Bringing your business in the United Kingdom to the United States can open up important opportunities. As the largest economy in the world, the US market is a tempting arena for businesses that want to expand beyond their home turf. But getting established in the US requires careful planning, from working through federal, state, and local laws to choosing the right business structure and filing taxes. Each choice you make in this process – such as whether to open a branch, start a subsidiary, or choose a representative office – will shape how you do business in the US.

This guide covers what you should know before registering your UK company in the US.

What’s in this article?

• Can you register a UK company in the US?
  
• What are the benefits of registering a UK company in the US?
  
• How to choose the right US state for your business registration
  
• What are the legal requirements to register in the US?
  
• US tax obligations for a UK company
  
• How to get a US bank account for your UK company
  

Can you register a UK company in the US?

Yes, you can register a UK company in the US. But the process isn’t the same for every company. The US doesn’t have a single, unified company registry like the UK does. Instead, each state has its own rules for registering foreign businesses. Businesses that want to register in the US must first decide which state they’d like to operate in.

Regardless of the state where they register, businesses generally have three main options for their structure in the US. They can establish a subsidiary, a branch office, or a representative office.

• Subsidiary: A subsidiary is a separate legal entity. It has certain protections and flexibility, but it also comes with its own set of administrative burdens.

• Branch office: A branch office isn’t legally separate from your UK company. This means there are fewer initial registration requirements but potentially more risk.

• Representative office: A representative office is the most restrictive option. It’s typically meant for marketing and promotion purposes and is not allowed to generate revenue.

What are the benefits of registering a UK company in the US?

Registering your company in the US can offer many benefits. Here are some potential advantages.

Access to a large, diverse market

• The US has a population of over 330 million as of 2024. Registering your business in the US provides a chance to introduce your products or services to a significant market of potential customers.

• American customers are known for their high spending, which means more opportunities to boost your sales and increase your revenue.

Credibility and brand presence

• Registering in the US can make your company look more credible to American customers, partners, and investors. It signals you’re serious about doing business there.

• Being registered locally can open doors to deals and partnerships, especially with suppliers and distributors that prefer working with local companies.

Tax benefits

• States such as Florida, Nevada, and Wyoming have business-friendly regulations and no or low corporate taxes.

• With a US entity, you might benefit from certain tax treaties through lower taxes on earnings.

Customer and market insight

• Being on the ground in the US helps you track local trends and consumer preferences and customise your offerings accordingly.

• A local presence enables you to respond faster to changes in the market, customer feedback, and new regulations.

Investment and funding

• Having a US base can make your business more attractive to American investors and venture capitalists who want to invest in companies with local footprints.

• Some grants, loans, and funding programs are only available to businesses that are registered in the US. A local presence can give you access to these additional financial resources.

Operational ease

• With a US entity, shipping products to US customers becomes much easier.

• Operating in US dollars can help you avoid the back-and-forth of currency exchange and protect you from exchange rate fluctuations.

Legal advantages

• Registering your trademarks, patents, and copyrights in the US can give you stronger intellectual property protection in a major market.

• Registering as a separate entity such as a subsidiary can safeguard your UK assets from potential legal or financial issues in the US.

Regional expansion

• A US base makes it easier to expand into other North American markets such as Canada and Mexico and grow across the continent.
  

How to choose the right US state for your business registration

Each US state has its own set of rules, taxes, and business environment that can impact your company. Here’s how to find the best state for your needs.

Find your potential customers

• If most of your potential customers are concentrated in a particular state or region, it might make sense to register there. Being closer to your customer base can reduce shipping times, improve service, and help you tap into local market dynamics.

• Some states have unique customer behaviours or needs. Understanding these can help you choose a state that aligns with your business model.

Consider the tax system

• Different states have different tax rates and requirements. Some, such as Delaware and Wyoming, have advantageous corporate income tax systems, which can save you money. On the other side of the spectrum, states such as California and New York might have higher taxes but give you access to larger markets.

• Beyond corporate tax, consider other taxes such as sales tax, franchise tax, and property tax. States including Oregon and Montana have no sales tax, which can be beneficial for some businesses.

