Selling IT Consultancy Services to USA from the UK
Navigating the complexities of selling services to the USA from the UK can be daunting. With Optimise Accountants by your side, you can streamline your operations and ensure compliance with UK and US tax regulations. Whether you’re working remotely in the UK for a US company or providing software consulting services to a US company, our expertise will help you manage your finances effectively and maximize your profitability.
Understanding the US Market
When selling services to USA from UK, it’s crucial to understand the key differences in tax laws and business regulations. The US operates a federal system with varying state laws, which can affect how you invoice, receive payments, and report income. At Optimise Accountants, we simplify these complexities, ensuring that your business remains compliant and your tax burden is minimized.
Tax Implications for UK Contractors Working with US Companies
If you’re contracting for a US company in the UK, knowing where you need to pay taxes is important. Generally, as a UK resident, your worldwide income is subject to UK tax. However, you might also need to consider US tax obligations, especially if your work involves frequent visits to the US or if you’re classified as a US-based employee.
For instance, when working for a US LLC as a UK based contractor, the LLC is treated as a pass-through entity for US tax purposes. This means the income passes through to the owner (you, in this case), and you must report it on your UK tax return. The US-UK tax treaty can help avoid double taxation, but it’s essential to get expert advice to navigate these provisions correctly.
Setting Up for Success
Optimise Accountants can assist you with every aspect of doing business in the US. From setting up a US bank account and invoicing US clients to understanding whether you need a visa to work remotely in the UK for a US company, our team has the knowledge and experience to guide you. We also help you determine if you should register a consultancy in the USA or if your UK-based entity suffices.
Key US & UK Tax Dates and Forms
- US Tax Returns: 15th April
- UK Self-Assessment Tax Returns: 31st January
- Forms: IRS Form W-8BEN for UK residents working with US companies, and UK SA100 for self-assessment.
If I work remotely for a US company from the UK will I be taxed in the UK or the US?
As a UK resident, you will be primarily taxed in the UK on your worldwide income. However, you might also have US tax obligations, especially if the nature of your work creates a taxable presence in the US.
Can I work remotely in the UK for a US company?
Yes, you can work remotely for a US company from the UK. You must comply with UK tax laws and any applicable US regulations.
Can I work remotely for a US company without a visa?
You can work remotely from the UK for a US company without a visa if you do not physically enter the US to perform your work.
Can a UK contractor work for a US company?
Yes, a UK contractor can work for a US LLC from the UK. However, you need to consider tax implications in both countries and ensure compliance with local laws when doing business in the US.
Can I sell a service such as software consulting to a US company?
Yes, absolutely you can sell software consulting services to a US company from the UK. Another popular high growth service is software development, where UK-based contractors offer their expertise to US firms in coding, programming, and creating custom software solutions tailored to the needs of their US clients.
Make sure you have a clear contract that details the scope of work and payment terms and be mindful of regulations in both countries such as data protection laws. You’ll need to report your income to HMRC in the UK and might have some US tax obligations, but the UK-US tax treaty helps prevent paying tax twice.
It’s good to know that services to US businesses are generally zero-rated for VAT. Do choose a payment currency that works for you regarding exchange rate risks and make sure your invoices comply with UK and US requirements.
Establish good communication channels, plan how to deliver your services, and consider getting professional indemnity insurance. Finally, check if your business structure is suited for international operations, and think about setting up a US subsidiary if it makes sense.
It’s essential to make your contracts as robust as possible and ideally reviewed by a lawyer to ensure compliance with both UK and US laws.
How can I receive payments in the UK as a UK resident from the US company I did work for?
For most convenience and cost-effectiveness, online payment services like Wise or PayPal, or digital banking services like Revolut, are popular. They offer competitive rates, lower fees, and faster processing times compared to traditional bank transfers. Alternatively, invoicing software like FreshBooks, QuickBooks, or Xero can generate professional looking invoices and process payments via gateways like Stripe or PayPal.
Other methods such as bank or wire transfers and cheques can be slow and incur high fees whilst at the other end bitcoin may be fast but subject to currency volatility and regulation issues.
What are some of the realities of working with a US client?
Working with a US client can be rewarding, but not without its challenges. The time zone difference is significant, as the UK can be anywhere between 5 to 8 hours ahead of the US, depending on the state. This will require adjusting your working hours to overlap with your client’s business hours. Regular zoom calls and email communication will be crucial to build and maintain trust.
I will work remotely for a US company from the UK. Will I be taxed in the UK or the US?
As a UK resident, you will be primarily taxed in the UK on your worldwide income. However, you might also have US tax obligations, especially if the nature of your work creates a taxable presence in the US.
