US LLC for founders in the UK

Why do founders in the UK form a US LLC?

• US-facing business. A US entity and bank account suit US clients, marketplaces and investors.
• Alternative to a UK company. Some founders compare a US LLC with a UK limited company that registers to sell in the US. For many UK residents the UK company is simpler.

How do you set one up from the UK?

1. Check the home-country position first

   How the UK will tax the LLC and its profit.

2. Choose the state and form the LLC

   Online, through a registered agent.

3. Get the EIN

   Without an SSN or ITIN, by fax, mail or phone.

4. Open a US account

   With a bank or provider that onboards non-resident owners.

5. Keep books and a transfer log

   For Form 5472 and your the UK return.

See how to open a US LLC from outside the US and the best state for a non-resident LLC.

What does the US require?

A single-member LLC owned by a resident of the UK is disregarded for US income tax. If it has no US office, employees or dependent agents, it usually has no income effectively connected with a US business and owes no US income tax. It must still file Form 5472 with a pro forma Form 1120 each year it has transactions with you, by fax or mail; the penalty for each missing form is $25,000. See Form 5472 and yearly filings for a foreign-owned LLC.

The US-UK income tax treaty can remove US tax on business profits that are not attributable to a US permanent establishment, and reduce withholding on dividends, interest and royalties, for UK residents who meet its limitation on benefits rules. Treaty relief does not remove Form 5472. See tax treaties and your US LLC.

How does the UK tax it?

UK residents are taxed on worldwide income. HMRC's general view is that a US LLC is a company, separate from its members, rather than a transparent entity, although the Supreme Court in the 2015 Anson case reached a different result on the facts of one Delaware LLC. On HMRC's general view:

• The LLC's profit is not automatically your income each year; distributions may be taxed as dividends when received.
• Anti-avoidance rules on transferring assets abroad can tax UK residents on income arising to a foreign company in some cases.
• If the US taxes you on the LLC's profit as transparent income, UK relief for that US tax may be harder to claim.

From April 6, 2025, the remittance basis for non-domiciled individuals was replaced by a four-year foreign income and gains regime for people arriving in the UK after ten years of non-residence. Check whether it applies to you.

Can managing it from the UK make it a UK company?

Yes. A company incorporated abroad is UK resident for corporation tax if its central management and control is in the UK. A US LLC treated as a company and run entirely by its owner from the UK may be UK resident, and liable to UK corporation tax on its profits, subject to the treaty's tie-breaker rules. This is a key point to settle with a UK adviser before forming the LLC.

How should money move?

Pay yourself from the LLC's US account to your UK account through normal banking channels, and record each transfer. The records support Form 5472 and your self assessment. See taking money out of a US LLC.

What are the common mistakes?

• Assuming HMRC treats the LLC as transparent, the way the US does.
• Running the LLC from the UK without considering central management and control.
• Skipping Form 5472 because there was no US tax.

The general position for every country is in US LLC and tax in your home country.

This guide is general information. It is not tax or legal advice for your situation.