01 — The HeadlineSame $100,000 Profit, Two Very Different Outcomes
A US LLC and a UK Ltd hit the same $100,000 profit very differently — and the gap is bigger than most sellers expect.
A UK Ltd is its own taxpayer. Before you see a single pound of profit, the company pays Corporation Tax. On £100,000 of net profit in 2026, that's £22,750 out first — a 22.75% effective rate — leaving £77,250 in the company before you take dividends.
A US LLC (single-member, foreign-owned) is a "disregarded entity." No company-level income tax by default. If you're running the store from abroad with no US staff and no US inventory, the profit is generally not effectively connected income — meaning US federal income tax is $0. You keep the full $100,000 at the US level.
That's not a small difference.
02 — UK LtdHow Corporation Tax Actually Works (And the Myth About Foreign Customers)
A UK Limited Company pays Corporation Tax on its profit regardless of where its customers are. Selling exclusively to buyers in the US, Australia, or anywhere else doesn't move the tax obligation. The company is UK-registered — its profit is UK-taxable, full stop.
The 2026 Rates
From 1 April 2026, the bands are:
| Profit Band | Rate | How It's Applied |
|---|---|---|
| Up to £50,000 | 19% (small profits rate) | Flat — applies to the full profit if the company has no associated companies |
| £50,000 – £250,000 | Marginal Relief | 25% main rate with a reduction calculated by a fixed formula |
| Above £250,000 | 25% (main rate) | Flat — applies to the full profit |
The Marginal Relief Calculation, Worked Through
On £100,000 of profit, the formula runs:
Less Marginal Relief: (3 ÷ 200) × (£250,000 − £100,000) = £2,250
Corporation Tax due: £22,750 (22.75% effective rate)
Cash left in the company: £77,250
That £77,250 sits in the company, not in your personal account. Drawing it as a dividend triggers a separate layer of UK personal tax in your home country, or a withholding question if you are not UK-resident — but the Corporation Tax bill is the same either way.
03 — US LLCWhen "Zero US Tax" Is Real — and When It Isn't
"A US LLC pays no tax" is one of the most widely repeated claims in international e-commerce circles. It is accurate for a specific seller profile and misleading for everyone else.
What's actually true: a US LLC means the LLC itself pays no income tax by default. It's a disregarded entity for US tax purposes — profit flows through to the owner, and the LLC files an information return rather than paying its own tax bill. What you actually owe — and where — depends entirely on what your store does.
The "$0 US Federal Tax" Case
Operate from outside the US with no staff there and no inventory in American warehouses, and your profit is generally not effectively connected income (ECI). US federal income tax: $0. You still pay personal income tax in your home country on the money that reaches you — same as you would under any structure — but the LLC layer adds nothing on top.
This is the profile that earns the "zero US tax" headline. Drop-shipping from suppliers outside the US, selling digital products, services, or info products to customers anywhere — these all typically sit outside the ECI definition for a non-resident-owned LLC with no US presence.
The ECI Case
Store inventory in US warehouses — the Amazon FBA model is the obvious one — and the IRS considers the resulting profit effectively connected income. You'd file Form 1040-NR and pay at the same graduated US rates US residents pay. On $100,000 of profit in 2026, the maths runs:
| Bracket | Profit in Band | Rate | Tax |
|---|---|---|---|
| First $12,400 | $12,400 | 10% | $1,240 |
| $12,401 – $50,400 | $38,000 | 12% | $4,560 |
| $50,401 – $100,000 | $49,600 | 22% | $10,912 |
| Total US federal income tax on $100k ECI | $16,712 | ||
Plus home-country personal tax on top of that, just as in the no-ECI case.
04 — The FBA TrapWhat Storing Inventory in the US Actually Triggers
Here's the mistake I see e-commerce founders make with US LLCs: they form one, hear "zero US tax," and immediately send inventory to Amazon FBA warehouses. Those two things don't go together.
Storing goods in US fulfilment centres is almost certainly what the IRS calls effectively connected income. Your profit is now US-taxable at graduated rates. But that's only the first layer. There's a second one waiting underneath.
