Freelancing
Freelancer or company?
Staying self-employed or setting up a company when you work from anywhere: why a company doesn't move you for tax, the yearly paperwork, a UK limited company, a US LLC and an Estonian company side by side, and the services that set one up, from their own price lists.
Checked on 16 October 2026. UK figures are for the 2026/27 tax year. This is general information, not tax or legal advice: where you live, where you work and how you run the business can each change the answer.
The short version
- A company doesn't change where you pay tax. Estonia's own e-Residency programme says it "does not confer tax residency". e-Residency, responsibilities of e-residents
- Where it's run can matter as much as where it's registered. Estonia's tax board says its companies are "also taxed abroad when the management... occurs outside of Estonia", and the UK treats a company as resident where its central management and control is. Estonian Tax and Customs Board, companies set up by e-residents, HMRC, INTM120060
- A company means yearly paperwork, even with no income. A £50 confirmation statement in the UK, an annual report in Estonia even for a dormant company, and for a single-member US LLC with a non-US owner, Form 5472 every year, with a $25,000 penalty for missing it. Companies House fees, September 2026, e-Residency, annual reports, August 2026, IRS, Form 5472 instructions
- Your home country decides how it sees a foreign company. HMRC generally treats a US LLC as a company, so a UK-resident owner is taxed on what the LLC pays out, not on its profit as it's made. A consultation on changing that closed on 31 July 2026. HMRC, INTM180050, October 2026, HMRC and HM Treasury, US LLC consultation, June 2026
- Staying self-employed at home avoids company filings. In the UK you register for Self Assessment once you earn more than £1,000 a year from it. GOV.UK, register as a sole trader
Self-employed or a company: the UK, 2026/27
The UK as a worked example. Most countries have the same choice, with their own rates.
Self-employed (a sole trader)
- Registering
- Register for Self Assessment once you earn more than £1,000 a year from self-employment, by 5 October after the end of the tax year. GOV.UK, register as a sole trader, LITRG, registering for Self Assessment, October 2026
- Tax on profits
- Income tax, plus Class 4 National Insurance: 6% on profits from £12,570 to £50,270 and 2% above. Class 2 is treated as paid once profits are over £7,105; below that, paying it (£3.65 a week) is voluntary. GOV.UK, National Insurance rates, April 2026, LITRG, National Insurance for the self-employed, April 2026
- Making Tax Digital
- You have to use it from April 2026 if your qualifying income for 2024/25 was over £50,000, from April 2027 if it was over £30,000 for 2025/26, and from April 2028 if it is over £20,000 for 2026/27. GOV.UK, Making Tax Digital for Income Tax, March 2026
- Living abroad
- From 6 April 2026 most people can no longer pay voluntary Class 2 for periods abroad. Class 3 is the option left, and new applicants need 10 years' UK residence or 10 qualifying years. HMRC, voluntary National Insurance abroad from 6 April 2026
A limited company
- Setting it up
- £100 online at Companies House. Since 18 November 2025 every new director has to verify their identity; from abroad you can do it through an authorised agent. Companies House fees, September 2026, Companies House, identity verification, August 2025, GOV.UK, verifying your identity, June 2026
- Where
- Directors don't have to live in the UK, but the company needs a registered office at a physical UK address. GOV.UK, company directors, GOV.UK, registered office
- Tax on profits
- Corporation tax at 19% on profits under £50,000 and 25% over £250,000, with marginal relief in between. GOV.UK, Corporation Tax rates, April 2026
- Taking money out as dividends
- Taxed at 10.75%, 35.75% or 39.35% depending on your income band, after a £500 dividend allowance. GOV.UK, tax on dividends
- Every year
- A £50 confirmation statement to Companies House. Companies House fees, September 2026
- Its tax residence
- A company incorporated in the UK is UK resident. It can also count as resident where it's managed, and a tax treaty then decides; where the treaty leaves it to the two tax authorities to agree, it stays resident in both until they do. Corporation Tax Act 2009, s.14, HMRC, INTM120030, HMRC, INTM120085
A UK company, a US LLC or an Estonian company
The three places freelancers most often look at, from each government's own pages. None of them changes where you are taxed as a person.