Look at legal and regulatory environments

• Some states are more business-friendly, with simple registration processes, fewer compliance requirements, and laws that favour business owners. Delaware, for example, is known for its flexible corporate laws and quick legal processes.

• Some states have more red tape, which could mean more time and money spent on compliance. Understand what’s involved in maintaining good standing in each state, whether that’s annual reports, fees, or specific industry regulations.

Think about your business type and industry

• Certain states have strong clusters for specific industries. For example, tech companies might thrive in California or Texas because of the access to talent and investors, while financial firms might lean toward New York. Choose a state that supports your industry with resources, networks, and favourable regulations.

• Some states offer incentives such as tax credits and grants to attract certain business types. Research different states to find incentives for your industry or business model.

Evaluate your expansion and scaling plans

• If you plan to expand into multiple states, you might still want to start in a state with a favourable business environment. Delaware is a popular choice because it’s easy to register and expand from there.

• Consider what you want your business to look like in five or 10 years. If scaling quickly is part of the plan, choosing a state with minimal barriers to growth can make a big difference.

Weigh the costs of doing business

• Beyond taxes, think about the costs of doing business, including labour costs, rent, utilities, insurance, and more. In Texas and Florida, for example, these costs are often lower than in New York or California.

• Initial filing fees and ongoing compliance costs vary between states. States such as Nevada and Delaware have relatively low costs for maintaining a business entity.

Consider privacy and liability protections

• Some states, including Wyoming and Delaware, have more privacy-friendly rules that don’t require limited liability company (LLC) owners to disclose as much personal information in the public record. This can be helpful if you want to keep certain aspects of your business private.

• Look at how each state handles business liability and corporate veil protections. States such as Delaware provide strong protections that can safeguard business owners from personal liability.

What are the legal requirements to register in the US?

To register a company in the US, you must fulfil a series of legal obligations concerning formation documents, taxes, and business licences. Here’s what to expect.

Figure out your business structure

Before registering, decide on your business structure. Here are your options:

• C corporation (C corp): Choosing a C corp is similar to creating a new company that is separate from your UK business. C corps are a common choice for foreign businesses since, unlike S corporations (S corps), they can be owned by non-US citizens or residents. C corps offer limited liability protection but come with more paperwork and tax filings.

• LLC: An LLC is more flexible than a C corp. It combines the simplicity of a partnership with the benefits of a corporation, including limited liability. It’s a popular choice because it’s easier to manage than a C corp and provides some tax benefits.

• Branch office: This isn’t a separate legal entity but an extension of your UK company. It’s simpler to create, but it might expose your UK business to more liability and tax risks in the US.

• Representative office: Like a branch office, this isn’t a separate legal entity. A representative office comes with more restrictions, such as a prohibition on directly generating revenue. But it can be the easiest option to organise.

Pick the right state for registration

Next, you need to choose the state where you want to register. Each state has its own set of rules, fees, and business environment. Look for business-friendly states such as Delaware with fewer corporate taxes, business-friendly laws, and low fees, and consider your primary market.

Appoint a registered agent

Most states require you to have a registered agent. A registered agent is a designated person or business who receives official documents, legal notices, and government correspondence in the state where you’re registered. The agent must have a physical address in that state; PO Boxes are not permitted. A registered agent can be a professional service, a law firm, or even someone from your team, as long as they meet the state’s requirements.

File your formation documents

If you’re forming a separate legal entity, you must file formation documents. Here’s what to file for each business structure:

• Corporation: File articles (or a certificate) of incorporation with the relevant state agency, usually the secretary of state. This establishes your company’s name, registered agent, and business purpose and how many shares you’re issuing.

• LLC: File articles of organization or a certificate of formation. This is similar to the documents for a corporation but specific to an LLC.

• Branch: No formation documents are needed for a branch. But depending on the state, you might need to register as a “foreign entity” where you want to do business. This process involves filing paperwork and paying a fee.

