Mr_T

Hello,

I touched down in sunny Arizona on Saturday and am now awaiting my green card and SSN. In the UK I do mainly consultancy work for big-4 consulting firms. One of my clients has asked if I would consider doing some work for them remotely. In the UK i work through a limited company which i was just about to shut down.

Is there a way in which i can work for this client and pay myself through 1099?

petitefrancaise

Do you have employment authorisation?

Mr_T

Yes, I have a cr-1 visa

Nutmegger

Unless you specifically want to channel your income through a new US corporate entity, you can just track your income from this source and declare it on your US tax return. Don't forget to file quarterly estimated tax payments.

Mr_T

At the moment i am paid directly to my LTD company which in turn pays me in dividends/salary. Would i just invoice my uk ltd company and pay my US self from there?

Nutmegger

Afraid I don't have personal experience of that situation. I just invoice my clients outside of the country in US dollars and have the money wired directly into my US bank account. However, it does seem that you would not want to involve any kind of UK entity -- just adding an extra layer of complication. If an LLC works better for you, perhaps you would need to set up a US entity and utilize that.

petitefrancaise

I've been dealing with all this lately.

I was recommended this book and it's succinct in it's advice. Told me what I needed to know.
https://www.amazon.com/LLC-Quickstar...hris+cohen+llc

the nearest business entity to what you describe is "s corp".

However as Nutmegger says you can always just put it through as earned income sole proprietor. This is the default if you do nothing about setting up a business structure. If you are going to earn anymore than pocket money though you need to get things reported to the IRS quarterly to make estimated payments.

An LLC startup is easy and cheap - if you earn over $50K then you can elect to be taxed like an S-Corp, you can do it before this but this seems to be the point at which it is worth doing financially... And I think you can change the LLC to an S-corp later.

Getting paid from the UK. Charge them in dollars , get paid in dollars or you start hitting issues with exchange rates and the IRS. Keep it simple and tell your clients that you have to do it this way now.

I am so far from being an expert that I almost didn't reply but that book is good and there is usually loads of good advice going free from the local small business department of your city council

Steve_

If you search on here we've had this thread a million times.

Basically, you set up a company in the US (typically self-employed or use an S-corporation) and you invoice the company in the UK. There's no need to do anything in the UK from a paperwork standpoint unless you physically go to the UK in person to do the work.

If you're self-employed you have to do installment payments after the first year on 1040-ES and the other main forms are 1040 Schedule C and schedule SE.

If you use an S-corporation the corporation has to report on an 1120-S. An S-corporation is a flow-through entity and is the most commonly used method of running your own business in the US, because you can avoid payroll taxes (i.e. FICA) using one. How you do this is by paying out the money the corporation earns as dividends. However it's not in your best interest to not pay any FICA at all as you won't qualify for Medicare or Social Security, so you still have to run payroll, which requires installment payments on Form 941 every quarter and you have to produce a W-2 every year. Most people pay out around $30,000-40,000 as payroll and the rest as dividends.

S-corporation is a federal tax format, actual forms of corporation are made under State law. The corporation has to register with the IRS and get an EIN, that's the first bit, then you can open a bank account for it.

Don't listen to people who say to use a Nevada or Delaware corporation, there's no point to that unless your business has a physical presence in more than one State. (The advantage is that Delaware and Nevada have no State income taxes and do not have an information sharing agreement with the IRS, but any income it earns in Arizona would be subject to Arizona income taxes regardless of where it is incorporated).

If you really wanted to be an idiot, you could register your UK corporation in the US and get it an EIN and file an 1120-F for it every year and get it a payroll account. Technically possible but really stupid for various reasons.

petitefrancaise

Not quite. I have been advised that the IRS requires that the S corp pay you a market rate salary for the job you are doing. You can put 60% of this market rate salary as salary - paying the self employment taxes on this and the remaining 40% as divident. Paying yourself less than the 60% will mean the IRS taking a very close look at your situation. Something to be avoided apparently