Can I work remotely in the UK for a US company?
Yes, you can work remotely for a US company from the UK. You must comply with UK tax laws and any applicable US regulations.
Can I work remotely for a US company without a visa?
You can work remotely from the UK for a US company without a visa if you do not physically enter the US to perform your work.
Can a UK contractor work for a US company?
Yes, a UK contractor can work for a US LLC from the UK. However, you need to consider tax implications in both countries and ensure compliance with local laws when doing business in the US.
Can I sell a service such as software consulting to a US company?
Yes, absolutely you can sell software consulting services to a US company from the UK. Another popular high growth service is software development, where UK-based contractors offer their expertise in coding, programming, and creating custom software solutions tailored to the needs of their US clients.
Make sure you have a clear contract that details the scope of work and payment terms and be mindful of regulations in both countries such as data protection laws. You’ll need to report your income to HMRC in the UK and might have some US tax obligations, but the UK-US tax treaty helps prevent paying tax twice.
It’s good to know that services to US businesses are generally zero-rated for VAT. Do choose a payment currency that works for you regarding exchange rate risks and make sure your invoices comply with UK and US requirements.
Establish good communication channels, plan how to deliver your services, and consider getting professional indemnity insurance. Finally, check if your business structure is suited for international operations, and think about setting up a US subsidiary if it makes sense.
It’s essential to make your contracts as robust as possible and ideally reviewed by a lawyer to ensure compliance with both UK and US laws.
How can I receive payments in the UK as a UK resident from the US company I did work for?
For most convenience and cost-effectiveness, online payment services like Wise or PayPal, or digital banking services like Revolut, are popular. They offer competitive rates, lower fees, and faster processing times compared to traditional bank transfers. Alternatively, invoicing software like FreshBooks, QuickBooks, or Xero can generate professional looking invoices and process payments via gateways like Stripe or PayPal.
Other methods such as bank or wire transfers and cheques can be slow and incur high fees whilst at the other end bitcoin may be fast but subject to currency volatility and regulation issues.
Are there cultural differences when working with US companies?
Working with a US client can be rewarding, but not without its challenges. The time zone difference is significant, as the UK can be anywhere between 5 to 8 hours ahead of the US, depending on the state. This will require adjusting your working hours to overlap with your client’s business hours. Regular zoom calls and email communication will be crucial to build and maintain trust.
You should be aware of cultural differences. For example, meetings with US clients will focus on efficiency and outcomes whereas in the UK we tend to do more small talk and have a more relaxed approach to punctuality and meeting length.
Decision-making can be very different, Americans prefer faster decision-making with decisive actions and input from all levels to reduce risk. Whilst in the UK we tend to take things slower focusing on details and risk management.
Work ethics can be in stark contrast between the two countries; Americans work longer working hours, a strong focus on productivity, and take shorter, less frequent holidays whilst still being accessible, whereas in the UK, like the rest of Western Europe, work-life balance and longer holidays are the norm.
Professional indemnity insurance can protect against potential claims, and effective project management ensures timely delivery of services.
Evaluating your business structure and possibly setting up a US subsidiary can also be beneficial. Building strong relationships with regular updates and reliability helps foster trust and a good working relationship. Optimise Accountants can help you with this step by step.
Do I need to set up a Limited company to work as a contractor for a US company from the UK?
Whether to set up a limited company depends on your specific situation, preferences, and future plans. Limited companies offer personal asset protection, tax efficiency, a professional image, and scalability whereas sole traders enjoy simplicity, less paperwork but face unlimited liability and fewer tax planning opportunities.
How do I register a consultancy in the USA?
You can register a consultancy in the USA by choosing the appropriate business structure (e.g., LLC, Corporation), obtaining an EIN (Employer Identification Number), and complying with state-specific registration requirements. Optimise Accountants can guide you through this process.
How we can help
Call us today 0115 939 4606 and learn how we can help you sell consultancy services to US clients and manage your international financial obligations.
We provide tailored advice and practical solutions for UK businesses and individuals doing business in the US. Our expertise covers all aspects of working for a US company in the UK, from tax planning and compliance to business setup and financial management. Contact us today to learn how we can help you succeed in the US market via a personalised 1-1 video call to discuss all your US/UK tax questions.
- Comprehensive tax planning and compliance for working remotely abroad for a US company
- Assistance with contracting for a US company in the UK tax obligations
- Strategies for managing your taxes as an IT consultant to a US company
- Setting up and registering businesses in both the UK and the USA
Or book your one-to-one personalised US tax consultation today with US tax specialist Simon Misiewicz (as seen on You Tube).