A flying capacitor (FC)-based multilevel structure is proposed as a viable solution for voltage-source inverter (VSI) implementation in a two-stage, single-phase, grid-connected photovoltaic (PV) microinverter application. The compact size and high-density design requirements for micro-inverter applications necessitate the optimal design of passive components, specifically flying capacitors (FCs). Existing studies lack a systematic methodology for designing FCs of individual voltage levels and are based on a single objective of satisfying energy storage requirements, leading to suboptimal designs. Lack of generalized analytical expressions for FC multilevel inverter in the grid-connected mode further inhibits study of critical performance characteristics, impeding optimal design. This study presents a practical multi-objective design optimization framework for FC-based VSI structure. The results show that the proposed capacitor-aware optimization procedure reduces resulting DC-link capacitor design volume by 14% compared to a pure film-capacitor DC-link for a 2-level VSI with 10% lower cost. Additionally, a 17% volume reduction compared to ratiometric design strategy is achieved.