoming provides the same core benefits with less administrative overhead and lower cost, making it the more practical option.

A properly formed US LLC with an EIN is the key to US financial infrastructure. Without it, a non-US founder is often reliant on services like Payoneer or Wise, which can be expensive and are not true business bank accounts. Many US payment processors, including Stripe and Shopify Payments, require a US entity with a US bank account to access their standard US pricing and features. Attempting to use these platforms as a foreign entity often results in account suspension or outright rejection.

With a US LLC, you can apply for business accounts at US-based financial institutions. This includes fintech platforms that are often more accessible to foreign founders than traditional high-street banks. An account in the LLC’s name allows you to receive USD payments via ACH and wire, bill US clients professionally, and connect directly to US payment gateways. This not only solves a critical operational problem but also enhances legitimacy. When a customer pays a US company and the funds settle into a US bank account, the entire transaction feels native and secure, increasing conversion rates. It also simplifies managing payouts to your own suppliers, like the original software developer you are white-labelling.

When a bank’s compliance team underwrites a white-label software business, they focus on two layers of risk: your business and the underlying software. First, they assess you, the founder. They will conduct KYC (Know Your Customer) checks and expect a clear, professional website that transparently describes the software, its pricing, and your terms of service. The business must look and feel real.

Second, they scrutinise the product itself. The underwriter needs to understand what the software does. Is it a benign CRM tool or a high-risk system for automated trading or mass emailing? You must be able to clearly explain the software's function and provide the reseller agreement that authorises you to sell it. Compliance teams are wary of opaque arrangements. They will want to see the legal agreement connecting you to the ultimate software provider. They will also analyse the flow of funds. If you are handling large volumes and remitting a percentage to the software owner, they need to understand that relationship to ensure it is not a prohibited money services business (MSB) activity. Full transparency is the only path to approval.

For a non-resident founder, the choice between Wyoming, Delaware, and Florida hinges on specific operational needs. Wyoming offers the lowest annual upkeep, with a state report fee of around $62 and registered agent fees typically between $100 and $200. Its privacy provisions are robust, shielding member details from the public record, which can be an advantage. Some payment processors, however, view Wyoming LLCs with extra scrutiny due to their historical association with opaque structures.

Delaware presents a higher-cost, higher-prestige alternative. Its franchise tax is a flat $300, and registered agent fees are comparable to Wyoming. While its public record privacy is less complete than Wyoming’s, its long-established corporate law and reputation can smooth the onboarding process with more conservative financial institutions. Florida, in contrast, offers minimal privacy and its physical nexus rules can create complications for non-resident founders. Its annual report fee is $138.75. For a location-independent white-label software business, the perceived benefits of a Florida address rarely outweigh the simplicity and lower costs of Wyoming or the established credibility of Delaware.

Each payment processor has its own appetite for foreign-owned US LLCs in the white-label software space. Stripe is generally the most accessible, asking for the LLC's formation documents, EIN confirmation letter (CP 575), and the founder's foreign passport. Stripe Radar's risk algorithms pay close attention to refund rates and chargeback ratios, which can be volatile when reselling another company's product. A sudden spike can trigger a manual review or the imposition of a rolling reserve, where a percentage of your revenue is held for a period to cover potential disputes.

Shopify Payments, which is powered by Stripe, follows similar documentary requirements. However, its own terms of service add another layer of compliance. If your business model involves complex revenue-share agreements, it may be flagged for review. PayPal requires the same core documents but is notoriously sensitive to changes in business patterns. A sudden increase in transaction volume, a common occurrence when a marketing campaign succeeds, can lead to account limitations. In all cases, having your reseller agreement with the original software provider ready is critical. Underwriters will ask for it to verify the legitimacy of your business and understand the flow of funds.

Setting up a US LLC for a white-label software business involves predictable third-party costs and a multi-week timeline. The initial state filing fee is a public cost, around $100 in Wyoming. An EIN is free from the IRS, but the application for a founder without a US Social Security Number can take 15 to 20 business days to process. Registered agent services, a mandatory requirement, typically cost between $100 and $200 annually. The first significant cost is often the state's annual report, due the following year, which is approximately $62 in Wyoming and $300 in Delaware.

The process from filing the LLC to receiving your first payout can take six to eight weeks. Weeks 1-2 involve LLC formation. Weeks 3-5 are typically spent waiting for the IRS to issue the EIN. Once the EIN is received, you can apply for a US business account. This banking application is where this model often stalls; underwriters may request detailed information about your reseller contract and the software's functionality. After account approval (Week 6-7), you can integrate with processors like Stripe. Expect your first payouts to be subject to an initial holding period of 7-14 days. Processors may also place a rolling reserve of 5-10% on your account initially, especially if your refund rates are high.

The process of structuring your white-label software business correctly follows a set sequence. First, the LLC is formed in your chosen state, typically Wyoming. Once the state confirms the formation, we file for the Employer Identification Number (EIN) with the IRS. Obtaining the EIN is a critical step that can take several weeks, as it officially registers your company in the federal system.

With the formation documents and EIN in hand, the next step is to prepare and submit banking applications. This is not a matter of simply filling out a form. We position your application based on your specific profile, the nature of your software, and the risk appetites of different US financial institution types. We prepare a detailed package for the bank’s underwriters, anticipating their questions about your business model, reseller agreements, and expected transaction patterns. This careful preparation maximises the probability of a successful outcome. The entire process, from LLC formation to having an open bank account, realistically takes several weeks. Xavion manages this entire sequence, providing a single point of contact and ensuring each step is completed correctly. For more information, please see xavioncapital.com/start.