Avoid These 5 Oversights When Starting a Business in the US
We’ve been helping ambitious businesses expand to the U.S. for 22 years now. During that time, we’ve identified factors that tend to separate the winners from the losers. Here are some mistakes to avoid when starting a business in the US.
1) Not enough research
It may seem obvious, but nearly all the issues that companies have when expanding internationally generally stem from lack of research, and the US is no different. Americans may speak the same language as people in the UK but don’t be fooled – there are some significant UK vs US cultural differences, particularly when it comes to starting a business in the US and employment!
Here are some great resources to aid your research process when starting a business in the US: business expansion
Speak with companies who have expanded their business to the U.S. previously to find out about their experience and best practice advice.
Attend relevant conferences with experts on business in the US. There are quite a few U.S. expansion conferences/workshops.
As a specialized US employer of record, PGC offer relocation and employment advice to help you when starting a business in the US. We offer free 30 minute strategy calls where we can run through your business expansion goals with a US Expansion Consultant. We will talk you through how you can start a business in the US, and offer specific advice if you plan to hire US employees.
UK Department for International Trade - helps businesses export and grow into global markets.
2) Not seeking professional tax advice
The tax environment in the US is notoriously complex with different taxes imposed at federal, state, and municipal levels. According to a TAS analysis of IRS data, US taxpayers and businesses spend about 7.6 billion hours a year complying with the filing requirements of the Internal Revenue Code.
If you don’t seek the right tax and business advice before starting a business in the us, you can get yourself into a pickle down the line. It’s no joke, the penalty for filing taxes incorrectly can result in hefty fines or even jail in extreme cases. Speak with an experienced tax professional to avoid this.
Even better, an accountant who understands the differences between the U.S. tax system and your local jurisdiction who can educate you on the variances and avoid a knock on the door from the IRS in the future. At PGC we spoke with US tax expert Christina Woskobojnik in a LinkedIn live session to help UK businesses better understand the US tax system when entering the market. Watching this will give you a solid knowledge base of the US tax system before starting a business in the US, but seeking specific advice with tax professionals related to your business is recommended.
3) Not seeking professional legal advice
Similar to the US tax system, US law is based on federal, state, and local jurisdictions. Federal law sets the minimum standard and states and/or local jurisdictions can choose to meet or exceed the federal standard. This can create legal complexity, particularly for international businesses. Along with a great accountant, you’ll want an excellent legal advisor in your corner who can help you avoid any pitfalls in the system, and get you set up with sufficient business contracts.
4) Not adjusting your employer benefits package for U.S. workers
It’s important to remember that US employees might have very different package expectations to staff that you employ elsewhere in the world. Access to medical healthcare benefits for example, is a huge deal for US employees and can make or break a remuneration package.
Most US employees will also expect access to a 401(k) retirement fund and PTO (Paid Time Off). It’s important to seek advice on how to tailor your package before hiring workers in the US and make sure you’re attracting the best talent.
5) Not having appropriate business insurance
Newsflash: America is a litigious place!
Even if you follow all the rules and regulations, doing things exactly by the book, there is still a chance you might be pulled into a lawsuit at some point after starting a business in the US. So, we recommend getting great business insurances in place prior to starting a business in the US– this will help you sleep at night!
How can I avoid making these mistakes when starting a business in the US?
If you really want to avoid simple oversights like these when starting a business in the US, we highly recommend that you partner with an experienced employer of record who understands the US market. At PGC we know hiring employees in the US vs the UK differs greatly, and will happily assist you with any queries you have regarding US business expansion.
On our website we have lots of great resources to help you understand the US market. Check out “The Ultimate Checklist,” our market research guide specially designed to help you prepare for entering the US.
Disclaimer: The information provided here does not, and is not intended to, constitute legal or accountancy advice. Instead, the information and content available are for general informational purposes only.