Introduction
UK residents and UK companies can often own a US business without moving across the Atlantic. But formation, tax, banking, licensing and immigration are five separate problems, and solving one doesn't solve the rest.
The right setup depends on your goal. Testing demand needs a different structure from hiring US staff, raising investment, running a regulated financial product or relocating yourself.
The US is a big, crowded market: the SBA counts 36.2 million small businesses.
This guide walks through market planning, entity and state choice, formation and launch, cross-border tax and banking, and hiring and compliance. Treat it as general information and get legal, tax and immigration advice tailored to your business.
Key Takeaways
- Forming a US company is the easy part; licences, tax and banking take longer.
- Choose your entity and state by where you will operate, not by the cheapest filing fee.
- Non-US founders get an EIN by phone or fax, not online.
- Sales tax can arise in several states without an office.
- Owning a US company does not give you the right to work in the US.
Plan Your US Market Entry Before Incorporating
Define what you will actually do in the US
Your intended activity drives everything else. The main options:
- Selling remotely from the UK
- A US subsidiary of your UK company
- Registering the UK company to do business in a US state
- US-based employees or a physical office
- A regulated service, such as money transmission
Each affects liability, tax, licensing and visas. A physical office or a place of management, for example, can create a permanent establishment under the US-UK tax treaty, which brings US tax exposure for the UK company.
Validate demand in one market first
Pick a specific state or metro area before committing. Check customer demand, competitors, pricing, local requirements, staffing availability, insurance, distribution and running costs. "The US" is fifty markets with different rules.
Stage the launch
You don't have to incorporate on day one. Consider:
Selling from the UK to test demand
Using a local partner or distributor
Hiring through a professional employer organisation (PEO)
The IRS notes that a client employer that outsources payroll generally stays responsible for employment taxes unless a certified PEO arrangement applies.
Triggers for a US entity include:
- US employees
- US contracts that need a local counterparty
- Investor expectations
- Banking needs
- A growing local customer base
Fraxtional's Foreign Company U.S. Compliance Support helps international companies work through the legal, contractual, governance and regulatory-readiness side of entering the US.
Choose the Right US Business Entity and State
The four routes
| Route | Typical fit |
|---|---|
| New US LLC | Small operations, simple ownership |
| US C corporation | Venture funding, employee equity |
| US subsidiary of the UK company | Group structures, US hiring |
| UK company registered in a US state | Direct operation without a new entity |
A subsidiary ring-fences US liability. Registering the UK company directly can expose it to US filings and, for some activities, a US return on Form 1120-F.
LLC or C corporation?
Neither is automatically better. A single-member LLC is generally disregarded for US tax, and a multi-member LLC defaults to partnership treatment. An LLC can elect corporate treatment using Form 8832. The federal corporate rate is 21%.
Two cautions:
- A foreign-owned disregarded LLC with reportable transactions must file Form 5472 with a pro forma Form 1120.
- UK tax treatment of the entity can differ from US treatment, so an LLC is not "tax-free" for a UK owner.
Also, nonresident-alien shareholders cannot hold S corporation stock. Investors generally expect a C corporation, usually in Delaware.
Choosing the formation state
Look at where you will operate, where staff and offices sit, investor and customer expectations, licensing, annual costs and franchise taxes. Formation fees alone can mislead:
| State | LLC filing | Recurring cost |
|---|---|---|
| Delaware | $110 | Annual LLC tax, due 1 June |
| Wyoming | $100 | Greater of $60 or $0.0002 per dollar of Wyoming assets |
| Florida | $100 | Annual report $138.75 |
| Texas | $300 | Franchise tax reporting; information report still required |
| California | $70 | $800 annual LLC tax |
Convert dollars at the current rate when budgeting in pounds.
Forming in one state, operating in another
Incorporating in Delaware but running the business from Texas usually means foreign qualification in Texas, plus registered agents in both states and local tax exposure. The "cheap" state can end up costing more in administration.
For regulated businesses, money-transmitter licensing generally turns on where your customers are, not where you incorporated.
Pre-filing checklist
- Check the name in the state database.
- Search the USPTO trademark database; USPTO guidance also recommends checking state registries, domains and common-law use.
- Appoint a registered agent with a physical street address (a mailbox won't do in Texas).
- Confirm business address requirements.
- Document owners, managers and any indirect owners; states and banks often ask for the full chain.
- Check beneficial ownership reporting. Under FinCEN's rule effective 14 August 2026, US-created entities are exempt, while certain foreign entities registered to do business in the US remain reporting companies.
Complete Formation and Launch Requirements
The formation sequence
- Confirm or reserve the name.
- Appoint a registered agent.
- File articles of organization or a certificate of formation.
- Adopt an operating agreement or bylaws.
- Record ownership.
- Keep every formation document.
Getting an EIN without a US number
Use Form SS-4. International applicants with no US residence or principal place of business cannot apply online. The IRS instructions allow phone or fax.
If your foreign responsible party has no SSN or ITIN, enter "foreign" or "N/A" on line 7b. Fax applications are typically processed within four business days.
Post-formation registrations
Most businesses need a mix of federal, state, county and city licences, and requirements depend on activity and location. Check:
- Business licences and professional permits
- Sales tax registration
- Employer taxes and payroll accounts
- Industry registrations
Banking and payment onboarding
Expect to supply:
- Formation records and EIN confirmation
- Ownership details; banks must identify natural persons holding 25% or more of equity, plus a control person
- Passport or other identification
- Registered-agent details and proof of address
- A description of expected activity
Some digital providers accept US companies with founders abroad, though policies vary by provider. Fraxtional's audit reports can supply third-party validation for banking partners and payment processors. Its sponsor bank service helps fintechs prepare for onboarding.
