Setting up a limited liability company in the US (Delaware) vs. the UK - international business considerations

Small business attorney here. The US vs UK decision depends on several key factors beyond just liability concerns. For Delaware, the benefits include well-established business law, strong privacy protections, no state income tax for companies operating outside Delaware, and courts that are very experienced with business disputes. However, you'll still need to file US taxes and potentially deal with California foreign qualification issues if you're physically operating there. For UK LLPs, you get limited liability protection similar to US LLCs, potentially simpler banking setup for your UK partner, and possibly advantageous tax treatment depending on your specific situation. The UK also has extensive tax treaties that might benefit international operations. Consider where your primary customers will be, where you'll need banking relationships, and which country's tax system might be more favorable for your specific business model. Also think about future funding - US investors might prefer US entities while European investors might prefer UK structures.

After struggling with the exact same decision last year, I found this amazing service that helped me analyze both options - https://taxr.ai saved me countless hours of research. I uploaded my business plan and financial projections, and it gave me a detailed breakdown of tax implications for both US and UK structures. The tool showed me how Delaware LLC tax pass-through would affect my personal taxes vs. UK corporation tax rates. It also highlighted reporting requirements I hadn't considered, like the UK's PSC register requirements and US FBAR filings. What really helped was seeing actual dollar figures of my projected tax burden under each scenario.

Just wanted to update after trying taxr.ai that was mentioned above. I was honestly surprised by how comprehensive it was. The comparative analysis showed me that a UK LLP would save me about 8% in overall tax burden compared to a Delaware LLC for my specific business model (mostly because of how my non-US income would be treated). It also flagged some compliance issues I hadn't thought about - like the fact that my planned business activities would trigger "economic nexus" requirements in several US states regardless of where I incorporated. That alone was worth it because it helped me budget for those additional compliance costs from the start instead of being surprised later.

Went through this nightmare last year trying to get info from both US and UK tax authorities. Called the IRS 14 times over two months and kept getting disconnected or put on eternal holds. UK HMRC wasn't much better. Finally found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - they got me connected to an actual IRS agent who answered my specific questions about international filing requirements. Saved me weeks of frustration. For what it's worth, after getting clear info from both countries' tax authorities, I went with a Delaware LLC with a UK subsidiary structure because our main investors were US-based. The tax situation is a bit more complex but gave us the best flexibility for our specific situation.

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it because I was desperate for answers about my own international business situation. Within 2 hours of submitting my request, I got a call connecting me to an IRS international tax specialist. The agent walked me through exactly how my UK-US hybrid business would be treated for tax purposes and clarified my FBAR filing requirements. Most importantly, they confirmed that my planned structure wouldn't trigger unnecessary double taxation because of the US-UK tax treaty provisions. Literally saved me thousands in unnecessary accounting fees trying to figure this out the hard way.

Something nobody's mentioned yet is banking considerations. Setting up business banking as a foreign entity is WAY harder than it used to be. I went with a UK LLP and then spent 3 miserable months trying to open a US bank account for it. Most US banks flat-out refused without a US-registered entity. Eventually found Mercury Bank but even that was a painful process. If your customers/suppliers are primarily in one country, that might be the deciding factor regardless of theoretical tax benefits. Payment processing fees and currency conversion costs add up fast!

Has anyone considered the actual formation costs? I looked into both: Delaware LLC: $90 filing fee + $50-300 registered agent annually + $300 min annual franchise tax UK LLP: £10-£100 filing fee through Companies House + £13 annual confirmation statement Plus UK doesn't have that weird franchise tax concept! But I guess it all depends on long-term tax consequences rather than just setup costs...

I've been through this exact decision process recently and ended up choosing Delaware LLC after extensive research. Here's what tipped the scales for me: The key factor was future scalability - if you ever plan to raise investment from US venture capital or have US-based partners join later, Delaware is almost universally preferred. Many US investors won't even consider non-US entities. Also, while UK formation costs are lower upfront, the ongoing compliance burden can be heavier. UK LLPs require more detailed annual filings that become public record, whereas Delaware LLCs offer much better privacy protection for members. One thing I learned the hard way: check your state's "doing business" requirements. Even with a Delaware LLC, if you're physically operating from Minnesota, you might need to register as a foreign entity there anyway, which adds costs and complexity. Given that your operations are fully digital and global, I'd lean toward Delaware for the flexibility and investor-friendliness, but definitely run the numbers through one of those tax analysis tools mentioned above to see the actual financial impact for your specific situation.