LLC vs LTD at a glance
An LLC is a business entity formed under the law of a US state; a Ltd is a UK private company limited by shares, registered at Companies House. Both limit your liability for the company's debts and both can be formed online from abroad. Tax is where they part:
US single-member LLC vs UK Ltd, for a non-US owner who lives and works outside both countries
| Question | US single-member LLC | UK private limited company (Ltd) |
|---|---|---|
| How it is taxed | Disregarded: its profit is the owner's income | A company, UK resident because it was incorporated there |
| Owners and who runs it | Members; run by the members or by managers they appoint | Shareholders; run by directors, at least 1 of them a natural person |
| US or UK tax on profit from work done abroad | 0% with no US trade or business | 19% to 25% corporation tax |
| Tax when profit is paid to you | None: a draw is not a dividend | None: no UK withholding on dividends |
| How your home country sees it | Transparent in some countries, a company in others (HMRC: opaque) | A foreign company paying you dividends or salary |
| Main yearly filings | Form 5472 with a pro forma Form 1120, plus the state's charge | Confirmation statement, annual accounts, CT600 |
| Penalty for missing the main filing | $25,000 per Form 5472 | £200 (about $265) for a CT600 1 day late, rising with time |
| Owners on a public register | No federal register for US-formed companies | Yes: persons with significant control at Companies House |
Companies created in the US no longer report their owners to FinCEN under a final rule in force since August 14, 2026 (FinCEN), while a Ltd's persons with significant control are public at Companies House, home address withheld (Companies House).
How a US LLC is taxed when you live abroad
The IRS treats a single-member LLC as disregarded as separate from its owner unless it elects to be taxed as a corporation, and its activity goes on the owner's own return (IRS).
A non-American owner then pays US tax on the LLC's business profit only when it is effectively connected with a US trade or business, and a foreign person is generally in one when performing personal services in the US (IRS). Work only from outside the US and the Index data on US LLCs puts the US rate at 0%, kept or paid out; spend months serving clients from Miami and that profit goes on a US return.
So a US LLC is an onshore company with no entity-level tax, not an offshore company in a zero-tax registry.
How a UK Ltd is taxed when you live abroad
A company incorporated in the UK is UK resident for corporation tax wherever its owner lives (Corporation Tax Act 2009, section 14), so a UK Ltd owned by a non-resident files and pays like any other.
For financial years starting April 1, 2025 and 2026 the rate is 19% on profits under £50,000 (about $66,300) and 25% over £250,000 (about $332,000), with marginal relief between that taxes each extra pound at 26.5% (HMRC). On $100,000 of profit the UK company figures come to 21.5%.
Paying the rest out adds no UK tax: there is generally no withholding on dividends (PwC), and a non-resident's UK liability on them is limited to tax deducted at source (HMRC SAIM1170).
Set against an Estonian OÜ, which pays 22% on whatever it distributes (Estonian Tax and Customs Board), the Ltd takes a smaller share of profit paid out up to £83,333 (about $111,000) and a larger one above it (HMRC).
- UK Ltd
- Estonian OÜ
- US LLC, non-US owner
Source: HMRC corporation tax rates, the Estonian Tax and Customs Board and the IRS, listed under Sources UK: no associated companies, converted at the ECB rate of September 28, 2026, no UK tax on the dividend. Estonia: 22/78 of the net dividend. US: owner not a US citizen or resident, no US trade or business.
Show the numbers
| $25,000 | $50,000 | $100,000 | $200,000 | $400,000 | |
|---|---|---|---|---|---|
| UK Ltd | 19% | 19% | 21.5% | 24% | 25% |
| Estonian OÜ | 22% | 22% | 22% | 22% | 22% |
| US LLC, non-US owner | 0% | 0% | 0% | 0% | 0% |
When your country says the Ltd is managed there
If your country of residence claims the company because its place of effective management is there, the tax treaty decides, often only once the 2 tax authorities agree, and until then the Ltd keeps filing in the UK (HMRC INTM120080); a company the treaty gives to the other country is non-UK resident (Corporation Tax Act 2009, section 18). Short of that, working from a home office abroad can give the Ltd a permanent establishment where you live.
