If you're based in the United Kingdom and own a U.S. business, you're among a growing number of UK entrepreneurs launching U.S. entities to access the U.S. market, payments infrastructure, or investors. But one of the most common questions we hear is: do I need to file taxes in the U.S.?
The answer is yes. If you’ve formed a U.S. company—like a corporation or LLC—you are required to file U.S. taxes annually. The IRS doesn’t consider where you live, but rather where the business is incorporated.
U.S. Federal Tax Obligations
What Forms You Need to File (By Entity Type)
C-Corporation
- Form 1120 – U.S. Corporation Income Tax Return
- Form 5472 – Required if 25% or more foreign-owned and there are reportable transactions
Single-Member LLC (Disregarded Entity)
- Form 5472 + Pro Forma 1120 – Required even if there's no income, as long as there are reportable transactions
Multi-Member LLC (Partnership)
- Form 1065 – U.S. Return of Partnership Income
- Schedule K-1 – Provided to each partner
Individual Filing
- Form 1040-NR – Required if you have U.S.-sourced income that is effectively connected with a U.S. trade or business
What Is ECI (Effectively Connected Income)?
ECI includes:
- Services performed while physically in the U.S.
- Income from employees or agents operating in the U.S.
- U.S. rental or real estate income
Simply selling to U.S. customers from the UK does not always trigger ECI. But if you’re physically present or using a U.S.-based team or warehouse, it likely does.
Common UK Business Types That Must File
Some examples include:
- SaaS startups selling subscriptions to U.S. users
- Consultants and contractors with U.S. clients
- E-commerce sellers using U.S. fulfillment centers
- UK companies raising capital from U.S. investors
U.S. Tax Culture vs. the UK
Audits and Financial Statements
In the UK, companies are accustomed to submitting accounts to HMRC and Companies House. In the U.S., most small companies and startups are not audited or required to file formal financial statements unless requested by investors or in rare regulatory cases.
Also unlike the UK, U.S. federal tax filings are private. They are not publicly accessible by third parties, including competitors or the general public. This level of privacy is a key difference that founders should be aware of.
VAT vs. Sales Tax
The UK uses a national Value-Added Tax (VAT) system, which is a consumption tax applied at each stage of production and distribution. Businesses charge VAT on their sales and reclaim VAT on their purchases. The standard VAT rate in the UK is currently 20%.
In contrast, the U.S. uses sales tax, which is:
- Imposed only at the point of final sale to the consumer
- Set and administered by individual states (not at the federal level)
- Applied mostly to physical goods and select services, not digital services or most consulting work
In the U.S., service-based businesses usually do not need to collect sales tax. But product-based businesses—especially those using fulfillment centers like Amazon—may be required to register and file in multiple states depending on where their customers are.
Bookmate does not handle sales tax compliance.
Other Misconceptions
- If the company has no income, it doesn’t need to file – False. U.S. filings are required regardless of revenue.
- Only U.S. residents file U.S. taxes – False. Filing depends on company formation, not your residence.
State-Level Obligations: Delaware and Wyoming
Delaware Franchise Tax (for C-Corps)
- Due: March 1
- Cost: $225–$400+ depending on share structure
- Payment: Online via Delaware Division of Corporations or through your registered agent
Delaware LLC Franchise Tax
- Due: June 1
- Cost: $300 flat rate
- Payment: Same as above
Wyoming Annual Report (for LLCs and C-Corps)
- Due: Anniversary month of formation
- Cost: Starts at $60 based on Wyoming-based assets
- Payment: Online or via registered agent
These are state-level requirements and separate from your federal IRS filings.
Do You Need an ITIN?
You don’t automatically need one just for owning a U.S. company. But if you personally have U.S. source income and must file Form 1040-NR, you’ll need an ITIN (Individual Taxpayer Identification Number). This applies whether you’re paid directly or receive partnership distributions.
Summary
If you're in the UK and own a U.S. business, you’re responsible for U.S. tax filings. The forms you need depend on the structure and activity of your business. Even if no tax is due, non-filing can result in significant penalties.
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