Best LLC for a mobile app: store payouts and withholding

Publishing an app puts a very large intermediary between you and your customer. That is mostly good for compliance and mostly bad for control, and both facts should shape how you set the business up.

The short answer

A single-member LLC, disregarded, and a developer account in the company's name. Registering as an organisation typically requires a verifiable legal entity — often including a D-U-N-S number — so form the entity before you enrol rather than after.

The stores mostly handle consumption tax

For in-app purchases and paid downloads, Apple and Google act as the seller or the collecting agent in most markets, and remit the applicable VAT, GST or sales tax themselves. You receive proceeds net of tax and net of commission.

• This is a genuine reduction in compliance work compared with selling the same software from your own site.
• It does not cover everything. Advertising revenue, sponsorships and anything sold outside the store are yours to handle.
• It does not cover income tax. Your profit is still taxable where you are.
• Complete the store tax forms properly. Both stores collect tax information and will withhold on certain income if it is missing or incomplete.

Commission, and what it does to the model

Store commission is the largest single line in most app businesses, with reduced rates available under small-business programmes and for long-running subscriptions. Two structural consequences:

1. 1Your break-even is set by someone else's rate card. Price the product against the net you receive, not the gross the customer pays.
2. 2Small-business programme eligibility is measured across associated developer accounts. Splitting apps across entities to stay under a threshold is the kind of arrangement that gets looked at; do not structure for it.

Privacy is the compliance work that replaces tax

App review enforces disclosure of what data you collect and what you do with it, and the disclosure has to match the app's actual behaviour — including the behaviour of every SDK you have embedded. An analytics library that collects an identifier you did not declare is your non-disclosure, not theirs.

• Know what your SDKs collect. Most developers do not, and the store's declaration asks anyway.
• Children's apps are a different regime, with substantially stricter rules on data collection and advertising.
• A privacy policy is required, and it should describe what the app does rather than what a template says.

Platform dependency is the structural risk

Your distribution, your billing and your customer relationship all belong to a company that can change its policies unilaterally. There is no entity structure that fixes this. What helps is owning an off-store channel — a website, an email list, a web version — so that a rejection is a setback rather than an ending.

If you are not a US person

• You may not need a US entity at all. Both stores support developers in many countries directly, and forming a US LLC purely to publish an app adds a filing obligation without an obvious benefit. Check your own country's enrolment path first.
• No S-corp election — Section 1361 bars non-resident alien shareholders.
• Form 5472 with a pro-forma Form 1120 annually if you do form one, $25,000 penalty for failure to file.
• Complete the store's tax interview with a treaty claim where one applies — US-source income can otherwise be withheld at the default rate.

When to revisit