Running the Ltd from abroad is allowed: its required natural-person director (Companies Act 2006, section 155) can verify identity from any country through an Authorised Corporate Service Provider (Companies House). A nominee director changes the name on file, not where the company is managed, while you still take the decisions.
How your country of residence taxes each one
The company's country is the first layer. The second is how your country classifies the company, and it does not have to agree with the IRS:
- Transparent: you report the LLC's profit as your own business income every year, paid out or not, with no dividend layer.
- A company: the LLC is a foreign company paying you dividends, and if it keeps profit untaxed, your country's CFC rules can tax it in your hands anyway.
HMRC is the clearest case of the second: its list of foreign entity classifications marks the US LLC as opaque (HMRC INTM180030), so the entity, not its members, is generally liable to tax on the profit.
A Ltd is a company in the UK and normally abroad too, so it raises fewer questions. The cost is 2 layers: UK corporation tax, then your country's tax on what you take out, which makes salary vs dividends a question for your home tax code.
The same LLC under 2 countries of residence
Works
Marta lives where the tax authority treats a US LLC as transparent. She reports its profit on her own return, pays her country's tax on it once and files Form 5472 in the US with nothing due.
Fails
Marta moves to London with the LLC. HMRC sees a foreign company, so her draws are no longer her own trading profit, and an LLC managed from London can be UK resident. The 2 countries now describe the same profit differently, and she pays advisers in both.
Yearly filings: Form 5472 vs Companies House and CT600
For reporting, the IRS stops looking through the LLC: a foreign-owned single-member LLC files a pro forma Form 1120 with Form 5472 attached, marked "Foreign-owned U.S. DE" (IRS instructions for Form 5472). Its reportable transactions include contributions, distributions and amounts paid to form the LLC, so money you put in or take out makes the form due even with no US income.
The related parties include you, as a 25% foreign shareholder, and related persons such as another company you control (IRS). If your LLC and your Ltd invoice each other, each payment goes on the LLC's Form 5472, and pricing it as unrelated companies would, the transfer pricing standard, is the safe course: the UK exempts small and medium-sized companies from its adjustment unless the other party is resident in a non-qualifying territory (TIOPA 2010, section 166; section 167), but your country of residence may not.
Form 5472: a $25,000 penalty on a form with no tax on it
The IRS assesses $25,000 when Form 5472 is not filed on time, and another $25,000 for each 30 days the failure runs past 90 days after its notice (IRS). No tax has to be owed. Keep the date in your own calendar even when a formation package promises to file.
Yearly filings. Sources: IRS, Delaware Division of Corporations, Companies House and HMRC, read October 12, 2026; Wyoming: Index data (Wyoming Secretary of State fee schedule, read September 29, 2026)
| Filing | Company | Deadline |
|---|---|---|
| Form 5472 with a pro forma Form 1120 | US LLC | Form 1120 due date, extendable on Form 7004 |
| State annual tax or report | US LLC | Delaware: $400 by June 1. Wyoming: $60 minimum, anniversary month |
| Confirmation statement | UK Ltd | Every 12 months, £50 (about $66) online |
| Annual accounts | UK Ltd | First: 21 months after registration; then 9 months after year end |
| Company Tax Return (CT600) | UK Ltd | 12 months after the period ends; tax due 9 months and 1 day after it |
The Ltd's CT600 is due even with a loss or no tax (GOV.UK), and the accounts follow Companies House's own deadlines (GOV.UK). A late return costs £200 (about $265) at 1 day and the same at 3 months, then 10% of unpaid tax at 6 and at 12 months (GOV.UK).
Banking and card payments for an LLC or a Ltd
Banks want the LLC's employer identification number (EIN) first, and an LLC whose principal place of business is outside the US applies by phone, fax or mail rather than online (IRS), so start it before opening a US bank account for the LLC.
Stripe prices by the account's country. As of October 2026, a US account charges 2.9% plus 30 cents a card charge and adds 1.5% for cards issued outside the US (NerdWallet), while a UK account charges 1.5% plus 20p on UK cards, 2.5% plus 20p on European ones and 3.15% plus 20p on US ones (Expertsure). So card payments as a non-resident cost less through the Ltd when clients pay with UK or European cards and less through the LLC when they pay with US cards.
