September 21, 2023

How to register a US business from the UK

With Firstbase since:

Are you a startup founder in the UK looking to register a US company? You might assume it’s a complicated endeavor, but it’s actually much simpler than you might think.

This article will detail the various steps and measures you should take to make sure that registering your UK startup in the US goes off without a hitch.

Registering your startup in the US

Incorporating a company in the US follows the same process for both UK residents and US residents. You don’t need a Social Security number to establish a legal entity for your business in the US. There are no restrictions on non-US residents starting companies.

However, the process can differ depending on whether you have already formed a limited company locally. To avoid any legal or financial complications, it’s crucial to make sure you handle all the necessary steps accurately.

Why incorporate in the US?

Access to capital is one of the main reasons UK founders choose to register a US company. In 2020, UK startups raised $16.6 million USD (€14 billion) in venture capital, while the US raised a staggering $130 billion USD (€109 billion) in the same year. This means that the US offers a much larger startup ecosystem and more promising funding opportunities.

US investors often prefer UK companies to incorporate in the US, as it allows them to offer US equity to American employees, providing access to a broader talent pool and offering tax advantages that UK corporate equity does not provide.

Why incorporate in Delaware?

According to Forbes, Delaware saw an additional 250,000 new businesses register in the state in 2020 alone. Since the 1900s, Delaware has been actively incentivizing businesses to stay in the small state with more lenient tax policies, fewer restrictions, and more simplified corporate laws.

Delaware corporations also experience less bureaucracy overall, with the Delaware courts known for their efficiency in corporate legal proceedings. Other key benefits to incorporating in Delaware include expediency, simplified structure, and privacy.

A step-by-step approach

Choose the right entity type: Most investors prefer C corporations for tax reasons. Consider this type of company, as it can have major tax implications for both US-based employees and investors. On the contrary, LLCs provide pass-through taxation, which simplifies tax reporting. 

Small business owners who want both liability protection and tax simplicity frequently select LLCs. The distinct goals and future financial prospects of the business will determine whether to become a C corporation or an LLC. Take our LLC vs. C-corp quiz to find out which one is right for your business.

Select a state: Delaware is usually the go-to choice for incorporating US C-corps, featuring some 70% of Fortune 1000 companies, thanks to its favorable corporate laws and well-established legal system. On the other hand, Wyoming’s privacy protections make it a strong choice for LLCs.

Appoint a registered agent: Your registered agent is responsible for receiving official documents on behalf of your business. You need an in-state registered agent who is available to receive mail during business hours. We offer registered agent services in all 50 states through Firstbase Agent.

Get a US business address: Even if you don't have any employees or offices in the US, you still need an official business address. Firstbase Mailroom provides a business address + mail services in every US state.

File articles of incorporation: These are the documents that a business files with the state to create a corporation. We’ll handle all the paperwork for you if you incorporate with Firstbase.

Obtain an Employer Identification Number (EIN): An EIN, which serves as the tax ID number for all of your tax and payroll-related requirements, is required for your new firm. You can obtain this by applying to the Internal Revenue Service. 

Open a US bank account: A US bank account is crucial for conducting business in the US. This allows for more seamless business operations, eliminating the fuss associated with trading in foreign currency and their attached exchange rates. 

Maintain compliance: Firstbase provides tools to help you accurately track and manage compliance requirements.

What if my business is already registered in the UK?

If your UK company is already established, you may want to utilize the “Delaware Flip” approach to effectively move it to the US by doing the following:

Register a Delaware corporation and transfer ownership: Shareholders of your UK company should agree to contribute all shares, cash, and intellectual property to the new US corporation. For tax purposes, take into account a share repurchase and clearance letter. This calls for a share buyback or repurchase, and you could want to utilize a clearance letter for this so your shareholders won’t have to pay taxes on the money they received from you.

Fulfill reporting requirements: Once your company is incorporated, you’ll need to file an annual report with the Delaware Secretary of State and ensure compliance with the IRS by filing annual tax returns.

The last stage is for your newly formed US-registered firm to buy out your UK company and make it a subsidiary. Your business will no longer be required to maintain a physical presence in Delaware or any other US state.

The final check

Remember that the name you’ve chosen for your existing UK Limited Company may not be available in Delaware. To find out if the business name you want to use to register your new C-corp is available, you can use a Delaware entity search.

In conclusion, forming a US corporation from the UK opens up access to a larger capital market and provides leverage for hiring US talent. The process doesn’t require a US address, but you will need to enlist the services of a registered agent to represent you in the state of incorporation. 

And while your UK tax status remains unchanged, your US corporation will have tax obligations in the United States. With guidance and support from Firstbase, you can navigate the process smoothly and take advantage of the benefits that come with operating a US company.

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