Hotscot

i want to move home at some point so Mrs H. can obtain UK citizenship but I'd prefer to keep my small business running in the U.S.

Just wondering if anyone has done this and what their approach was.

Cheers

sallysimmons

Yes!

Ours is a service business and our employees are freelancers.

We kept the website hosted in the US and kept our US freelancers. But we had to register the business as a UK business and we pay taxes here. We also had to register for VAT even though most of our clients are in the US. This is something to do with the freelancers we employ - apparently the cost of them puts us over the VAT threshold. This means we now have to charge VAT to any UK/European clients (which we didn't have to do when we were an American business).

Your taxes will become quite complicated and expensive for the first few years - this is by far the biggest hassle we had. You have to file in both countries, but the US will require you to file a lot of extra paperwork because you will own a foreign business.

Other than the tax side of things, we haven't really had too many issues. We use Paypal to accept payments. It's not perfect but it allows us to bill our clients in US dollars.

One other problem - we did have a business bank account in the US with Chase, but they closed it last year without giving us any choice. They said foreign residents couldn't have a US business bank account. This has complicated our money management and it's why we now have to use Paypal for all our payments.

I'd say that's the biggest issue you need to iron out - how you will accept payments without your US clients getting charged foreign exchange fees.

Hope that helps.

Hotscot

Thank you...I really appreciate that information.

Could you clarify why you had to register your U.S. business as a UK business? Does the UK even need to know you have a U.S. business? (As long as you pay your proper taxes.)

It also troubles me that Chase closed your account. I'll need to ask Wells Fargo about that.

Pulaski

If you have a US corporation, whether inc or LLC, and maintain a US address (even if a UPS mailbox using their street address and "Unit #" (not "Box #") I don't see a problem.

Being a proprietor of an unincorporated business, and/or trying to use an overseas address, I can see could cause an issue.

penguinsix

I believe there is a special form for a US corporation that is majority owned or controlled by a foreign person. Don't forget about that when you do your paperwork.

sallysimmons

In order to pay taxes here, you need to be registered with HMRC and, if you're living here, you have to pay UK taxes (which generally then means you don't pay in the US although you still have to file). I can't see how you can register without registering as self-employed or, as in our case, as a UK partnership, but I'm sure there are many things I don't understand!

I believe there are ways to retain a US business address for the purposes of keeping a bank account, but it all seemed a bit shady to me. It may be easier to investigate that from over there - we had been here 18 months when Chase changed their policies without warning.

Even if your current bank says they're OK with it now, just be warned that they can change their minds at any time.

Our situations and businesses are probably very different, so my experience may be no use at all.

The good news is that our living here has not affected our sales and hasn't seemed to concern clients.

Good luck!

Pulaski

There are multiple options with advantages and disadvantages, as well as costs and practicalities. If you are unincorporated then you would undoubtedly be self employed in the UK, but if you have a US corporation (certainly an "Inc", not sure about how HMRC sees an "LLC") you could pay yourself a salary or dovidends, and be taxed only on the salary/dividends in the UK, keeping the rest of the profits in the US corporation. The obvious downside to this is that the US corporation pays taxes, and then you pay taxes on your salary / dividends.

If you are a USC and have to complete a US tax return, then an LLC or S Corp will get rolled into your personal tax return in the US and I can't begin to imagine how that would be unraveled for calculating taxes due in the UK, if that is where you are living.

Honestly this is a complete minefield that warrants paying for advice from a suitably qualified and experienced tax accountant, and one where consulting one of the larger, well known Chartered Accountants in the UK would probably be a worthwhile investment as they have the experience of international tax matters.