# Ltd Company in UK -Live in US - Where do I pay taxes?



## S1980 (Jul 3, 2009)

Hello,

I am in need of some advice!
I am a UK citizen and I have just set up my own Ltd Company in Uk- offering freelance design services. I will begin trading in January and my first major client is my previous employer and have negotiated a great contract.

However, my fiancee lives in US and I am currently in the process of obtaining a K1 Visa to move there and marry her next spring....

Therefore, if my company/office is based in UK and my client will pay me in £'s to my UK Bank account - where do I pay tax? I understand that there is a treaty between UK & US to avoid dual taxation. 

If I deregister (P85) from UK next spring - would I pay Personal tax in US and Business/Corporation tax in UK?

Finally, as it will take at least 9 months to receive my Greencard after getting married in April, am I able to keep my business in UK and pay all tax there until I officially receive my Green card and have to move everything over and pay taxes in US?

Ideally, As I have just setup the business, I would like to complete at least a calendar year in UK (2010) before having to close the business in the UK and create an LLC Company in the US and get clients to pay me in $ to a US bank account.

Basically, I need advice on when/where to pay tax and also when would be the most intelligent time to close my business in Uk and pay all taxes up to date and reopen the business in US and start paying everything officially over there....

Any advice would be GREATLY appreciated!! 
Also, if anyone could recommend a tax advisor in US who specialises in these international situations, that would be awesome! I will be living in Las Vegas, Nevada.

Thanks in advance and apologies for the length of this post!!!!
This stuff is soooo confusing!!

: )


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## Bevdeforges (Nov 16, 2007)

Hi and welcome to the forum!

Once you are a permanent resident (i.e. green card holder) in the US, you must declare all income to the IRS and generally you have to pay US taxes - including state taxes, if your state has them.

In your case, since you have an incorporated UK company, your company is still resident in the UK, and thus pays its taxes there. You then have to treat what you take out of the company as "salary" - and that is what is subject to US taxes once you're in the US.

Your "salary" is a deductible business expense for the company, so they should wind up paying taxes on the net result after your pay is deducted. (That's the theory anyhow - I'm not too up to speed on how UK taxes work.) The fact of your being non-resident in the UK will probably complicate the issue a bit so you should check with the tax authority there to be sure.

For US taxes, here's an explanation of how the IRS views LLCs Limited Liability Company (LLC) Basically, you have to elect whether your LLC will be treated as a personal business, a partnership or as a corporation when you first file over there. For a personal business or partnership, you are taxed on the net results of your business. For a corporation, you are taxed only on your salary (and of course any dividends) from the company, with the company having a separate "entity" that must then file statements and pay taxes for itself.
Cheers,
Bev


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## S1980 (Jul 3, 2009)

*Professional advice needed - International tax issues: US / UK*

Thanks very much for the swift feedback Bev! That was really helpful : )

However, I would still like to talk in detail to a tax advisor/ CPA who specialises in International tax issues. It would be great to get some more professional advice... Ultimately, I will also need a CPA to help with the accounting for my future LLC in US anyway...

So, if anyone knows of someone that could be of assistance please contact me...

Cheers
: )


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## Bevdeforges (Nov 16, 2007)

As far as finding a CPA with international tax experience (particularly in both corporate and personal income taxes), your best bet is going to be looking at the Big Four (or however many are left of the old Big Eight these days).

Depending on where you are located in the US, some of the big CPA firms have "small business" or entrepreneur practices. Of course the big firms are pretty pricey with their advice, too.
Cheers,
Bev


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## taxmenot (Sep 22, 2009)

Set up a international business company (IBC) in the Seychelles and do all your business through that. There is no tax for an IBC in the Seychelles. Then only pay yourself a small income from the IBC and place all the rest of your costs on the company. You only pay income tax on money you receive personally.
Also not many people know this, but there is not law on the statutes in the US to complete a tax form, nor is there any law to force anyone to do so. However, if you complete a tax return in the US, by doing so, you give the IRS the right to take your money. However, as a non-US citizen you could also be expelled, but your wife cant. Just a thought.

