UK tax advice on founding and contracting for a US C-corp

[jamesbrown]

provide some initial guidance without charging £1500+

Depending on what you mean by "initial guidance", the first thing to understand is that £1500+ is peanuts for advice on US-UK taxation. You can probably achieve only one of the two following outcomes at the same time: 1) no lube needed; and 2) little money spent.

[eek]

This is exactly the type of thing Stripe Atlas: Start a business with our startup toolkit was designed to do.

I would go and look at the details there as it contains a whole pile of relevant information.

Once you've read everything appropriate then would be a good time to decide if you need tax advice or not. For the moment I really don't think you do.

Edit to add - Stripe Atlas: Founders' Guide to equity has the details you probably need.

[alpe19]

This is exactly the type of thing Stripe Atlas: Start a business with our startup toolkit was designed to do.

Yes, we would be using Clerky for that. From an initial look, Clerky and Stripe Atlas seem very similar. The only problem is that these platforms standardise and provide support for the incorporation process in the US, but have very little, if anything, for non-US founders or contractors.

[alpe19]

Thanks, everyone, for the feedback. It really looks like I should get advice before signing anything. I find particularly concerning that some of you were put off in similar circumstances by the complexity of this matter: while I am willing to invest my time in this venture, knowing that it may not succeed, I could not accept to risk what I have personally earned with sacrifices until now (house, investments, etc.).

[eek]

Yes, we would be using Clerky for that. From an initial look, Clerky and Stripe Atlas seem very similar. The only problem is that these platforms standardise and provide support for the incorporation process in the US, but have very little, if anything, for non-US founders or contractors.

If they are incorporating in the states and not planning to do anything else there is little point doing much about it as I don’t believe there is any solution that will help you here beyond (if it works out) heading to Portugal or somewhere where international income is subject to minimal or zero tax rates.

[alpe19]

Thank you very much for the info. Because of my ignorance on this matter, I was thinking this would be much simpler. I really appreciate your feedback. I think my only option is to get proper advice from a UK/US tax advisor and figure out with them if an arrangement exists that does not put me personally at risk.

Thanks again, have a nice day!

[eek]

Thank you very much for the info. Because of my ignorance on this matter, I was thinking this would be much simpler. I really appreciate your feedback. I think my only option is to get proper advice from a UK/US tax advisor and figure out with them if an arrangement exists that does not put me personally at risk.

Thanks again, have a nice day!

At risk of what? This is the uk, you end up with a set of shares assuming it all works out and they vest correctly and tax will be due on the capital gain when you sell them.

personally you are worrying too much about something that in all likelihood won’t ever come off. I would be way more concerned if I was joining a firm 6-12 months in than I would be starting a business as a joint shareholder.

[alpe19]

Based on the thread I linked before, I understood that section 431 election may not apply to a contractor and, therefore, I would have to pay also income tax to HMRC on the value of the shares when they vest. Is that not the case? Thank you very much

[eek]

Based on the thread I linked before, I understood that section 431 election may not apply to a contractor and, therefore, I would have to pay also income tax to HMRC on the value of the shares when they vest. Is that not the case? Thank you very much

But you miss the fundamental difference.

he was working for the shares.

you are buying them up front and vesting is being done in a different way so as you are not working for the shares, your issue is different.

in your case you are buying the shares when you begin but the company has a legal right to buy (all or some of them) them back at par if you fail to meet the vesting criteria.

founders shares work differently to employee shares and that other poster’s issue was that he was neither a founder nor an employee.

so go and get advice if you want but make 100% sure of the questions you are asking because the devil here is in the detail and you’ve got yourself confused.

[alpe19]

I see, I am probably confused because the Restricted Stock Purchase Agreement submitted to me states that the Company would be entitled to repurchase the stock at par value in case of termination of Continuous Service Status for any reason, so I assumed that this meant that I would be receiving the stock as compensation for my service to the company (i.e. my work as a contractor). Moreover, in the contractor agreement that I have been sent it is stated that "Contractor shall be paid solely in equity securities of the Company, subject to vesting and the other terms and conditions set forth in the Common Stock Purchase Agreement between Contractor and the Company", which again seems to associate the shares I would receive to my activity as a contractor.