UK-US Business Tax Planning & Advisory

Unlike VAT, sales tax is not always charged or collected, and there is no reclaim process at the end of the year. Sales tax rules are set at the state level, meaning each state determines what goods and services are taxed.

Nexus refers to the minimum connection a business must have with a state before the state can impose tax obligations. Nexus can be created through physical presence—such as an office, property or employees — or through economic presence, which occurs when a business exceeds a state’s sales or transaction thresholds even without any physical operations.

US health insurance is often expensive, and employers rarely cover 100% of employee premiums. Businesses can choose from a variety of individual and group health plans and coverage options, but they must provide consistent, nondiscriminatory coverage across employee groups to stay compliant.

The UK has a more centralized system with fewer filing layers and unified reporting. In contrast, US accounting firms are highly specialized across tax, audit, and advisory due to a complex, multi-layered tax system, varying state-by-state compliance requirements, and the fact that US tax issues often arise early in a company’s US expansion.

There is a significant difference between what financial data is publicly disclosed in the US and UK for small businesses.  In the UK, most entities are required to file statutory financial statements to Companies House, making their information public. In the US, only publicly traded companies are required to disclose financial data. Information filed with the IRS is confidential and can only be shared with the taxpayer’s consent.

In the US, this is an important decision, which should be made with guidance from trusted, experienced advisors. Key factors include owner liability protection, funding plans, tax treatment, and the business’ ownership structure.

There is no single best state to form a US entity. The right choice depends on your business model, customer base, and long-term goals. After your due diligence, consult legal and accounting advisors to evaluate each state’s liability protection, tax obligations, and compliance requirements to most suitable location for your US entity.

Processing payroll in the US can be complex. Employers typically choose from three service models:

• Traditional payroll provider – processes wage and tax calculations, while the employer remains fully responsible for compliance and deadlines.
• PEO (Professional Employer Organization) – a co-employment model that shares payroll and HR responsibilities.
• EOR (Employer of Record) – legally employs the workers and assumes full responsibility for compliance and reporting obligations.
  PEOs and EORs can often help businesses offer competitive employee benefit packages.

US banks operate under strict compliance and internal-control frameworks due to the size of the market and higher fraud-risk exposure. As a result, opening a bank account typically takes longer and requires detailed reviews of ownership, control, and documentation. Electronic payments often require additional approvals and formal authorization records. Overall, US banking tends to be more costly, reflecting the heightened compliance, monitoring, and risk-management requirements.

There are a variety of organizations that offer valuable information and support. View the list of organizations that DY USA is a member of to support both our firm and our clients.