Best way to set-up UK LLP?

[hdloader11]

Hey guys, I've been dropshipping for a while now using my USA LLC, but I want to open a new company for my non-US income. Most of my customers will be in UK, thus I wanted to open a UK LLP due to it being a pass-through entity, since I don't have to pay personal income taxes where I live.

However a LLP requires at least 2 different entities to form, so I've been wondering about what is the best way to go about this that will minimize my tax burden.

If I were to get a UK LLC as a partner and give it like 1% of the profits, would that work? I would then have to pay 20% tax on that 1% presumably.

Another option that came to mind was having my father as the second partner in the LLP. I'll give him a low percentage of profits just for show, and he also doesn't need to pay income taxes, thus things will work out.

My third and final option was just setting up a UK LTD, and then paying out any and all profit as salary to myself at the end of the fiscal year. This way, there technically wouldn't be any corporate income taxes, since there are no profits to be had.

What do you guys think of these options, which would be the best?

 

[Marzio]

If I were to get a UK LLC as a partner and give it like 1% of the profits, would that work? I would then have to pay 20% tax on that 1% presumably.

You could also give 0% to the UK LTD and make that company dormant.

 

[hdloader11]

You could also give 0% to the UK LTD and make that company dormant.

That's probably the best idea. Would that work though? I somehow thought that all partners needed at least some profit distribution, but I'm probably wrong

 

[fshore]

If a UK LTD is part of of a llp, will still the sales be non UK sourced and not taxable for the non UK resident?
UK source income from a llp is taxable in the UK also for a non resident.

 

[Marzio]

If a UK LTD is part of of a llp, will still the sales be non UK sourced and not taxable for the non UK resident?
UK source income from a llp is taxable in the UK also for a non resident.

Alright then to be safe it would be probably a smart idea to make the second partner your father or if privacy is a concern make the second partner the US LLC.

 

[Ready Offshore]

Hey guys, I've been dropshipping for a while now using my USA LLC, but I want to open a new company for my non-US income. Most of my customers will be in UK, thus I wanted to open a UK LLP due to it being a pass-through entity, since I don't have to pay personal income taxes where I live.

However a LLP requires at least 2 different entities to form, so I've been wondering about what is the best way to go about this that will minimize my tax burden.

If I were to get a UK LLC as a partner and give it like 1% of the profits, would that work? I would then have to pay 20% tax on that 1% presumably.

Another option that came to mind was having my father as the second partner in the LLP. I'll give him a low percentage of profits just for show, and he also doesn't need to pay income taxes, thus things will work out.

My third and final option was just setting up a UK LTD, and then paying out any and all profit as salary to myself at the end of the fiscal year. This way, there technically wouldn't be any corporate income taxes, since there are no profits to be had.

What do you guys think of these options, which would be the best?

There are so many options after Brexit to consider: residence, bank account, profits and salary.

 

[hdloader11]

If a UK LTD is part of of a llp, will still the sales be non UK sourced and not taxable for the non UK resident?
UK source income from a llp is taxable in the UK also for a non resident.

Is dropshipping considered a UK sourced income though? Because in US it isn't considered to be a US sourced income, thus not subject to any taxes, especially since my company has no significant presence in USA.

It's looking better to open another US LLC and get a GBP account from Transferwise if all dropshipping income from UK is considered as UK-sourced.

Also it seems you are right, if there is a UK company/person as a part of the LLP, it can be taxed in UK.

 

[fshore]

Is dropshipping considered a UK sourced income though? Because in US it isn't considered to be a US sourced income, thus not subject to any taxes, especially since my company has no significant presence in USA.

Yes, if done/managed in the UK. That's why a UK resident partner might be a bad idea. But I'm not sure about this, should be checked.