Get an Employer Identification Number (EIN)

If you plan to hire employees in the US, you’ll need to get an EIN. This functions like a Social Security number for your business. You’ll need it for tax filings, hiring employees, opening a bank account, and most other official business dealings in the US. You can get an EIN by applying directly through the IRS – applying online is the quickest method, but you can also do so by mail or fax.

Register for state and local taxes

Next, you’ll register for state and local taxes. Depending on where you register, there could be several state taxes to consider such as corporate income tax, sales tax, and franchise tax. Each state’s tax system is different, so learn what applies to your situation. Some cities and counties have their own tax requirements too. For example, New York City has its own business tax that’s separate from New York State’s tax.

Get the right permits and licences

You must obtain the correct permits and licences before beginning your business operations. These include the following:

• General business licences: Some states and cities require that a company obtains a general business licence to operate legally. The requirements and fees vary widely, so check with the local city or county government.

• Industry-specific permits: Depending on what you’re selling, you might need additional permits. If you’re opening a restaurant, you’ll need health permits. If you’re selling products, you might need a seller’s permit.

• Professional licences: Certain professions – such as law, medicine, and finance – require state-specific licences to practice. Check what’s needed for your field.

Comply with relevant laws and regulations

Familiarise yourself with federal and state-specific laws regarding employment and customer data, including the following:

• Employment and immigration laws: If you’re planning to hire in the US, you must comply with federal laws on work authorisation, visas, and labour practices.

• Data protection and privacy laws: If you’re handling customer data, you must comply with regulations such as the California Consumer Privacy Act (CCPA).

US tax obligations for a UK company

Your exact tax obligations will depend on how you structure your business and where you operate. First, consider the following:

• How does the IRS view your business? This depends on whether you’ve registered as a C corp or an LLC.

• Will you be taxed on income “effectively connected” to US business activities? This occurs if your UK company is directly operating in the US through a branch office or if it meets the criteria for having a “permanent establishment” under the US-UK tax treaty.

Here’s a closer look at how UK companies are taxed in the US.

Federal income taxes

• If your US entity is a C corp, it will pay federal corporate income tax on its profits. As of 2024, the federal corporate tax rate is 21%.
  
• If you choose an LLC structure, the tax treatment is a bit different. These are typically “pass-through” entities, meaning profits pass directly to the owners, who report them on their personal tax returns. LLC owners who generate income in the US will owe tax on that income, while foreign-owned LLCs that don’t generate income will still need to file informational tax returns each year.
  

State income taxes

• Each state has its own tax rates and rules. States such as Wyoming don’t have a state corporate income tax, while states such as California and New York have relatively high rates. If you operate in multiple states, you might need to file state taxes in each of them, depending on where you have nexus, a legal term for sufficient presence.

• Some states use apportionment formulas to determine how much of your business income is subject to their state taxes. These formulas are based on the percentage of your sales, payroll, and property located in a state.

Withholding taxes on payments to the UK

• The US generally withholds taxes on dividends, interest, and royalties paid to foreign companies. The standard withholding rate is 30%, but thanks to the US-UK tax treaty, this rate can be reduced – sometimes even to zero – depending on the payment type and the circumstances.

• To benefit from the lower treaty rates, you’ll need to submit IRS Form W-8 BEN-E. This form certifies your eligibility for the treaty benefits.

Branch profits tax

• If your UK company operates a branch in the US rather than a separate subsidiary, you might be subject to branch profits tax. This is a 30% tax on the profits from a foreign company’s US branch that mimics the taxation of dividends paid to foreign companies. This can be reduced under the US-UK tax treaty.
  

Sales and use taxes

• If you sell goods or certain services in the US, you might be required to collect sales tax. Sales tax obligations are based on where you have nexus – a connection significant enough to require you to collect and remit sales tax. A physical presence, economic activity, or even having an employee or inventory in a state could create nexus. Nexus is determined at the state and sometimes local level, and the rules can vary widely.

• Use tax is levied on the storage or use of taxable items when no sales tax has been paid. It’s commonly used when customers make a purchase in a state with no sales tax and uses the items in another state that has sales tax. Depending on your business model, you might be required to collect use tax.

