Expanding Your UK Business to the U.S.? Here’s Where to Start
One of the first decisions UK business owners face when expanding to the U.S. is choosing the right business structure. The most common options are:
✅ Limited Liability Company (LLC) – A flexible, tax-efficient structure.
✅ C-Corporation (C-Corp) – The go-to choice for startups raising investment.
Each has distinct tax implications, ownership rules, and scalability potential, so choosing the right one is critical to your long-term success in the U.S.
What’s the Difference Between an LLC and a C-Corp?
Both LLCs and C-Corps offer liability protection, meaning your personal assets are separate from business liabilities. However, they operate very differently in terms of ownership, taxation, and investor-friendliness.
| Feature | LLC | C-Corp |
|---|---|---|
| Best For | Small businesses, consultants, service providers | Startups, high-growth businesses, investor-backed companies |
| Ownership | Flexible ownership structure | Stock-based structure |
| Taxes | Pass-through taxation (profits go to owners) | Double taxation (corporate + shareholder tax) |
| Raising Investment | Less attractive to investors | Preferred structure for venture capital & fundraising |
| Compliance | Fewer regulations, simple reporting | More complex, requires board, annual filings, and governance |
💡 Key takeaway: If you plan to raise venture capital, a C-Corp is the best choice. If you want a simpler structure with tax flexibility, go for an LLC.
Option 1: Why Choose an LLC?
Pros of an LLC
✔ Pass-Through Taxation – Profits and losses pass through to your personal tax return, avoiding double taxation.
✔ Less Paperwork – No strict governance requirements like a C-Corp.
✔ More Control – Founders have full flexibility over ownership and decision-making.
Cons of an LLC
❌ Not Ideal for Fundraising – Investors typically don’t invest in LLCs.
❌ Self-Employment Tax – Owners pay 15.3% self-employment tax on profits.
❌ State-Specific Regulations – Some states have additional LLC taxes (e.g., California).
💡 Best for: Small businesses, consultants, service providers, or startups that don’t plan to raise venture capital.
Option 2: Why Choose a C-Corp?
Pros of a C-Corp
✔ Perfect for Raising Capital – Investors prefer C-Corps because they can issue stock and offer equity incentives.
✔ Lower Corporate Tax Rate – The U.S. corporate tax rate is 21%, often lower than personal income tax.
✔ Stock & Equity Options – Ability to issue stock makes it easy to bring on co-founders, employees, and investors.
Cons of a C-Corp
❌ Double Taxation – Profits are taxed at both the corporate level (21%) and the shareholder level (dividends).
❌ More Compliance & Reporting – C-Corps require board meetings, annual filings, and formal governance.
❌ More Costly to Maintain – Higher state fees, reporting, and accounting requirements.
💡 Best for: Venture-backed startups, SaaS companies, tech businesses, or any UK company seeking U.S. investment.
Which U.S. Structure is Best for UK Businesses?
🔹 Choose an LLC if:
✔ You don’t plan to raise U.S. investment.
✔ You want a simple structure with lower tax complexity.
✔ You are a consultant, agency, or service-based business.
🔹 Choose a C-Corp if:
✔ You want to attract investors or issue stock options.
✔ You are building a scalable startup or SaaS company.
✔ You plan to raise VC funding in the U.S.
Where Should You Incorporate? Best U.S. States for UK Businesses
Choosing the right state to incorporate is just as important as choosing the right business structure.
Top 3 U.S. States for Incorporation:
✅ Delaware – The best option for startups and investor-backed businesses (most VCs require a Delaware C-Corp).
✅ Wyoming – A great alternative to Delaware for LLCs, with low fees and strong privacy laws.
✅ Florida/Texas – No state income tax, making them attractive for profitable companies.
🚀 Most UK startups expanding to the U.S. incorporate as a Delaware C-Corp because it’s investor-friendly and legally recognized across all 50 states.
Tax Implications for UK Founders in the U.S.
LLC Taxes for UK Owners
• LLC profits are taxed as personal income for UK owners.
• You may owe U.S. federal and state taxes depending on your setup.
• The U.S.-UK Tax Treaty helps avoid double taxation.
C-Corp Taxes for UK Owners
• The corporation pays 21% corporate tax on profits.
• UK shareholders pay U.S. taxes on dividends received (but the tax treaty reduces the rate).
• If you don’t live in the U.S., you might avoid self-employment taxes.
💡 Pro Tip: Work with a cross-border accountant to optimize taxes for both U.S. and UK laws.
How to Register Your U.S. Business as a UK Founder
✅ Step 1: Choose LLC or C-Corp based on your goals.
✅ Step 2: Pick your state of incorporation (Delaware is best for most).
✅ Step 3: File formation documents (use services like Stripe Atlas, Clerky, or a U.S. lawyer).
✅ Step 4: Get an EIN (Employer Identification Number) for banking & tax purposes.
✅ Step 5: Open a U.S. business bank account (Mercury, Brex, or traditional banks).
🚀 Canyonstone Partners helps UK businesses set up in the U.S. with expert-led incorporation, banking, and compliance support.
Final Thoughts: Making the Right Choice for Your Expansion
Expanding to the U.S. is a major growth opportunity, but choosing the wrong business structure can create tax headaches and limit funding options.
📌 Key Takeaways:
✅ An LLC is best for small businesses & non-investor startups.
✅ A C-Corp is the right choice for high-growth startups & VC-backed companies.
✅ Delaware is the #1 state for incorporation, especially for startups.
✅ U.S. tax laws are complex—work with experts to avoid costly mistakes.
💡 Need help choosing the right U.S. business structure? Canyonstone Partners specializes in guiding UK businesses through seamless, stress-free U.S. expansion.