# Uk limited company advice



## Lucky20 (Mar 19, 2014)

Morning,

I am a American and have been in the UK for almost 10 years. The last year I worked here was 2008, so that is the last time I filed US taxes. My British husband would like to start his own company with me. 

I started reading the US tax laws and are confused if me being part of it would make us pay more tax. I at first thought I could just do my taxes as before with the Foreign Tax Exclusion as I would be working, however I would be listed as a director.

Any advice would be good as he was looking to set the company up soon.

Thanks,
Red


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## Bevdeforges (Nov 16, 2007)

That's actually a good question. The FATCA laws call for special reporting for "certain corporations" where a "US person" holds more than 10% of the stock or is a "director." However, I've searched pretty far and wide and still have not come up with what they mean by "certain corporations" - to my mind, that means there are exceptions.

Theoretically, you shouldn't wind up paying more taxes - but the reporting requirements for those "certain corporations" can get pretty hairy. That includes having to file a fully translated set of financial statements for the corporation (i.e translated as to currency and US GAAP - generally accepted accounting practices) each year.

OTOH, it may all depend on precisely what sort of corporation you set up. Although they don't define "certain corporations" on the form where you're supposed to declare your "US persons" and provide all the accounting information, on other (related) forms, they give a list of what business entities they consider the equivalent of a US "corporation" and it seems that they are only interested in public corporations (i.e. one where stock is traded on the stock market), not small, closely held companies, especially those where the ownership interest is not held "for investment purposes" (which one would assume would include a family owned business where both spouses are making their living from the company).

You would still be entitled to take the Foreign Earned Income Exclusion for your salary income, even as a "director" of the company, as long as the amount you are being paid corresponds to compensation for actual work you do for the business.

An overview of the FATCA requirements is here: Summary of FATCA Reporting for U.S. Taxpayers

Wish I could say something more definite, but that seems to be the state of affairs at the moment.
Cheers,
Bev


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## Lucky20 (Mar 19, 2014)

Thanks Bev,

I was thinking that as well about "certain companies'. One part of the FATCA says Reporting thresholds are having over $200,000 of specified foreign financial assets. Which we do not think we would be even close to. Honestly I am confusing my self jumping from Pub to Pub, I got yellow sticks everywhere.

We are looking to do a closed limited company developing IOS app's, and consulting to cover cost until the app part generated enough income to day to day living. Maybe with luck I could turn into one of those FATCA worth millions. 

Thank you for getting back to me, reading the Pubs is one thing, understanding them well that's different.

Red


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