Payroll taxes

• If your US entity or branch hires employees in the US, you’re required to withhold and pay federal and state income taxes on their wages. You’ll also need to pay Social Security, Medicare, and federal unemployment taxes.

• Federal Insurance Contributions Act (FICA) taxes are split between employers and employees to cover Social Security and Medicare, with each paying 7.65% of wages.

Franchise taxes and other local levies

• Many states levy a franchise tax on businesses for the privilege of being chartered or doing business in that state. This is not based on income. It could be a flat fee or calculated from the value of the company’s capital or assets in the state.

• Some cities and municipalities also have their own business taxes, such as San Francisco’s Gross Receipts Tax.

Transfer pricing and intercompany transactions

• If you’re transacting between your UK parent company and your US subsidiary or branch, you’ll need to maintain proper documentation to justify your transfer pricing policies. Transfer pricing rules dictate that transactions between related entities must be conducted at “arm’s length,” which means they must be priced as if between unrelated parties. Both US and UK tax authorities scrutinise these transactions to prevent artificial profit shifting and tax evasion.
  

How to get a US bank account for your UK company

US banks have strict requirements for opening a bank account, especially for foreign entities. Here’s what you should know.

Decide on your US business structure first

Before you can open a bank account, most US banks will want to see that your business is officially registered in the US. This means you’ll need to do the following:

• Create a US entity: This could be a C corp, an LLC, or a branch office. Many banks won’t grant an account to a foreign company directly, but an LLC or corporation gives your business a US presence.

• Register as a foreign entity: If you want to operate as a branch under your UK company’s name, you might need to register as a “foreign entity,” depending on the state where you want to do business.

Gather the required documentation

US banks have strict requirements for documentation, especially for non-resident businesses. While the exact documents required can vary from bank to bank, here’s what you’ll generally need:

• Articles of incorporation or organisation: This proves that your business is legally established in the US. If you’re operating as an LLC or corporation, you will file this document with the secretary of state in the state of registration. If you’re registered as a foreign entity, this documentation also shows that you’re allowed to operate in a specific state.

• EIN: Your US business needs an EIN, which is like a Social Security number for your company. It’s issued by the IRS and is important for opening a bank account, filing taxes, and hiring employees.

• Operating agreement or corporate by-laws: Some banks require an operating agreement (for LLCs) or corporate bylaws (for corporations) to verify how your company is structured and who has authority to open bank accounts and sign documents.

• Passport and secondary ID for company directors or signatories: Banks will typically require copies of a valid passport and another form of ID (such as a driver’s licence) for anyone who will be a signatory on the account.

• Proof of address: You’ll need to provide proof of address for both your business and the individuals involved. This can be a utility bill, lease agreement, or similar document.

Choose the right bank for your needs

Some US banks are more open to international clients than others. Here’s a closer look:

• Major banks with international reach: Banks such as Bank of America, JPMorgan Chase, Wells Fargo, and Citibank often have established processes for handling international clients and might be more flexible in handling non-resident businesses.

• Local or regional banks: Smaller banks or credit unions might have more personalised service and potentially lower fees, but they might not have the infrastructure to support non-resident businesses.

• Online banks and fintech solutions: Online banks and fintech companies such as Mercury are geared towards startups and sometimes provide more flexibility for foreign businesses. They often have simpler processes. But before you use them, ensure that they offer all the services you need.

Be prepared for in-person visits

Many US banks require at least one company representative to visit a bank branch in person to open an account. This is to comply with Know Your Customer (KYC) regulations. Contact the bank in advance to find out its specific requirements and schedule an appointment. Some banks might offer to host a video call to verify identities, but this isn’t standard. Bring all the required documents for the in-person visit.

Consider a US address and phone number

Some banks might require – or strongly prefer – that you have a US-based address and phone number. There are services that can help with them:

• US address: Services such as Regus and WeWork provide virtual office addresses that can help satisfy this requirement without needing a physical office.

• US phone number: Grasshopper or Google Voice can provide you with a US phone number that forwards to your UK number.