Incorporating in the USA (as subsidiary)

[willendure]

Hi,

There are a number of platforms and opportunities for taking on contract work in the USA, but the yanks generally won't deal with non-US based companies, even if they are happy with the timezone difference etc.

To that end, I have been thinking of incorporating a subsidiary in the USA and having a 'virtual office'. The idea would be that the US based LLC would be 100% owned by my UK company. It would also have a US bank account. I believe these things are entirely possible to do, even though I am not a US citizen or green card holder. Running a US company can also open the door to obtaining a green card further down the line.

Has anyone experience of doing this? I am interested to hear about it, and also get an idea of the costs involved in incorporating, and what to expect in terms of annual costs of running a small business in terms of having the accounts prepared each year. If its likely to be of the order of a few $K per year, then I think it is quite viable.

[willendure]

Seems that an LLC is a bad choice for a subsidiary as it is not really intended to be used as such and does not align well with the tax treaty - so double taxation would be applied at a 30% rate. A subsidiary should generally be a C corp, and that is not really the right vehicle for a small contracting entity. I will also look into the possibility of creating an LLC as a non-citizen but owned by me personally. That might work better as at this stage I am really just looking to test the water.

[WordIsBond]

but the yanks generally won't deal with non-US based companies

Curious. Have never encountered this.

[willendure]

Curious. Have never encountered this.

Some of the platforms I am interested in, like say AWS Marketplace, need a US business bank account, for which I need a US corporate entity. Would seem risky to work outside of a limited liability structure especially given that lawsuits are more common - if working as an individual I could literally lose my shirt if things went wrong.

Curious too though, have you contracted directly for US businesses whilst based in the UK? Did you do so as an individual or through a UK ltd company? I am also thinking a UK ltd might be suitable as a way of testing the water.

[Scruff]

Some of the platforms I am interested in, like say AWS Marketplace, need a US business bank account, for which I need a US corporate entity. Would seem risky to work outside of a limited liability structure especially given that lawsuits are more common - if working as an individual I could literally lose my shirt if things went wrong.

Curious too though, have you contracted directly for US businesses whilst based in the UK? Did you do so as an individual or through a UK ltd company? I am also thinking a UK ltd might be suitable as a way of testing the water.

If you are a member of IPSE, phone them and ask them - they have IPSE US and should be able to assist?

[willendure]

If you are a member of IPSE, phone them and ask them - they have IPSE US and should be able to assist?

Yes, IPSE member, good idea.

[SuperLooper]

Some of the platforms I am interested in, like say AWS Marketplace, need a US business bank account, for which I need a US corporate entity.

Set up a Transferwise borderless account. Then you have a US bank account. Simples.

This is how my US clients pay me: from their perspective it's a domestic transfer into my UK company's US account.

[WordIsBond]

Some of the platforms I am interested in, like say AWS Marketplace, need a US business bank account, for which I need a US corporate entity.

False assumption. Transferwise borderless banking will handle this for you. They give you a US routing number and account number and a UK sort code and account number on this end, if you need one. Your US client pays into the US account, you transfer the funds, then send them from your TW account to your normal UK account.

Would seem risky to work outside of a limited liability structure especially given that lawsuits are more common - if working as an individual I could literally lose my shirt if things went wrong.

Wise assumption.

Curious too though, have you contracted directly for US businesses whilst based in the UK? Did you do so as an individual or through a UK ltd company? I am also thinking a UK ltd might be suitable as a way of testing the water.

Have done, am doing so. Most of what I'm doing right now is US.

UK Ltd. I did have a US bank account, won't bore you with the details, because Transferwise is a far superior setup to what I had to do originally. Just use them, or if any competitors have come out with something similar to Borderless Banking. Nothing magical about TW but I like them, very easy to set up and use, solves the problem. I don't know about any competitors but I haven't been looking.

Only drawback -- funds left in TW aren't really protected by FSCS. So as soon as I'm paid, I immediately pay out any US subcontracting fees I have lurking out there (yes, I use US subcontractors occasionally), and then immediately convert the funds and transfer them to my business account. If you want to leave US funds in TW, either because you don't like the exchange rate at the time they come in or because you have US payments that will be coming due, you need to know that they are at risk.

That said, the risk is probably not high. I talked to some contacts in the know before ever going with TW. The feedback I got was it is a very solid group run by legit people who know what they are doing and have a good reputation. FWIW. I still never leave funds in it.

[willendure]

Thanks for the very helpful advice above.

I was also wondering, if trading under a UK Ltd. in the US, are you not subjected to witholding tax at the 30% rate? But I think this can be redueced to zero by filling in Form W-8BEN-E, and giving that to any clients. When signing up to AWS marketplace I was directed towards completing this form.

[SuperLooper]

Thanks for the very helpful advice above.

I was also wondering, if trading under a UK Ltd. in the US, are you not subjected to witholding tax at the 30% rate? But I think this can be redueced to zero by filling in Form W-8BEN-E, and giving that to any clients. When signing up to AWS marketplace I was directed towards completing this form.

I have never been asked about tax withholding or filling in any such form. My UK Ltd is not trading in the US anyway, it's trading in the UK doing business with a US client.