Setting up business in USA/UK

To register a U.S. company from the U.K. is access to capital. U.K. startups raised USD 16.6 million in venture capital in 2020. Contrast that with USD 130 billion raised in the U.S. that same year. Altogether, there is a much larger startup ecosystem in the U.S. and many more opportunities for funding. U.S. investors often prefer that U.K. companies incorporate in the U.S. A corporation able to offer U.S. equity to American employees has a bigger talent pool to draw upon.

The tax rate also partially plays an important role. Some investors were ready to finance U.K. registered companies at 35%, the U.S. corporate tax rate did not offer a competitive advantage compared to the U.K.’s. Since then, the U.S. corporate tax rate has dropped back to 21%, regaining its edge and making U.S. corporations more attractive to investors. Most importantly, corporations formed in the U.S. have to deal with less bureaucracy overall, and the Delaware courts, mainly, are known for their efficiency in corporate legal proceedings.

There are two kinds of corporate entities non-citizens can open in the U.S.:

• Limited liability company (L.L.C.)
• Corporation ( C-corp)

While foreigners are frequently recommended to form a C-corp, there are some distinct advantages to incorporating as an L.L.C. The most evident of these is a limited liability- meaning members are protected from personal liability for business decisions, and personal assets are secured if the company incurs debt. L.L.C.s are also free from the strict record-keeping necessary for C-corps and have almost no limitations on profit sharing between members.

Many new businesses select the C-corp business structure. The benefits of forming a C-corp are significant. The most often-cited reason is the ability to expand by offering unlimited stock: a feature that is often attractive to investors. Foreign owners also find relief in the C-corporation structure for its ability to protect them from close I.R.S. involvement. Of course, that shield comes with the double tax, but that financial damage is frequently escaped by careful tax planning, which can be structured to cancel out most of the double taxation.

If your company is already a U.K. limited company, you can use the “Delaware Flip” approach to effectively move it to the U.S. This is easiest when your company is still young, with hardly any shareholders and outside investors. In essence, you file articles of incorporation for a Delaware C-corp, then acquire your U.K. company and make it a subsidiary.

The steps for registering a company in the U.S. if it’s registered in the U.K. are as follows:

• Recruit U.K. accountants and lawyers to ensure you have all the mandatory regulatory acceptance to convert your business. You’ll also need to pay off all debt and outstanding equity.
• Register a Delaware corporation. This needs you to name officers and directors and allot shares.
• The shareholders in your U.K. limited company agree to contribute all shares, cash and intellectual property in the U.K. company to the new U.S. corporation, making the U.K. company a subsidiary. This requires a share repurchase; you may wish to use a clearance letter so your shareholders can avoid paying income tax on the payment they receive from you.
• Your new U.S. registered corporation to acquire your U.K. company as a subsidiary.

There are four main types of business structures in the U.K., and each has various tax liability implications for owners and shareholders:

• Sole trader
• Partnership
• Limited liability partnership
• Limited company

A sole proprietorship is an uncomplicated business type, and it does not require any formal filings. A person is automatically contemplated as a sole proprietor if he performs business activities but doesn’t register as any other kind of business. A drawback of a sole proprietorship and why an individual should not start his business as a sole proprietorship is that he will take personal liability for all business matters. It means his business assets and liabilities are not separate from his assets and liabilities. As a result, he can be held personally liable for the debts and obligations of the business. If his business gets sued or something happens to his business, he will be personally responsible for his business. So, an individual should 100% look to form an L.L.C., C-Corporation or S-Corporation if he is starting a business in the U.S. Once the person is sure about how to begin a business in the U.S.A., he can expect realistic returns.

There are numerous visas that you can apply for building a business in the U.S. Many companies have been started by immigrant founders who left their home country to work on developing a business in the U.S. The various type of visas which can be applied for building a business in the U.S. are as follows:

• E-1 and E-2 visas
• EB-5 job creation visa or permanent residency visa
• L-1 multi-national transfer visas
• 0-1 visa- individuals with extraordinary ability or achievement

At MAS, we assist our clients with the following services for incorporating a company in the U.S.A.:

• Incorporation of a company
• Certificate of formation/ incorporation
• Operating agreement
• 12 month registered agent service
• Assistance in setting up of a virtual bank account
• Obtaining E.I.N. number
• Obtaining ITIN number

At MAS, we assist our clients with the following services for incorporating a company in the U.K.:

• Formation of the company
• Registering of companies house filing
• Digital as well as a printed certificate of incorporation, share certificates, memorandum & articles
• V.A.T. registration, if required
• A registered office address in London for 12 months (with free scan and email service)
• Discounted.com or .co.uk domain name
• Assistance in setting up a virtual bank account
• U.K. V.A.T. number
• U.K. Taxes