If you have a company in the UK, it will be taxed only on funds retained in the company as profits, so just make sure there are no profits and you wont have to pay taxes.

Remember you are only required to pay taxes you are legally liable for. Structuring your finances to avoid unnecessary taxation is you right, as determined by the courts in the UK and enshrined in the constitution of the US. Remember the very rich pay few taxes, this is not because they are rich, there are rich because they plan to be, and good financial planning is something anyone can do.


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## Bevdeforges (Nov 16, 2007)

taxmenot said:


> Also not many people know this, but there is not law on the statutes in the US to complete a tax form, nor is there any law to force anyone to do so. However, if you complete a tax return in the US, by doing so, you give the IRS the right to take your money. However, as a non-US citizen you could also be expelled, but your wife cant. Just a thought.


This old chestnut comes up from time to time in the US. It's not true, and the US courts have confirmed the obligation to pay federal taxes any number of times.

You won't be expelled from the US for not paying taxes. The IRS can and will take everything you own and you can be jailed - citizen or not.
Cheers,
Bev


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## Davis1 (Feb 20, 2009)

On April 24, 2008, Wesley Snipes was sentenced to three years in prison for willful failure to file federal income tax returns under 26 U.S.C. § 7203 While defense lawyers urged leniency, prosecutors argued that Snipes should be made an example of because of his fame. Kahn was sentenced to ten years in prison, and Rosile was sentenced to four and half years in prison. As of April 2009, Snipes remains free on bail to work, even traveling internationally, while he appeals his conviction...


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## Zoom (Jul 7, 2008)

Are you sure Bev? Say it ain't so cause I really dig what Taxmenot had to say. From what I understand there is no valid law that says all American Citizens must pay taxes - it's all a "Ghost Law" fake out. I have no problem paying some taxes if I was to get ANYTHING in return (Universal Health Care, Decent Pension, basically blend Sweden and France together) but all these wars and crap just don't interest me.

Now, living in Los Angeles our Brilliant District Attorney has decided to go after 76 year old Roman Polanski on a 32 year old sex crime. What he did was wrong but he has paid a VERY high price since 1978. So this is how it's gonna go - 2 years to get him back here, 2 years until the trial is ready to go, 2 hung juries, 2 non convictions and 20 million dollars down the old waste pipe. He'll be over 80 and all of us will laugh at the idiotic district attorney as he losses the next election. 

Anyway, Seychelles sounds great. I was there in 1989 and the place is like paradise (AKA opposite of here) - Le Digue, that's the spot !!!) I can easily be in charge of cash deposits if I have to go to Seychelles a few times a year. Is it possible to have Taxmenot give me a little more info? Thanks in advance, Zoom


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## Fatbrit (May 8, 2008)

Zoom said:


> Are you sure Bev? Say it ain't so cause I really dig what Taxmenot had to say.


Just because you like the sound of something......doesn't make it true! If you're a USC, you are taxed on your worldwide income.


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## Bevdeforges (Nov 16, 2007)

Zoom said:


> Are you sure Bev? Say it ain't so cause I really dig what Taxmenot had to say. From what I understand there is no valid law that says all American Citizens must pay taxes - it's all a "Ghost Law" fake out. I have no problem paying some taxes if I was to get ANYTHING in return (Universal Health Care, Decent Pension, basically blend Sweden and France together) but all these wars and crap just don't interest me.


I'm about as sure as I can be. While working as plant controller in Chicago, I had one yutz serve me and all the executives in the plant with papers maintaining that "there is no valid law that says all American Citizens must pay taxes" and thus he wanted all his tax withholdings returned to him, and no further withholdings withheld. Cited some wacko book that has been making the rounds for years.

