If you’re wondering how to start an LLC, the UK provides an attractive environment for business growth, brand enhancement, and tax efficiency.
In this step-by-step guide, we’ll walk you through everything you need to know to start an LLC company.
What is an LLC?
A Limited Liability Company (LLC) is a type of business in the United States that combines characteristics of both corporations and traditional partnerships. However, in the UK, the LLC structure doesn’t exist. The equivalent would be the Private Limited Company (Ltd.), which is very similar to the American LLC.
Differences Between an LLC and an Ltd in the UK
Although the terms LLC and Ltd. are often used interchangeably, they’re not exactly the same, as they belong to different legal systems. An LLC is part of the U.S. legal system, offering flexibility in management and tax options. It can be taxed either as a corporation or as a ‘pass-through’ entity. On the other hand, an Ltd. is the UK’s version of a limited company. An Ltd. is more structured and subject to more formal corporate rules. Both offer limited liability, but each country sets its own legal, tax, and management rules in order to start an LLC or a Ltd company.
Setting up a Company in the UK
If you want to start a company in the UK, the first step is to register it with Companies House. You can complete this process online from £12, and it usually takes 24-48 hours. You’ll need to provide basic information such as:
- Name of the company.
- Registered address in the UK.
- Details about the directors and shareholders.
- Memorandum and Articles of Association.
Once the company is set up, you’ll need to register with HMRC (Her Majesty’s Revenue and Customs) to fulfill your tax obligations. You can complete this process online as well.
Finally, you’ll need to open a business bank account in the country. This account helps you manage income, expenses, and taxes separately. It’s possible to open an account even if you’re not a resident, but since Brexit, some banks have stricter requirements and may ask for documents like proof of identity, address, and business registration.
Can You Start an LLC from the UK?
It’s definitely possible to start an LLC in the United States from the UK by following a clear set of steps. First, you’ll need to choose a unique name that includes ‘LLC’ and check its availability. You can verify this on the U.S. Secretary of State website and make sure the name doesn’t conflict with existing trademarks.
Next, you must hire a registered agent in the U.S., which is necessary to receive official legal documents. The agent will also provide a physical address in the U.S., making sure your business complies with local laws. You’ll also need to get a postal address in the U.S., which can be virtual, to centralize all your legal and business correspondence.
The next step is to apply for an EIN with the IRS. This is crucial for tax purposes, opening a business bank account, and hiring employees. Once you’ve got the EIN, you can open a business bank account in the U.S. to manage finances in U.S. dollars. Finally, you’ll need to set up a payment processor like Stripe or PayPal, depending on your business needs.
The process to start an LLC can take around six weeks, depending on how quickly you handle the paperwork and requirements.
Tax Requirements and Obligations
It’s possible to manage both an LLC in the U.S. and an Ltd. in the UK, benefiting from the tax advantages and operational opportunities each country offers. However, it’s crucial to ensure that you comply with all the legal and tax obligations in each jurisdiction. Tax and legal requirements in both countries can be complex.
If you have any doubts about the procedures or specific requirements, you should consult with experts in accounting and business law. This will help you avoid legal or tax issues and ensure that your company stays compliant with regulations in both countries.
Conclusion
If you’ve decided to start an LLC in the U.S. or an Ltd. in the UK, remember that it can be a great strategie for expanding your business internationally, benefit from the tax advantages and opportunities each country offers. While the formation process is relatively simple, it’s crucial to meet all tax and legal obligations to avoid future complications. By following the right steps and staying informed, you can successfully manage your business in both countries, maximizing your benefits.
