Entering the U.S. Market: Steps to Get Started
We’ve been helping firms crack the U.S. market for over 20 years now, so are aware of the typical processes businesses go through to get their operations up and running stateside. There’s a lot to consider, so to help you out here are some of the common first steps you need to take to get your U.S. business expansion journey started.
1. Incorporating Your Business
If you’re entering the U.S. market for the first time, setting up a subsidiary in the U.S. decreases the liability that your company is exposed to. Yes, it is possible to bill clients from an international entity, but sooner or later, you’ll want to incorporate your business in the U.S to minimize your risks. The two most-used business structures in the U.S. are C-Corp and LLC. It is important to speak with a corporate governance professional when choosing a corporate structure in the U.S.
2. Choosing a U.S. Office Location
Choosing an office location in the U.S. traditionally was one the most frequent questions on businesses’ minds prior to COVID-19. With the prevalence of remote working and travel restrictions, businesses have asked themselves, ‘Do I need to open an office to start doing business in the U.S.?’
You can save yourself a lot of hassle by using an employer of record (EOR), like PGC. An EOR manages your workers on your behalf, ensuring all compliance is followed. You don’t even need a local entity and can have workers onboarded within 24 hours. This means if you are not ready to take the leap stateside just yet due to restrictions, you can still do business in the U.S. by utilizing an EOR. You can find out more about how you can do business in the U.S. without a presence, here.
If you are, however, still eyeing up U.S. office locations to make the most of the anticipated drop in real estate prices post COVID-19, you should consider the following factors when you are searching for the perfect location.
Quality of local talent - It’s likely that you’ll want to hire local workers at some stage in your expansion journey. You should check out what is the local talent pool is like in the city/state you’re considering. For example, is there a quality supply of candidates hailing from local universities? What are the education levels like in that area?
Time zone - When choosing an office in the U.S., do not underestimate the difference a time zone makes when doing business internationally. You can face challenges when communicating to Europe and different areas of the U.S., especially the West Coast. Often, businesses find New York and Florida’s time zones to be within a bearable time difference with Europe.
Transport links - How well connected is your city/ location to local markets? The United States is a big place. If you have frequent meetings, you should consider setting up your office in a location that is accessible to local transport routes. Being within close reach to major transport routes can also help attract quality talent who want an easy commute.
Budget - The costs of opening an office and salaries in the U.S. vary wildly depending on the state or city you operate in. Some locations have a much lower living wage, office prices, and tax burdens than others.
Quality of life - Ask yourself, can you see yourself living or visiting this location? Is this a place where your workers could build a happy life in and out of the office? The better quality of life the area offers can really improve retention rates.
Business incentives - When setting up your office in the U.S., It is worth considering states who offer incentives to attract businesses to their locations. Check out some of the most popular ones here.
3. Immigration
Your employees are a big part of what makes your business unique, so it is likely you’ll want some of your internal staff to join your U.S. expansion journey. The U.S. immigration system is notoriously subjective and difficult to navigate. Therefore, if you want to relocate staff to the U.S., we always recommend seeking advice from an immigration specialist as soon as possible.
Businesses most commonly use the E2 (investment visa) when entering the U.S. market. In order to have your E2 approved, you’ll need to put a business plan together, be willing to invest a significant amount of money into your business plan, show plans to hire local staff, and provide tonnes of documentation. Once your E2 visa is approved, you’ll be able to transfer a member of your senior staff (usually a Director and/or Owner) initially and junior employees at a later date.
4. Hiring Workers in the US
One of the final and most important steps when getting started in the U.S. market is hiring your workers compliantly. There are three main ways of engaging workers in the U.S which you should be aware of.
1. W2 - If you engage a worker as a W2, you are responsible for their insurances, payroll, benefits, and taxes. This is the most common engagement model for workers in the U.S. as it is the most compliant. It can be daunting learning all the rules and regulations that come along with employment compliance, never mind seeking out competitive benefit plans. If this seems a little too much to do alone, you can simplify the process by placing W2 workers using a solution like PGC’s.
2. Corp-to-Corp - Corp-to-Corps are independent contractors (ICs) operating through their own corporation. A common challenge businesses face when entering the U.S. market, is compliantly engaging with ICs. If you plan to, it’s very important to correctly classify the engagement and avoid the significant penalties of a misclassification lawsuit.
3. 1099 – A 1099 is also known as a sole trader or freelancer. It is very hard to compliantly engage these types of workers.
5. Employment Compliance
If you choose to hire a worker in the U.S. independently, it is vital that you keep up to date with the ever-changing employment compliance landscape to decrease the chance of costly misunderstandings arising. Insurances, workers compensation, worker classification, healthcare, benefits plans, and paid sick leave ordinances are just some to name a few. If you operate in multiple states, each one has different employment laws. So, you have to stay on top of your compliance game.
If you utilize an employer of record service, they will look after all of this for you. If your main priority is growing your business in the U.S., you should place all your energy on what you do best, running your business. It can be overwhelming getting tangled up in the world of U.S. compliance.
Ready to Get Started in the U.S. Market?
Expanding your business to the U.S. can be a daunting process if you brave it alone. We recommend speaking to experts to get your plans rolling and avoid the common headaches associate with U.S. expansion. If you’re ready to learn more about getting starting in the U.S. market, organize a strategy call with one of our experts today.
Disclaimer: All information written here is for general informational purposes only and is not intended to be a substitute for professional and/or legal services.