| UK limited company | US LLC (Wyoming or Delaware) | Estonian company (OÜ) through e-Residency | |
|---|---|---|---|
| Government fee to set up | £100 online | Wyoming $100; Delaware $110 | €265 for the company, plus €150 for the e-Residency card (€165 from 1 January 2027) |
| Every year | A £50 confirmation statement to Companies House | Wyoming at least $60; Delaware $400 (it was $300), due 1 June. For a single-member LLC with a non-US owner, a pro forma Form 1120 with Form 5472 each year | An annual report within 6 months of the year end, even if the company did nothing |
| A local presence | A registered office at a physical UK address. Directors don't have to live in the UK | A registered agent in the state, which formation services sell (see below) | If the board is abroad, a licensed contact person with an Estonian address |
| Tax on the company | Corporation tax: 19% on profits under £50,000, 25% over £250,000, and in between a rate set by marginal relief | None by default for a single-member LLC: the IRS treats its profit as the owner's. A non-US owner pays US tax on income connected with a US trade or business, and 30% on some other US-source income | 0% on profit kept in the company; 22/78 on profit paid out |
| The catch | A UK company is UK tax resident, wherever you live. If you run it from abroad, your country may treat it as resident there too | Missing Form 5472 costs a $25,000 penalty. Your home country decides how it taxes you on the LLC: the UK generally treats it as a company, not as you | If you manage it from where you live, that country can tax the company too. e-Residency doesn't make you tax resident in Estonia |
Sources: Companies House fees, September 2026, Wyoming Secretary of State, fees, June 2026, Delaware Division of Corporations, LLC formation, e-Residency, Estonian state fees, August 2026, e-Residency, state fee, e-Residency, changes in 2025 and beyond, April 2026, Delaware Division of Corporations, LLC tax, August 2026, IRS, Form 5472 instructions, e-Residency, annual reports, August 2026, GOV.UK, registered office, GOV.UK, company directors, Firstbase, pricing, e-Residency, contact person and legal address, e-Residency, legal duties of company owners, December 2020, GOV.UK, Corporation Tax rates, April 2026, IRS, single-member LLCs, July 2026, IRS, effectively connected income, August 2026, IRS, income of nonresident aliens, July 2026, Estonian Tax and Customs Board, income tax, Estonian Tax and Customs Board, tax rates, March 2026, Corporation Tax Act 2009, s.14, HMRC, INTM120030, HMRC, INTM180050, October 2026, Estonian Tax and Customs Board, companies set up by e-residents, e-Residency, responsibilities of e-residents
A US LLC with a non-US owner
- For US tax
- A single-member LLC is ignored by default ("disregarded"): its profit is the owner's. It can choose to be taxed as a corporation instead (Form 8832). IRS, single-member LLCs, July 2026
- When the US taxes a non-US owner
- On income connected with a US trade or business, at the normal graduated rates; doing the work in the US usually counts. Some other US-source income is taxed at 30% of the gross, or a treaty rate. IRS, effectively connected income, August 2026, IRS, income of nonresident aliens, July 2026
- Every year, even with no US tax
- A pro forma Form 1120 marked "Foreign-owned U.S. DE", with Form 5472 attached, due on the 15th day of the 4th month after the year end. Not filing costs $25,000. IRS, Form 5472 instructions
- Its tax number (EIN)
- If you have no US residence or principal place of business, you can't apply online: phone +1 267-941-1099 (not toll-free, Monday to Friday, 6am to 11pm Eastern time), fax or post Form SS-4, writing "foreign" where it asks for an SSN or ITIN. IRS, Form SS-4 instructions
- Ownership reporting
- Companies formed in the US no longer report their owners to FinCEN. FinCEN, March 2025
An Estonian company through e-Residency
- What e-Residency is
- The e-Residency card costs €150, rising to €165 from 1 January 2027. It "does not enable you to travel or live in Estonia or Europe" and doesn't make you tax resident. e-Residency, state fee, e-Residency, changes in 2025 and beyond, April 2026, e-Residency, responsibilities of e-residents
- The company
- A private limited company (OÜ) with as little as €0.01 of share capital per shareholder, paid in when it's founded, and a €265 state fee. e-Residency, share capital, April 2026, e-Residency, Estonian state fees, August 2026
- Tax
- No tax on profit kept in the company. Profit paid out is taxed at 22/78 in 2026, the same as 2025; the lower 14/86 rate ended in 2025. Estonian Tax and Customs Board, income tax, Estonian Tax and Customs Board, tax rates, March 2026
- Running it from abroad
- You need a licensed contact person with an Estonian address. Another country "may consider your company a tax resident if you effectively manage it from there". e-Residency, contact person and legal address, e-Residency, legal duties of company owners, December 2020, e-Residency, cross-border taxes, May 2026
Running a company from your laptop: the questions to ask
- Where are the decisions made? The UK looks at where central management and control "actually abides", as a question of fact, not where the board says it meets. HMRC, INTM120060
- Could your home count as a place of business for the company? The OECD's 2025 guidance, as EY summarises it, says an employee working from home for less than 50% of their working time over 12 months generally doesn't create one; above that, it depends on whether there's a commercial reason for being there. It was written for employees of a foreign employer, and how it applies when you own the company isn't settled. Not every country follows it. EY, the 2025 OECD update, December 2025
- Does a tax treaty settle it? If two countries both say the company is resident, the treaty tie-breaker applies. Many UK treaties look at where it is effectively managed; where a treaty leaves it to the two tax authorities to agree, the company stays resident in both until they do. HMRC, INTM120085
- How does your home country tax you on it? Salary and dividends can be taxed differently, and countries treat foreign companies differently: the UK, for example, generally taxes a UK-resident owner of a US LLC on what it pays out. Ask an adviser in the country you live in before you set one up. HMRC, INTM180050, October 2026
Americans abroad with an LLC
- How it's taxed
- A single-member LLC owned by a US citizen goes on Schedule C, like a sole proprietorship, and self-employment tax applies the same way. IRS, single-member LLCs, July 2026
- Taxed as an S corporation
- An LLC can elect S corporation status on Form 2553. IRS, about Form 2553
Formation services compared
Prices from each service's own pricing page, read on 16 October 2026. They change often; check before you pay.
A US LLC
In order of starting price before state fees. Stripe Atlas includes the state fee; the others add it. Clerky only sets up Delaware corporations, not LLCs.
| Service | Price | State fee | Registered agent | After the first year | Founders outside the US | |
|---|---|---|---|---|---|---|
| ZenBusiness | Starter $0, Pro $199, Premium $299 | Extra | Not included on any plan: $199 a year | Pro renews at $199 a year, Premium at $299 | Not stated | Go to ZenBusiness |
| LegalZoom | Basic $0, Pro $249, Premium $299 | Extra | Price not on the page | Pro: an attorney plan at $49 a month after 30 days. Premium: bookkeeping at $9.99 a month after 6 months | Not stated on its LLC page | Go to LegalZoom |
| Northwest Registered Agent | $39 | Extra | First year included, then $125 a year | Registered agent $125 a year | Not stated | Go to Northwest Registered Agent |
| Firstbase | $99 (shown down from $399) | Extra | Required, not included: $299 a year per state | Optional mailroom $35 a month; tax filing for a non-US-owned single-member LLC $899 a year | Sells a tax package for non-US owners | Go to Firstbase |
| doola | Starter $297 a year | Extra | The page contradicts itself on whether Starter includes it | Yearly plans; the higher tiers (Tax & Compliance $1,999, Business-in-a-Box $2,999) add the state annual report, IRS filings and bookkeeping | Yes: "entrepreneurs from around the world" | Go to doola |
| Stripe Atlas | $500 | Included | First year included, then $100 a year | Registered agent $100 a year | Says companies from over 175 countries have used it | Go to Stripe Atlas |
Sources: ZenBusiness, LLC pricing, October 2026, LegalZoom, LLC pricing, Northwest, LLC pricing, July 2026, Firstbase, pricing, doola, pricing, October 2026, Stripe Atlas
A UK limited company
The cheapest package from each that includes a registered office and a director's service address, after Companies House itself. In order of the price shown plus the £100 Companies House fee, before VAT; the pages don't treat VAT the same way.
| Service | Price | The £100 fee | Registered office and service address | After the first year | If you live outside the UK | |
|---|---|---|---|---|---|---|
| Companies House | £100 online, doing it yourself | This is the fee | Neither: you supply a UK address | £50 a year confirmation statement | Yes: directors don't have to live in the UK | Go to Companies House |
| Rapid Formations | Privacy package £14.99 (VAT not stated) | Extra: £100 | Both, in London | Not stated; a registered office on its own is £39 a year | Has non-resident packages, with no price shown | Go to Rapid Formations |
| Your Company Formations | Privacy package £17.48 + VAT | Extra: £100 | Both, in London (service address for one director) | Billed yearly; renewal price not stated | International package for non-residents: £98.48 + VAT, plus the £100 | Go to Your Company Formations |
| 1st Formations | Privacy package £117.99 | Included | Both, for 12 months | Registered office £39 + VAT and service address £26 + VAT a year | Has a non-residents package, but its page dates from March 2024 | Go to 1st Formations |
Sources: Companies House fees, September 2026, GOV.UK, company directors, Rapid Formations, packages, Your Company Formations, packages, 1st Formations, packages, 1st Formations, non-residents (March 2024)
An Estonian company
In order of the lowest set-up price each publishes, as published: some include VAT and some add it. Monthly prices aren't like for like: some include accounting and some don't. You need the e-Residency card first (€150).
| Service | To set up | After that | Contact person and address | Worth knowing | |
|---|---|---|---|---|---|
| Companio | €265 + VAT on Premium and Ultra (the state fee only); €390 on Pro | Pro from €89 a month, Premium from €199, Ultra from €594 (excluding VAT). Pro's annual report is €250 a year extra | Included on all plans | - | Go to Companio |
| Xolo Leap | The €265 state fee plus a €25 + VAT registration fee | Starter €59 a month (for the first 12 months or until €4,000 of revenue), Standard €99, Pro €139, Premium from €259 (excluding VAT) | A legal address is included; the page doesn't say whether a contact person is | Xolo Go, its no-company option, lets you invoice without a company for 5.9% on outgoing payments | Go to Xolo Leap |
| Unicount | €296 including VAT (the €265 state fee plus a €31 register fee) | A virtual office at €199 a year + VAT is required; accounting from €29 a month + VAT | In the €199 virtual office | - | Go to Unicount |
| Enty | €60 plus a €290 government fee (excluding VAT) | Paid plans from €33 a month | Included on paid plans, not the free one | It gives the government fee as €290; the e-Residency programme gives €265 | Go to Enty |
| 1Office | €510 for one shareholder, including the state fee and the first year's address and contact person (€690 for up to 3 shareholders) | Address and contact person €195 a year; accounting price not published | First year included | - | Go to 1Office |
Sources: Companio, pricing, October 2026, Xolo, pricing, Xolo, set-up cost, July 2026, Xolo Go, cost, July 2026, Unicount, pricing, July 2026, Enty, pricing, 1Office, for e-residents, September 2026