We simply ignored the "order" and turned the matter over to the IRS. They seem to feel they have every authority to extract his "fair share" of taxes from him.
Cheers,
Bev


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## wannabe-expat (Apr 10, 2010)

*what happened S1980*

Hope it's all going well for you S1980

How did you get on? I am in a similar situation.

Cheers




S1980 said:


> Thanks very much for the swift feedback Bev! That was really helpful : )
> 
> However, I would still like to talk in detail to a tax advisor/ CPA who specialises in International tax issues. It would be great to get some more professional advice... Ultimately, I will also need a CPA to help with the accounting for my future LLC in US anyway...
> 
> ...


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## BritishGav (Jan 26, 2010)

I know this thread is pretty old but from my understanding (I work for a UK company who trade in New York) if you have no physical presence in the US you don't have to pay US taxes only UK ones provided you're registered in the UK.

Where it gets complicated is when you have a presence in the US, as far as I recall you can avoid double taxation between UK tax and US Federal taxation, but you still have to pay state tax on top. Making a UK registered US company with a physical presence rather expensive to operate.

I also have to point out that I'm not allowed to give Financial Advice, this is just my opinion


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## wannabe-expat (Apr 10, 2010)

Interesting, I hadn't thought of that happening...ouch! I understand it's different in Canada though otherwise that would be a show stopper for me.


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## timrlee (May 19, 2010)

BritishGav said:


> I know this thread is pretty old but from my understanding (I work for a UK company who trade in New York) if you have no physical presence in the US you don't have to pay US taxes only UK ones provided you're registered in the UK.
> 
> Where it gets complicated is when you have a presence in the US, as far as I recall you can avoid double taxation between UK tax and US Federal taxation, but you still have to pay state tax on top. Making a UK registered US company with a physical presence rather expensive to operate.
> 
> I also have to point out that I'm not allowed to give Financial Advice, this is just my opinion


Hi

I'm about to be in this situation - I have a Ltd company here in UK and plan to move with my wife to Virginia shortly. Just started to look into the possibility of moving across and still working for the LTD here until I switch to an LLC in the states.

Did the original poster ever find a solution or work around?

Cheers

Tim


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## Bevdeforges (Nov 16, 2007)

timrlee said:


> Hi
> 
> I'm about to be in this situation - I have a Ltd company here in UK and plan to move with my wife to Virginia shortly. Just started to look into the possibility of moving across and still working for the LTD here until I switch to an LLC in the states.
> 
> ...


There really isn't a "work around" for this. If you are in the US on any form of immigrant visa, you will be expected to declare and pay tax on your worldwide income. Even on a "non-immigrant" visa, this applies - except for a strictly tourist visa (where you maintain your foreign residence and return there at the end of the visa term).
Cheers,
Bev


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## timrlee (May 19, 2010)

Bevdeforges said:


> There really isn't a "work around" for this. If you are in the US on any form of immigrant visa, you will be expected to declare and pay tax on your worldwide income. Even on a "non-immigrant" visa, this applies - except for a strictly tourist visa (where you maintain your foreign residence and return there at the end of the visa term).
> Cheers,
> Bev


Hi Bev,

Thanks for the quick reply and clarification. Sorry wrong I used the wrong language there - I've seen various posts stating that you can avoid double taxation but have never seen how - that is what i mean by "work around" - really it would be smart tax planning.

I will be in the states under a K3 visa, my current ltd company here in uk has only been running since the start of the year.

Cheers

Tim


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## Bevdeforges (Nov 16, 2007)

Avoiding double taxation isn't really a matter of planning - just of learning how to properly report your various sources of income. 

If you are an "employee" in your ltd company, then you declare and pay taxes on the salary you are paid while resident in the US. The company remains a UK resident and pays its taxes as usual (with your salary one of the deductions from revenue).

You probably need to consult with an accountant (CPA) on arrival in the US to make sure things are properly set up. But normally it shouldn't be too difficult to make sure you only pay taxes to the proper jurisdiction without any duplication. 
Cheers,
Bev


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