How to Start a Business in the US as a UK Citizen
If you’re a UK citizen, but you’re thinking about starting a business in the US, you’re not alone. There are some great reasons to create a US-based company, and you don’t have to live in the US or be one of its citizens to do that.
Forming a business abroad is a common practice for people in the UK and other countries. Depending on the specific rules and regulations where you live, you might find that another country has rules that are easier to work with. There may also be taxation advantages and other perks of choosing a different location for your registered business.
Why Choose the US?
One of the best reasons to start a business in the US is the access to capital. Venture capital options there are much stronger than they are in the UK, so you’ll be able to have additional opportunities to find funding and investors. The tax rate for companies in the US is also better, you’ll have a bigger pool of talent to choose from, and you’ll have less bureaucracy, as well.
Before you start your US business, though, you want to make sure you’re taking the most important aspects into consideration. You’ll be creating and starting your business remotely, so you have to understand what each step entails. Here are five of the biggest areas to consider, and what you’ll want to think about for each one.
1. Choose a Name, Website, Etc
The first thing you’ll want to do when starting your new company is figure out what you’re going to call it and how customers will find you. There are some great names out there, but a lot of them have already been used by other companies. Finding the right name, and making sure it’s available can take a little while. Once you have that figured out, you’re ready to make it official.
2. Select the Right Legal Formation
Choosing the correct business entity is key to making your US-based business work for your needs and goals. You have a couple of options, which are C corporations and LLCs. While some investors prefer to choose the C Corp due to the way it’s taxed, there are many advantages to the formation of an LLC.
For example, some states have different rules and regulations for LLC formation than others, so you can find a location that works best for you and use it to your advantage. If you choose a C Corp, though, you’ll be limited to what that business entity requires no matter what state you ultimately decide on for registration of your company.
3. Pick a State to Register In
Which state should you choose to form your LLC? Some are better than others when it comes to the requirements for creating a business entity, and how much it will cost you to have your business address there. Texas, Delaware, and Nebraska are popular states to choose from, as they’re considered business-friendly locations.
Filing fees and other expenses are typically lower there, and the “red tape” that’s required to create and operate a business is also often lower. That’s good news for anyone who wants to start a US business from the UK. Since you aren’t there to physically handle any of the steps of setting up your business, you need a state that makes it easy to do online and through the mail.
A big advantage of Texas over other states is that Texas has one of the world’s largest economies. Starting a business there can be a very smart move and give you access to capital and other support that’s not easy to find in other locations. You can file for an LLC in Texas for only $300, and you’ll pay additional fees if you have an attorney or service do it for you.
Like many other states, Texas requires you to have a registered agent with a physical address in Texas before you can file your LLC. There are companies that provide this service, so you can pay a small fee to one of them and know that you’ve met the requirements. Any important tax documents and other legal paperwork will be sent to that agent. You will also have franchise fees and other small expenses for your LLC, but these are less than what most other states charge.
4. File Your Articles of Incorporation
Your articles of incorporation (which some states call an operating agreement or other similar terms) may also have to be filed, depending on the state you choose to register your LLC. This agreement lays out the structure of your business, who owns it and what percentage ownership they have, and other details. While it sounds complicated, it’s actually not difficult to complete. Many states don’t require that you file this, but you should still create one and keep it as part of your records.
5. Get an EIN and Open a Bank Account
No matter what state you choose for registration of your LLC, you’ll need an Employer Identification Number (EIN) from the IRS. There’s no fee for this, and you only need to fill out a simple form. The IRS will then issue you an EIN, and you’ll need that number to open a business bank account. It’s important to keep your business accounts separate from any personal accounts you have.
The Bottom Line for Your New Business
It’s relatively easy for a UK citizen to create a business with US registration and formation. If you’re going to come to the US and operate your business in person, that can get more complicated. However, just operating your business from the UK, with US LLC registration, can be done quickly and conveniently.
When you choose a state like Texas to register your LLC you’ll have lower costs and a simple process that doesn’t take a long time to set up. Then you can get started on operating your business, confident that you’ll have a strong talent pool and significant economic opportunities to help you along the way.
*This is a collaborative post.