Business bank accounts for non-residents differ mainly in 2 things: which company countries they accept, and whether they onboard an owner who lives in a third country.
What an LLC and a Ltd cost to set up and run
| US LLC, WyomingState fees | $100 to form, $60 a year |
|---|---|
| US LLC, DelawareState fees | $110 to form, $400 a year |
| UK Ltd£100 and £50 at Companies House, online | $133 to form, $66 a year |
| Estonian OÜ€265 and €150 (€165, about $188, from January 1, 2027); address or contact person $228 to $455 a year | $302 to register, $171 for e-Residency |
Government fees only; agents', accountants' and software fees come on top. Read at each registry on October 12, 2026, except Wyoming, Delaware's formation fee and the 2027 e-Residency fee, which come from the Index data checked September 29, 2026.
For the LLC the state is a cost choice, not a tax one, and choosing Wyoming or Delaware also sets the late charge: Delaware adds $200 plus 1.5% a month on tax and penalty once June 1 passes (Delaware Division of Corporations).
Where an Estonian OÜ fits
The third option is an Estonian private limited company (OÜ), registered online through e-Residency (Estonia's business register) and kept on a paid legal address or contact person in Estonia every year (e-Residency).
Estonia taxes its profit when it is distributed, at 22/78 of the net dividend, or 22% of the gross profit paid out (EMTA). Its own tax board adds that a company managed by an e-resident from abroad will probably have a permanent establishment abroad and owe tax there (EMTA).
Paid out in full at $100,000, the OÜ's 22% sits next to the Ltd's 21.5%, so it earns its place only for founders who leave profit in the company, which is also what decides e-Residency against a US LLC: profit kept in an OÜ waits untaxed in Estonia, while a transparent LLC's profit is taxed where you live every year.
LLC or Ltd for a US citizen abroad
For an American the comparison flips, because the US taxes citizens on worldwide income wherever they live (IRS). A single-member LLC is your own business on Schedule C, owing self-employment tax abroad the way a sole proprietor does (IRS).
A UK Ltd is a foreign corporation instead, reported every year on Form 5471 by certain US officers, directors and shareholders (IRS). Owned more than 50% by US shareholders, it is a controlled foreign corporation (26 U.S.C. 957), and profit it keeps can reach your US return each year as net CFC tested income, called GILTI for tax years beginning before 2026 (26 U.S.C. 951A).
The high-tax election excludes income taxed abroad above 18.9%, which is 90% of the 21% US corporate rate (Treas. Reg. 1.951A-2(c)(7); 26 U.S.C. 11), a line the UK's 19% to 25% can clear. The LLC adds no new layer to your US return; the Ltd adds UK tax, a foreign-company return and that yearly test.
LLC or Ltd: which to choose
Match the company to your country of residence first and your clients second.
When the US LLC fits
- Your country treats an LLC as transparent, so the LLC adds no tax layer.
- Your clients are mostly American and pay in dollars or by US card.
- You want the fewest filings: 1 federal filing (Form 5472 on a pro forma Form 1120) and a state charge a year, never missed.
When the UK Ltd fits
- Your country treats an LLC as a company, so a Ltd avoids the mismatch.
- Your clients are in the UK or Europe and pay by local card.
- You want penalties that start small, as the UK's do, rather than the Form 5472 kind.
David's note
I decide LLC or Ltd from the country the founder will live in next, not only the one they live in today. A company is hard to swap once it has a bank account, a Stripe history and clients paying into it, so when a move to the UK, or to any country that sees an LLC as a company, is likely within 2 years, I start with the Ltd.
Before you form an LLC or a Ltd
- Confirm where you will be tax resident this year and next.
- Ask an adviser there how it classifies a US LLC and taxes UK dividends.
- Record each company decision where you intend the company to be managed.
- Match the company to where your clients pay from.
- Put every deadline in your calendar: Form 5472, or the confirmation statement, accounts and CT600.
