The Basic Guide to Expanding into the US

Are you and your business partners toying with the idea of expanding to the US? Well, if so, you’re in good company. Many businesses all over the world are drawn to America for its large and profitable market, access to capital investment, talent and innovation, and the chance it offers a business to widen its reach, bolster its profitability and boost its reputation as a global player.

However, expanding to the US isn’t something to take lightly. There’s an awful lot to consider, and it can be a labour-intensive endeavour from a research and planning perspective. To make it easier, here is a basic guide to inform you about some of the things you’ll need to investigate in greater detail if you’re serious about tapping into what the USA has to offer.

Begin by ensuring you can afford expansion

First and foremost, your business must be financially ‘sound’ before you can risk expansion overseas. Do your research into the company’s accounts, forecasts and existing liabilities before you take on something as expensive as setting up in the USA.

And, (it should go without saying but is worth mentioning nonetheless) make sure you have thought about what your business can offer the USA. Is there a gap in the market? Do you know how to fulfil what American customers want right now? Does the USA offer the right kind of benefits for your business, and are you confident it’s the best choice of country to expand to over another one?

Keep an eye on political issues and business affairs

If you’re confident your business has something to offer the US market, keep abreast of political affairs. It’s uncertain what the impact of President Trump’s policies will be on international businesses looking to expand to the USA, so keep a close eye on the news and consider what impact tax or tariffs could have on your plans, for example.

If setting up in the USA still looks like a good idea, give some careful thought to how you’d like to establish yourself. For example, you may decide to simply set up a branch office in the US. This is a quick and easy option, but it does come with pitfalls: namely, you’ll be exposing your business to taxation on your entire corporate income, rather than just the branch’s income earned in the USA. You’ll also expose your entire business to liability and lawsuits.

Many businesses therefore choose to set up a subsidiary company, but it’s a good idea to hire a US attorney to talk you through whether to establish a limited liability company or a corporation, if this is the route you want to go down.

Hire a tax consultant to advise you

As well as hiring an attorney to help you decide how to legally structure your US business, consider hiring a specialist tax consultant. This person will need to have knowledge of taxation from an international perspective, advising you on how to pay tax in the US, what kind of documentation you’ll need, and how various legal structures determine the amount of tax you’ll pay. The rate of taxation varies from state to state too, and you’ll need to get yourself a Federal Tax ID number before you can start doing business.

So, pay for a professional to help you navigate all this complicated ‘landscape’ to ensure you’re doing everything by the book and not paying more than you need to.

Consider investing in US employees

For many businesses expanding to the USA, an American employee on the ground is invaluable. Not only will he or she drive through the plans you’ve created for your business, but they’ll also have insider knowledge of working with an American market, as well as being a trusted and accessible point of contact for your new customers. So, consider finding and hiring US employees to help you.

You can do this yourself, or you can do it through a company such as Foothold America – they’ll hire US employees for you and handle all the HR administration on your behalf (something that will save you time and money, as US payroll, benefits and employment can be very confusing as an outsider). Their services also mean you won’t need to set up a subsidiary company if you’d prefer to just ‘test the water’ initially, so consider using a third party like them to make expansion to the US a smooth transition.

Consider time zone and geographical factors

Finally, whether you’re going to set up a subsidiary, or are just going to test the water, you’re definitely going to need to visit the US from time to time to ensure things are running smoothly. Give some thought to the fact that the USA is a vast place with numerous time zones: the state you choose to operate will therefore either make things easier or much harder for you, so check out airports, transport links, infrastructure and other seemingly minor details that might have a big impact on your expansion.

Dragan Sutevski

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan