US LLC from the UK: HMRC Sees a Company, the IRS Doesn't

0:00Can a UK resident own a US LLC?

Ellie runs a small software studio in Manchester. Her best clients are American, and one of them wants a US company to sign with. So, can she have one from the UK? As far as America goes, yes. No social security number, and no trip to the US. It won't give her the right to live or work there, though. Cheyenne, in Wyoming, is usually seven hours behind the UK. We're BaseAcross. We set up US companies for founders outside America, so we'll be straight with you.

Let's ride the line, one stop at a time.

0:36Do I need a US company if I live in the UK?

First stop. Do you need a US company at all? Often not. The big card processor already serves UK businesses, and so does a well-known multi-currency account. And a UK limited company can be registered online, for a government fee. A US company makes sense when the US is the point. American customers and contracts, US investors, or a US-facing brand. Ellie has the first. So she rides on.

1:06How does HMRC tax a US LLC?

Next stop, and it's the one most videos miss. How does HMRC see a US LLC? As a company, not a see-through business. America sees it the other way. A single-owner LLC's profit counts as the owner's as soon as it's earned. In the UK, Ellie is taxed on what the company pays her, as dividends. So the same profit looks different from each side of the Atlantic. That gap shapes everything that follows, so plan the two sides together.

1:39Can an LLC run from the UK be a UK company?

Then a question about where the company is run. A company is UK-resident if its central management and control is in the UK, wherever it was formed. So an LLC that Ellie runs day to day from Manchester can be a UK company for corporation tax. Here's the guide's own illustration. Say the LLC makes forty thousand pounds of profit, from clients outside the US. If HMRC treats it as UK-resident, the small profits rate takes seven thousand six hundred pounds.

That's what a UK limited company would pay. What it then pays her is taxed as a dividend, above the yearly allowance. And the LLC still reports to the IRS. That's an illustration, not a quote.

2:27Will I be taxed twice? And the treaty

Now the costly junction. Work done in the UK generally isn't US income, so there's often no US tax. But profit from a US trade, say stock or staff in America, can be taxed there as yours. HMRC then taxes what the LLC pays you, and says you're generally not entitled to relief for the US tax. That's how the same profit can be taxed twice. So take advice before forming an LLC with US operations.

There is a tax treaty between the two countries. It cuts US withholding on some payments to you. But it doesn't fix the LLC mismatch. A Delaware C-Corp is a company in both countries, so it avoids that gap.

3:13Forming it, the EIN and the bank

Forming it is the quick part. A Delaware C-Corp if US investors want shares. An LLC can still work, but take UK tax advice first. The company needs a registered agent, an address in that state for legal papers, not where you work. Then the EIN. Without a social security number, it's a paper form to the IRS. One of the US fintech banks takes applications from the UK. It asks for US operations, now or planned, and a real business address.

That can be in the UK, but not the agent's. A multi-currency business account serves UK owners too. Each provider decides for

3:56Is the UK changing how LLC owners are taxed?

itself. Next, a change that isn't here yet. A government consultation proposes letting UK residents treat an eligible LLC as see-through. There's no law yet, and it would only apply to tax years after it's passed. Meanwhile, as a UK resident you normally pay tax on foreign income, and report it on your Self Assessment return. If the LLC is UK-resident, it may have company filings of its own.

And the company still files a report with the IRS every year, even without sales, and missing it is expensive. It's usually due in the spring, and there's a form to ask for more time, filed before the deadline.

4:38The route, in order

So here's the route. First, check whether a UK limited company already does the job. If the US is the point, choose the structure with your accountant. Then form, then bank. Put the IRS report and your Self Assessment on one calendar. The full guide, with every source and a checklist for your accountant, is linked below. And Ellie? She asked her accountant which line to take before she bought a ticket.