US LLC or UK company: where should a non-resident online business incorporate?

Running an online business from outside both the US and the UK puts you in an unusual position: you can choose your corporate home. A freelance developer in Lisbon, a SaaS founder in Dubai, or an e-commerce seller in Nairobi can each incorporate in either jurisdiction without setting foot there. But the two structures work very differently in practice, and picking the wrong one can mean unnecessary tax, compliance headaches, or blocked access to the payment rails your business depends on. Whether you should form a US LLC or a UK company as a non-resident depends on where your customers sit, which financial infrastructure you need, and how your home country treats foreign entities. This guide sets out the key differences as they stand in 2026, so you can make that decision with confidence rather than guesswork. Rules change: confirm specifics with a qualified adviser in each country before you act.

The choice: two very different vehicles

The US LLC and the UK limited company look similar on the surface: both offer limited liability, both can be formed remotely, and both give you a credible presence in a major economy. But their legal DNA is different. The LLC is a creature of state law (most commonly Wyoming or Delaware) and is treated as a "disregarded entity" for US federal tax purposes when it has a single foreign owner. The UK Ltd is a body corporate, automatically UK tax resident, and subject to corporation tax on its worldwide profits. One is essentially a tax-transparent wrapper; the other is a fully taxed entity. That distinction drives almost every downstream difference in compliance, banking, and cost.

The US LLC in brief

A single-member LLC owned by a non-US person pays no US federal income tax, provided the owner is not engaged in a US trade or business generating effectively connected income. That sounds attractive, but it does not mean the LLC is invisible to the IRS. Every year the LLC must file Form 5472 alongside a pro-forma Form 1120, reporting transactions with its foreign owner. Missing that filing triggers a USD 25,000 penalty per form, per year: one of the steepest penalties in the US tax code relative to the effort involved. The LLC's profits are also not magically untaxed. They flow through to the owner and can be taxed in the owner's home country under controlled foreign company (CFC) rules or hybrid-entity mismatch provisions. What the LLC does give you is straightforward access to US banking, Stripe, and US Amazon seller accounts: infrastructure that many online businesses find essential.

The UK company in brief

A UK limited company incorporated at Companies House is generally UK tax resident and taxed on worldwide profits. The corporation tax rate for 2026 is 19 per cent on profits up to GBP 50,000, rising to 25 per cent on profits above GBP 250,000, with marginal relief in between. Non-UK-resident companies and close investment-holding companies pay the full 25 per cent regardless of profit level. Annual obligations include a confirmation statement and statutory accounts filed at Companies House, plus a CT600 corporation tax return submitted to HMRC. From autumn 2026, directors must also verify their identity under new Companies House reforms. The UK company gives you a presence in a well-regulated, internationally recognised jurisdiction with strong access to UK and EU payment processors, banking, and marketplaces.

Tax compared: pass-through versus corporation tax

The fundamental tax question is binary. The US LLC (single-member, foreign-owned) pays no US federal tax on its own: its income passes through to you and is taxable wherever you are resident. The UK Ltd pays corporation tax in the UK before you extract anything. Neither structure is a tax dodge. If you live in a country with CFC rules (most of the EU, Australia, Canada, and many others), the LLC's profits may be attributed to you and taxed at your personal rate regardless. The UK company's profits are taxed at source, but dividends paid to you may attract withholding tax or further personal tax in your home country. The real question is which combination produces the lowest total tax burden across both jurisdictions: and that calculation is specific to your residence, your income level, and any applicable double-tax treaties. Generic advice here is dangerous; bespoke modelling is essential.

Banking, payments and market access

For many non-resident founders, the practical reason to incorporate is not tax but access. A US LLC lets you open a US bank account (Mercury, Relay, and similar neobanks serve non-resident LLCs), accept payments through Stripe's US entity, and sell on Amazon.com as a domestic seller. If your revenue is primarily from US customers, this infrastructure matters more than the tax wrapper around it.

A UK Ltd gives you access to UK business banking (Tide, Starling, and the high-street banks all serve UK companies with non-resident directors, though onboarding scrutiny has increased), UK and EU payment processors, and credibility with European clients. If you sell B2B into Europe or need GBP settlement, the UK company is the more practical vehicle.

The honest answer for many businesses is that you need both: a US entity for US payment rails and a UK entity for European market access, linked by properly documented intercompany agreements. Cosmos regularly helps founders structure exactly this, coordinating formation and compliance in both jurisdictions through licensed local partners.

Credibility, investors and clients

Perception varies by audience. US venture investors and enterprise buyers are comfortable with Delaware LLCs and C-corps. UK and European clients, particularly in regulated industries, often prefer dealing with a UK limited company whose accounts are publicly filed and whose directors are identifiable. If you are raising investment, note that most US VCs will want you to convert or re-domicile into a Delaware C-corp rather than invest into an LLC: the pass-through tax structure creates complications for institutional investors. A UK Ltd is more naturally suited to receiving equity investment without structural gymnastics, though UK venture funding is smaller in absolute terms than the US market.