Launch-readiness checklist
- Separate business finances and accounting software
- US contracts and terms of service
- Privacy documentation
- IP assigned to the company
- Commercial insurance
- Payment processing
- Record retention
- A calendar of filings and renewals
Manage Tax, Banking and Cross-Border Finances
US and UK obligations side by side
You may owe federal, state and local tax in the US while also reporting in the UK. Since 6 April 2025 the remittance basis is abolished, so UK residents are generally taxed on worldwide income as it arises.
Foreign tax credit relief is limited to UK tax on the same item. Your residence is set by the Statutory Residence Test, which includes a 183-day test.
Cross-border issues to raise with advisers
- Permanent establishment: under the treaty, a fixed place of business, including a branch or office, can qualify.
- Transfer pricing: HMRC applies the arm's-length principle to connected-party charges.
- Controlled foreign companies: UK CFC rules can apply when statutory conditions are met. They are not an automatic charge on every UK-owned US subsidiary.
- Withholding: without a Form W-8BEN or W-8BEN-E, payments to foreign persons may face 30% withholding. The treaty covers dividends, interest and royalties, but confirm rates with an adviser rather than assuming.
Sales tax is not VAT
US sales tax is generally charged at the final sale and varies by state and locality. VAT is collected at each stage with input recovery. Obligations can arise in several states through economic nexus:
| State | Threshold |
|---|---|
| South Dakota | More than $100,000 gross sales |
| Florida | More than $100,000 taxable remote sales |
| Texas | $500,000 safe harbour |
| California | $500,000 in tangible merchandise sales |
Marketplace sales often count toward thresholds, and marketplaces may collect for you. Check each state's rules.
Opening a bank account from the UK
Compare traditional banks and digital providers on:
- Approval checks and onboarding requirements
- Fees, USD receipts and foreign exchange costs
- Access limits and payment-processor compatibility
Nacha estimates 80% of ACH payments settle within one banking day. International wires are slower; one provider quotes up to four business days incoming.
Finance and compliance calendar
Track:
- Federal and state tax returns and estimated payments
- Payroll filings and sales tax returns
- Annual reports and franchise taxes
- Licence renewals
- Month-end close and intercompany reconciliations
- Documents for audits or investor reviews
Hire, Relocate and Maintain Compliance in the USA
Ownership is not permission to work
Business visits, remote management from the UK and working inside the US are treated differently. Common routes include:
- E-2: The Department of State lists the UK as a treaty country; USCIS requires investors to develop and direct the enterprise
- L-1: Needs a qualifying relationship with a foreign company
- H-1B: Suits specialty occupations
- B-1: Temporary business visits only
Check current official guidance and get immigration advice.
Hiring US employees
Expect to deal with:
- State payroll registration and unemployment insurance (run state by state)
- Wage and hour rules and worker classification
- Anti-discrimination law
- Workers' compensation and benefits
- Paid leave; paid family and medical leave programmes exist in 13 states and DC
Contractor classification rules are in flux, with the Department of Labor proposing in February 2026 to replace its 2024 rule. Confirm the current position.
Regulated businesses: fintech, crypto and embedded finance
Financial products add layers that ordinary formation doesn't cover:
- FinCEN MSB registration, generally within 180 days of establishment, plus a written risk-based AML programme
- Separate state money-transmitter licensing, with uneven implementation of the model law across states
- Sanctions controls, customer due diligence and consumer protection (UDAAP, Regulation E)
- Privacy and cyber obligations, including the FTC Safeguards Rule
- Sponsor-bank oversight; regulators have taken action over banks' fintech-partner risk management
Many firms go live in one or two states while other applications are pending. A full-time compliance executive is expensive for an early-stage company. Fraxtional provides fractional CCO, CRO, BSA Officer, CAMLO and MLRO leadership, scaling from a few hours a week to full coverage.
Its licensing support runs through pre-filing strategy, filing preparation and post-filing compliance.
Conclusion
A US launch is a chain of linked decisions:
- Validate the market
- Pick the structure and state
- Complete registrations
- Set up financial controls
- Plan for people and compliance
Before you file, have a qualified US and UK legal or tax adviser review your structure. Then write a launch checklist with a named owner for every registration, deadline and obligation.
Frequently Asked Questions
Can a UK resident start a business in the US?
Generally yes. You can own or form a US business without US residency. Formation rules, tax, banking checks, licences and permission to work in the US are separate matters.
Do I have to pay UK tax on income earned from a US business?
It depends on your UK tax residence, the UK company's involvement, the US entity structure and the type of income. Get coordinated HMRC, IRS and treaty advice.
What is the best business to start in the US with $100,000?
It depends on your skills, demand, operating model, regulation and customer acquisition costs. Compare a low-overhead service or digital model with any capital-intensive or regulated opportunity.
Do I need a US visa to start a business from the UK?
Not to own the company or manage it remotely. Working in the US needs an appropriate route, which depends on your activities, investment, existing UK company and role.
Should I form an LLC or C corporation in the US?
LLCs offer flexible administration; C corporations suit investors and equity plans. Tax outcomes differ between the US and UK, so take UK-US tax and legal advice first.