Layer One: Federal Income Tax on ECI
Covered in detail in the section above — about $16,712 on $100,000 of net profit at 2026 rates. The LLC still doesn't pay this bill (it's a disregarded entity); the foreign owner files Form 1040-NR and pays it personally.
Layer Two: State Sales Tax Nexus
Holding stock in a US state creates sales tax nexus — a separate, state-level duty to register with each state where your inventory sits, collect sales tax from buyers located there, and remit it on the state's schedule. Amazon's marketplace facilitator laws now collect and remit sales tax on most marketplace sales on the seller's behalf, which simplifies the collection step — but the registration and remittance obligations for non-marketplace sales (your own Shopify store, for example) remain.
Thresholds and rates differ by state. Wyoming, for example, has no income tax but a 4% state sales tax. California has a higher rate and complex local layers on top. Picking the formation state for the LLC has nothing to do with which states create nexus — that's driven by where Amazon physically stores your inventory, which the seller doesn't fully control.
The Numbers Compared
| Scenario (on $/£100,000 net profit) | Entity-Level Tax | Effective Rate |
|---|---|---|
| US LLC, no US inventory, foreign owner | $0 US federal | 0% |
| US LLC, Amazon FBA inventory in US | ~$16,712 US federal (+ state sales tax) | ~16.7% + sales tax |
| UK Ltd, any customer location | £22,750 Corporation Tax | 22.75% |
The "LLC is always better" take is accurate for one specific seller profile: no US stock, dollar-paying customers, foreign owner, no US staff. Drop that profile and the numbers move.
05 — Annual ComplianceForm 5472 vs Companies House: What Each Structure Actually Costs You in Time
Both structures have real annual obligations. The penalties for missing them are categorically different.
US LLC — Form 5472 (Foreign-Owned, Single-Member)
A US LLC that files nothing is still required to file something. Foreign-owned single-member LLCs must submit Form 5472 with a pro-forma Form 1120 every year — even if the store earned zero dollars. Even if the only "transaction" was the money you wired in to start the company.
The deadline is 15 April. Extendable to 15 October with Form 7004.
Miss it, and the penalty starts at $25,000 per form, per year. The IRS doesn't issue a courtesy warning first.
UK Ltd — Companies House & HMRC
A UK Limited Company files two layers each year: annual accounts and a confirmation statement at Companies House, and a Company Tax Return with HMRC. The deadlines are different from the Form 5472 timeline, and so is the penalty structure.
| How Late | Penalty (Annual Accounts) |
|---|---|
| Up to 1 month late | £150 |
| 1 – 3 months late | £375 |
| 3 – 6 months late | £750 |
| More than 6 months late | £1,500 |
| Two years late running | Both figures double |
HMRC adds £100 the day a Company Tax Return is overdue, with further penalties the longer it runs.
The Comparison in One Line
Form 5472 is the higher single-penalty obligation ($25,000) but only one form a year. UK Ltd filings are lower individually (£150 to £1,500) but more frequent — accounts, confirmation statement, and Corporation Tax return, each with its own deadline.
06 — PrivacyPublic Records: Where Your Name Appears (or Doesn't)
A US LLC can keep your name off the public record. A UK Ltd cannot — and there's no workaround.
US LLC: Privacy States
Wyoming, Delaware, and New Mexico let you form an LLC without listing the owner on a state register. The state record shows the LLC name, the registered agent, and (in some states) the management structure — but not the owner. The Operating Agreement, which actually documents ownership, is a private document held in the LLC's own records.
This is what the term "anonymous LLC" refers to. The owner's name is not in the public state filing. It is held by the registered agent, the bank, the payment processor, and the IRS — none of which is a public record.
UK Ltd: Companies House Is Public by Design
Companies House lists directors and persons with significant control (PSC) publicly. Any person can search it for free, right now, from any browser. The director's name, partial date of birth, country of residence, service address, and PSC status are all on the public record from the day the company is incorporated.
