Ask HN: Setting up a US topco with a UK subco

#1

Post by tomerds » Tue, Nov 29, 2022, 1:52 PM UTC

Hi,

My co-founder and I are currently raising a pre-seed from EF who can invest in either US or UK companies with ease. We need to set up our company in order to create a bank account to receive the funding within the next couple of weeks. We are citizens from the US and UK respectively.

Ideally we want to set up as a US topco as we suspect our seed (plan to close in April) will come from the US due to our network and industry (web3). However in order to employee myself (UK) longterm we want to set up a UK subco.

Is there any advice out there from seasoned entrepreneurs who may have gone through something similar?

Note: we will be operating remotely

Re: Ask HN: Setting up a US topco with a UK subco

#2

Post by JumpCrisscross » Tue, Nov 29, 2022, 1:54 PM UTC

U.S. only. Changing your legal structure for one person is a wild misallocation for a pre-seed start-up, and a stain not easily remedied down the road.

Re: Ask HN: Setting up a US topco with a UK subco

#3

Post by tomerds » Tue, Nov 29, 2022, 2:13 PM UTC

JumpCrisscross wrote: post #2

U.S. only. Changing your legal structure for one person is a wild misallocation for a pre-seed start-up, and a stain not easily remedied down the road.

Thats totally fair,

Two questions: 1) why is it a stain, 2) my citizenship won't be changing any time soon, won't hiring myself as a contractor open us up to employee misclassification

Re: Ask HN: Setting up a US topco with a UK subco

#4

Post by e1g » Tue, Nov 29, 2022, 4:08 PM UTC

90% of US-based Seed-level investors will not invest in a foreign entity. 90% of investors also will consider a complex corporate setup (at pre-seed) to be a big red flag - questions of IP residency, financial/taxation obstacles, lack of alignment/prioritization among founders, etc. "U.S. only" is the right choice, especially after the crypto clown show of the last six months.

There is no issue with a US entity employing a person in the UK - your citizenship is irrelevant.

Re: Ask HN: Setting up a US topco with a UK subco

#5

Post by seekingcharlie » Tue, Nov 29, 2022, 10:27 PM UTC

You can have a US co and still employ yourself legally in the UK. Check out remote.com et al.