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Nerw Permanent Resident. What to do with UK Business?

Nerw Permanent Resident. What to do with UK Business?

Old Apr 4th 2012, 7:57 am
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Default Nerw Permanent Resident. What to do with UK Business?

Hi everyone, advice and guidance GRATEFULLY ccepted for the following:

Here the Situation
I've just become a Permanant Resident. In the UK to tie up loose ends and sell house in the next month.

My USC wife and I run a small Coaching Business in the UK (a limited company), coaching people by phone and via online self-coaching modules.

We're moving to California (in May), where we will continue doing the same type of work, as well as me being a 'Speaker' and promoting my recently published personal development book.

We have given a license to two companies (ex-clients of ours) to continue our Coaching presence in the UK. They will pay us a commission each month of their Sales.

Here are the Questions
1. Do we keep the Business 'active' in the UK, as well as starting up in the US?
...or just do everything from the US (being paid from the UK on, say, Paypal) and just keep the company name registered in UK?

2. We're planning to become Sole Traders, as we don't intend to employ anybody in the US. Any other suggestions?

3. Has anybody got personal experience of having done the same thing...and can help with any other issues that we should be aware of and/or address before moving over?

Thank you in advance for all your help.
Best wishes
Anthony
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Old Apr 4th 2012, 12:54 pm
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Default Re: Nerw Permanent Resident. What to do with UK Business?

Originally Posted by AntMcG View Post
1. Do we keep the Business 'active' in the UK, as well as starting up in the US?
...or just do everything from the US (being paid from the UK on, say, Paypal) and just keep the company name registered in UK?
You can do do both, or either. How you work your business is entirely up to you. What is your ultimate goal? If it's to consolidate, then I suggest it's less difficult if you run everything from the US.

Hopefully, other members will have more suggestions.

Ian
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Old Apr 4th 2012, 1:04 pm
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Default Re: Nerw Permanent Resident. What to do with UK Business?

I agree with Ian. Since you're a US PR now, you don't have to adhere to any special business restrictions either in the USA or the UK, that I'm aware of. You can run it however you want. You might want to run all your scenarios by a tax person in the USA, to see how your UK business will affect your US tax return. But wait until after April 17 to contact a tax rep...they are swamped right now! LOL

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Old Apr 4th 2012, 6:17 pm
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Default Re: Nerw Permanent Resident. What to do with UK Business?

Originally Posted by ian-mstm View Post
You can do do both, or either. How you work your business is entirely up to you. What is your ultimate goal? If it's to consolidate, then I suggest it's less difficult if you run everything from the US.

Hopefully, other members will have more suggestions.

Ian
Yes - our plan is to consolidate our business to where we will be.

Thanks Ian, Less difficult sounds good

I suppose there's a feeling of 'better the devil you know...' but then again we ARE moving our life to the USA so we may as well do it properly!

Do you know if the tax liability is better in California than in the UK, where we can pay 'minimum' tax and take dividends from the company? Does soemthing similar exist in California?
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Old Apr 4th 2012, 6:38 pm
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Default Re: Nerw Permanent Resident. What to do with UK Business?

Originally Posted by AntMcG View Post
Do you know if the tax liability is better in California than in the UK, where we can pay 'minimum' tax and take dividends from the company? Does soemthing similar exist in California?
Sorry... California tax liability is out of my depth. I barely understand Kentucky tax liability - and I've lived here for 14 years now!

Ian
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Old Apr 4th 2012, 7:07 pm
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Default Re: Nerw Permanent Resident. What to do with UK Business?

While I realize that there is a desire to "tidy up loose ends" this sounds like something that doesn't need to be done immediately.

Why not leave the UK business arrangements as they are for now and review the situation in 6 months or a year once you have started to get yourself established in the US and have a better idea of how things are going to work out?
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Old Apr 4th 2012, 7:21 pm
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Default Re: Nerw Permanent Resident. What to do with UK Business?

Originally Posted by AntMcG View Post
Yes - our plan is to consolidate our business to where we will be.

Thanks Ian, Less difficult sounds good

I suppose there's a feeling of 'better the devil you know...' but then again we ARE moving our life to the USA so we may as well do it properly!

Do you know if the tax liability is better in California than in the UK, where we can pay 'minimum' tax and take dividends from the company? Does soemthing similar exist in California?
Under US tax law, there are three types of limited liability companies, a LLC, a S corporation, and a C corporation. Only C corporations are allowed to give out qualified dividends (reduced tax rate of a maximum of 15%) but the company is accessed a corporate income tax before dividends are paid. A LLC and a S corporation have profits taxed as earned income (normal individual tax rates).

The primary differences between the types of companies is tax loopholes.
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Old Apr 5th 2012, 3:18 am
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Default Re: Nerw Permanent Resident. What to do with UK Business?

IRS FORM 5471

This is often forgotten by expats who are now filing US taxes, but it is a real pain in the butt.

If you own >10% of a foreign company (basically--the actual test is a bit more complex) then you need to file IRS Form 5471.

http://www.taxmeless.com/5471.htm

(note 5472 covers foreigns owning US companies).

The US expats in the UK has a special section on taxes that might put you in touch with some specialists based in the UK before you leave.

http://talk.uk-yankee.com/

When it comes to cross-border business ownership rules, you really start to enter the world of needing professional tax advice, sorry to say.
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