Breaking into the US? The founder’s guide to tax

Cross the Atlantic to win US customers and you might feel like you’re stepping into a whole new tax climate – a place where the rules change from state to state, mountains of paperwork form quickly, and a small setup slip can turn into an expensive compliance storm. 

Join SeedLegals CEO Anthony Rose and Shilpa Ajmera (Tax Principal at CLA’s Technology and Emerging Growth Companies group), who uses her experience with VC backed and PE owned companies with global operations, to unravel what founders actually need to know when entering the US market.

Key takeaways

Choose the US structure that matches your fundraising plan

• If you’re planning to raise from US VCs, investors most likely will expect that you’re a Delaware C-Corp: it’s one that’s recognised instantly.
• Think in levels: sell into the US from your UK company (lowest friction), set up a US subsidiary to hire and contract safely, then consider a Delaware Flip if you need US investors and US-held IP.
• Don’t run ‘parallel’ UK and US companies owned separately by founders – investors want to invest in the entity that owns the IP and revenue, and split ownership structures can kill deals in diligence.
• The core driver is reducing friction: if investors ask for a SAFE and you can say ‘yes’ immediately, you stay in momentum – versus losing weeks to restructure mid-fundraise.

Master operational hygiene: EINs, filings and state registrations

• Once incorporated, you’ll need an Employee Identification Number (EIN) – if you don’t have a US Social Security Number (SSN) to open a bank account, run payroll, hire employees and file tax returns – and foreign founders may need extra steps if they don’t have a US SSN.
• Make sure you don’t miss the annual/biennial filings and fees that Delaware requires, as this can create problems during fundraising and due diligence.
• Incorporating in Delaware doesn’t mean you’re ‘done’ – if you operate or hire in places like California or New York, you may need to also register there as a foreign corporation. 

Let’s talk: foreign-owned compliance, withholding and transfer pricing

• US filings can look deceptively simple, but foreign-owned structures are closely monitored – and small compliance slips can trigger disproportionately large penalties. 
• To apply treaty benefits and avoid default 30% withholding in some scenarios, you’ll need proper documentation (eg. W-8 forms) when paying non-US founders/contractors from a US entity.
• The US-UK tax treaty can help prevent double taxation, but it relies on clean documentation around where services are performed and the source of income.
• After the flip, transfer pricing becomes a real consideration: transactions between the US parent and UK subsidiary need to be priced like independent parties, and you’ll want the structure and IP position to be defensible. 

Don’t just manage risk, take advantage of US incentives

• R&D credits aren’t just for lab-coat companies: if you’re building new features and solving technical challenges, you may qualify. But the spend generally needs to be US-based to count.
• Even if you’re pre-revenue, R&D credits sometimes offset payroll taxes, which can create real cashflow relief early on.
• Founder equity planning matters: QSBS can be a big win for US taxpayers at exit, and 83(b) elections can prevent scary tax bills as shares vest. However, timing and eligibility are highly important considerations.