Should Your Startup Set Up a US Entity?

Should Your Startup Set Up a US Entity?

For ambitious startups with global plans, setting up a US entity can be a smart strategic move. The United States remains the world’s largest venture capital market, and many investors prefer structures they already know and trust.

That said, the benefits only really stack up if the structure fits your growth plans. Below we break down why founders choose the US — and what responsibilities come with it.

Why startups expand into the US?

Easier access to investment

One of the biggest drivers is fundraising. US investors (particularly VCs) are far more comfortable investing in US corporations — most commonly Delaware C-corps. The legal framework is familiar, investment documents are standardised, and equity structures are investor-friendly.

In practice, this can mean:

• Smoother VC conversations
• Faster funding rounds
• Better support for employee share schemes
• Stronger positioning for future exit

If raising venture capital is part of your roadmap, a US entity can make a real difference.

Stronger credibility in the US market

If you’re selling to US customers, having a US company can improve trust and reduce friction with:

• Enterprise clients
• Payment providers
• US platforms and marketplaces

It often makes your business look and feel more “local” to US partners.

Flexible company structures

US corporate law — particularly in Delaware — is built with scaling businesses in mind.

Founders benefit from:

• Multiple share classes
• Flexible governance
• No requirement for US-resident directors
• Simple incorporation process

This flexibility is one reason the model is so popular with high-growth tech startups.

Key obligations to be aware of

Setting up in the US isn’t a “set and forget” exercise. There are ongoing compliance requirements.

Annual state filings

Most US companies must:

• File an annual report
• Pay franchise tax
• Maintain a registered agent

Missing these can lead to penalties or loss of good standing.

US tax compliance

Depending on your activities, you may need to:

• File US federal tax returns
• Register in states where you have nexus
• Run US payroll if hiring locally
• Manage sales tax where applicable

Foreign-owned companies often have additional IRS reporting requirements too.

Corporate housekeeping

US companies are expected to maintain proper records, including:

• Board and shareholder documentation
• Share issuance records
• Annual approvals or written consents

Investors will expect these to be in good order.

Cross-border considerations for UK founders

If you’re UK-based, it’s important to consider:

• CFC rules
• Transfer pricing
• Permanent establishment risks
• Double taxation exposure

Getting joined-up UK and US advice early is key.

Is it right for every startup?

A US entity usually makes sense if:

✅ You plan to raise venture capital

✅ The US is a key target market

✅ You’re building a high-growth scalable business

It may be unnecessary if:

❌ You’re running a lifestyle business

❌ All activity is UK-focused

❌ You want minimal compliance

How OTG Accountants can help

Setting up in the US can unlock major opportunities — but only if structured properly from day one.

OnTheGo supports startups with:

• US expansion planning
• UK–US tax coordination
• Group structuring
• Ongoing compliance
• Investment readiness

Speak to the OTG team to explore whether it’s the right move for your business.