US LLC (Privacy State)
- Owner name not on the public state register
- Operating Agreement is private (LLC records only)
- Registered agent's name and address are public
- Beneficial owner data held by bank, agent, IRS — not public
- Common choice for multi-brand operators and privacy-conscious founders
UK Ltd
- Directors and PSCs publicly listed from incorporation day
- Name, partial DOB, country of residence, service address all on file
- Searchable free of charge by anyone, anywhere
- Annual confirmation statement keeps it current
- No "anonymous Ltd" option exists in UK company law
For some sellers this is a non-issue. For others — especially those running multiple brands, operating in markets where personal exposure creates problems, or working in regulated niches — the privacy difference alone tips the decision.
07 — Banking & PaymentsYour Entity Choice Is Also a Banking Choice
Your entity choice is also a banking choice — and the two stacks don't overlap much.
US LLC: The Dollar Stack
A US LLC pairs with Mercury, Relay, Slash, Wise, or Revolut. More importantly, it unlocks a US Stripe account that settles in dollars. Most US marketplaces and payment processors expect a US entity; the LLC fits naturally. You'll need your EIN and state formation documents to pass Know Your Business checks, but the path is well-trodden.
If most of your sales come from dollar-paying customers — US-based Shopify buyers, Amazon US marketplace, Etsy US, Stripe-processed checkouts in dollars — the LLC's banking stack lines up cleanly with where the money actually arrives.
UK Ltd: The GBP/EUR Stack
A UK Ltd pairs with Wise, Revolut Business, or World First — solid for GBP and EUR settlement, and a better fit if your buyers are in the UK or Europe. You'll need the company number plus incorporation documents to get started. UK Stripe accounts settle in pounds; PayPal Business and most European payment gateways prefer a UK or EU registered entity.
| Tool | Works with US LLC | Works with UK Ltd | Best For |
|---|---|---|---|
| Mercury | ✓ | ✗ | USD operating account, US LLC native |
| Relay / Slash | ✓ | ✗ | USD operating accounts, US LLC native |
| Stripe (US) | ✓ | ✗ | USD payment processing, US marketplaces |
| Stripe (UK / EU) | ✗ | ✓ | GBP/EUR payment processing |
| Wise Business | ✓ | ✓ | Multi-currency, both structures |
| Revolut Business | ✓ | ✓ | Multi-currency, both structures |
| World First | ✓ | ✓ | FX-heavy operations, both structures |
08 — Decision FrameworkFive Questions That Narrow the Decision Faster Than Any Side-by-Side Table
The numbers in this guide cover the main scenarios, but every store is different. These five questions narrow the US LLC vs UK Ltd decision faster than any feature comparison can.
Where does your profit get taxed?
No US staff and no US stock usually means $0 US federal income tax under an LLC. A UK Ltd always owes Corporation Tax first — 22.75% effective on £100k in 2026. If the LLC's "$0 US tax" applies to your operation, that's a meaningful structural advantage. If you'd be paying ECI rates anyway because of FBA, the gap narrows.
Decides: tax outcomeWhere do your customers pay?
Dollar buyers suit a US LLC with Mercury or Relay and a US Stripe account. UK and EU buyers suit a UK Ltd with Wise or Revolut Business and GBP/EUR settlement. Mismatching the entity to where revenue lands creates avoidable FX cost and onboarding friction.
Decides: banking and paymentsDo you store inventory in the US?
FBA stock in American warehouses triggers US income tax (about $16,712 on $100k) and state sales tax obligations — under either structure, with a US LLC being the only one of the two that even fits the FBA model cleanly. This is the single most important variable for FBA sellers specifically.
Decides: compliance loadDoes owner privacy matter?
Wyoming, Delaware, and New Mexico keep your name off public registers. Companies House doesn't offer that option, and there's no workaround. For some founders this is decisive; for others it's irrelevant. Be honest with yourself about which camp you're in before the company is filed — switching afterwards is possible but costly.
Decides: public exposureWhat does your home-country rate look like?
Whichever entity you pick, you still pay personal income tax where you live on what reaches you. That layer is the same either way — but it's not zero, and it can swing the after-tax outcome significantly depending on jurisdiction. A €100k draw in Portugal looks different from the same draw in Germany.
Decides: actual money in your pocket09 — FAQFrequently Asked Questions
Form a US LLC or UK Ltd With Confidence
We help e-commerce founders pick the structure that actually matches how their store operates — and then form it, get the EIN or company number, open banking, and put the compliance calendar in place. One process, no guesswork.