Filing and compliance burden compared

The ongoing cost and effort differ meaningfully:

• US LLC (Wyoming or Delaware): annual state fee (USD 60 in Wyoming, USD 300 franchise tax in Delaware), registered agent fee (typically USD 50 to 150), and the mandatory Form 5472/1120 filing. No public accounts. No audit requirement. But the 5472 filing is unforgiving: miss it once and you owe USD 25,000.
• UK Ltd: GBP 34 confirmation statement fee filed online, annual accounts filed at Companies House (publicly available), CT600 filed with HMRC, potential audit if the company exceeds small company thresholds, and from autumn 2026 director identity verification. More moving parts, but each individual obligation carries lower penalties for minor delays.

The US system is lighter in volume but harsher in penalty. The UK system requires more regular filings but is more proportionate when things go slightly wrong.

Which fits which business, and when you need neither or both

There is no universal winner. The right choice depends on your specific situation:

• You sell digital products or SaaS primarily to US customers, you live in a zero-tax or territorial-tax country, and you need Stripe US and a US bank account: the US LLC is likely your starting point.
• You provide B2B services to UK and European clients, you want publicly filed accounts for credibility, and you plan to hire UK-based contractors or staff: the UK Ltd makes more sense.
• You sell physical goods into the UK: remember that a UK company is UK-established and benefits from the GBP 90,000 VAT registration threshold, whereas a non-established foreign seller has a nil threshold and must register for VAT from the first pound of UK sales. Conversely, a US LLC selling into the US faces state-level sales-tax nexus rules that vary by state.
• You live in a high-tax country with aggressive CFC rules: neither a US LLC nor a UK Ltd will shield your profits from home-country tax. Your home jurisdiction may actually be the simplest and cheapest place to incorporate.
• You need presence in both markets: form both entities, but invest in professionally drafted intercompany agreements for any licensing or service fees between them. Generic templates will not withstand scrutiny from HMRC or the IRS.

Sometimes the answer is neither. A UAE free zone company, for instance, may suit founders based in the Gulf who sell globally and want zero corporation tax with genuine commercial substance. Cosmos advises neutrally across all these options precisely because the right answer is always specific to the founder.

How Cosmos helps

Cosmos coordinates US and UK company formation through licensed local partners in each jurisdiction, handling registered agent appointments, EIN applications, Companies House filings, and bank account introductions as a single engagement. Because Cosmos is not a law firm or a registry, it can advise neutrally on which structure fits your business rather than selling you whichever product it happens to offer. For founders who need both a US LLC and a UK Ltd, Cosmos manages the ongoing compliance calendar for both entities: 5472 filings, confirmation statements, CT600 deadlines, and director verification: so nothing falls through the cracks. The goal is to keep you compliant in every jurisdiction without you becoming a part-time tax administrator.

Frequently asked questions

Can I form a US LLC without visiting the US? Yes. Wyoming and Delaware both allow entirely remote formation. You will need a registered agent in the state, an EIN from the IRS, and a US mailing address for banking purposes. The entire process typically takes one to three weeks.

Will a US LLC protect me from tax in my home country? Almost certainly not. Most countries with developed tax systems have CFC or hybrid-entity rules that attribute the LLC's profits to you personally. The LLC is tax-neutral in the US, not globally.

Do I need to register for VAT if I form a UK company? Only once your UK taxable turnover exceeds GBP 90,000. Below that threshold, registration is voluntary. But if you are a non-UK business selling into the UK without a UK company, you are a non-established taxable person and must register from the first sale.

Can I have both a US LLC and a UK company? Yes, and many international businesses do. The key is to document the commercial rationale and intercompany terms properly. Poorly structured dual entities attract attention from tax authorities on both sides of the Atlantic.

Is a Delaware LLC better than a Wyoming LLC? Delaware has stronger case law and is preferred by investors, but Wyoming is cheaper (USD 60 annual fee versus USD 300) and has no state income tax. For a single-member non-resident LLC that is not raising US venture capital, Wyoming is usually the more cost-effective choice.

Choosing between a US LLC and a UK company is not a question with a single right answer: it depends on your customers, your payment infrastructure needs, your home-country tax position, and your growth plans. Get the analysis right at the start and you avoid expensive restructuring later. If you are unsure which path fits, Cosmos can walk you through the comparison for your specific situation and coordinate whichever formation you choose. Tax and company law change frequently: this article reflects the position in 2026, and you should confirm details with a qualified adviser before acting.

This is general information, not tax, legal or accounting advice. Rules differ by country and change frequently; confirm your position with a qualified adviser in the relevant jurisdiction before acting.