Advice

How to Expand Business in the USA?

Expanding a business internationally has its own intricacies. Many companies are drawn towards the US market as it offers lots of allures such as geographic proximity, a familiar language and culture, and a business-friendly environment.

Moreover, the US market provides various growth opportunities for businesses. I know you might have many questions from legal formation to which physical location is suitable to expand the business, etc.

 

So below I have listed some common questions asked by entrepreneurs when they intend to expand their business in the US.

  • In which form is it suitable to open a business?

Expanding business to the US, the most preferable business structure is LLC. The setup process for an LLC is the same for a foreign national as it is for a US citizen, and is quite simple. LLC has “pass-through taxation” so any business under LLC is not applicable for corporate income taxes. Hence, this enables business owners to elude “double taxation” effects triggered by paying taxes both as an entity and an individual. Moreover, under LLC you don’t have to worry about Employer Identification Number, you can easily hire employees and file taxes without being a US citizen.

 

  • In which state is it more profitable to register a company?

Businesses in the United States can form LLC in any of the 50 states or Washington DC. But states like Delaware, Nevada, and Wyoming are more business-friendly or international-friendly. You can even find fortune 500 companies in Delaware and Nevada, it is one of the fast-growing or high-potential states offering various advantages for outside businesses. Some of the advantages are listed below

  • The law of Delaware and Nevada is very flexible as compared to other states
  • The Court of Chancery especially focuses on business regulation and uses magistrates instead of board of juries
  • For businesses, there is no corporate income tax that is formed in Delaware and Nevada.
  • There is a personal income tax for foreign nationals
  • Taxation necessities are repeatedly fortunate to companies with intricate capitalization structures or a large number of approved shares.
  • You don’t need to be residents of Delaware and Nevada, irrespective of you are a shareholder, director or any officer
  • Nevada and Delaware has a very pro-business climate with no information sharing agreement with the IRS

More importantly, when you want to open a US bank account or merchant account for your US company you can choose Wyoming as it has lower annual state fees, which is $50 than Delaware where it is $250 or Nevada $325. However, banks of Delaware, Nevada, and Wyoming are very familiar with dealing with international clients that have no physical office in the US. So the procedure becomes quite simple.

 

  • What is the procedure for registering the company in the US?

As the US offers unique culture for growth, it has a productive and open customer market. According to a recently released survey by Department of Commerce, the flow of Foreign Direct Investment (FDI) into the United States and its territories arose from $160 billion in 2012 to $187.5 billion in 2013.

We can say, the US is a nation of migrants from diverse religions, cultures, traditions, and rivalries.

Therefore, expanding a company in the US is very easy. You just have to gather the following documents:

  • Certificate of Incorporation
  • Company’s Memorandum and Articles of Association
  • Organizational Minutes and Bylaws
  • Share Certificate/Member Certificate
  • IRS Form SS4- Application for Employer Identification Number

Moreover, the basic requirement to open a company in the US includes:

  • Minimum 1 Director is required (depending on the state business law)
  • No minimum Capital requirement (but it varies state to state)
  • Locally registered virtual office

You need to hire a registered agent in the US who can help you through the process of registration.

 

  • How is it more profitable for us to organize our business in such a way that the parent company entirely controls its subsidiary in the USA?

A subsidiary firm operates as a separate entity from its parent company. Why? Since it benefits the company in terms of taxation, regulation, and liability. The sub can prosecute and be litigated distinctly from its parent. Its obligation is also generally its own and is not usually a burden for the parent company.

However, if you want your parent company to control subsidiary firm you can draft the articles of incorporation, including certain requirements to control, which includes:

  • Not permitting an alteration of the subsidiary’s articles or regulations without the consent of the single or common shareholders.
  • Complete guidelines describing the power of the subsidiary’s corporate officers
  • Having the statutes clearly describing the procedure for selecting and eliminating directors

The parent company can place its own directors on the subsidiary board but this has disadvantages as it becomes tough to serve two masters and take an appropriate decision.

So it is advisable to set up an independent subsidiary in order to protect parent company legally.

 

  • Do we need to hire tax and legal advisers that could support in the USA on the permanent basis?

Well, hiring a tax and legal advisor can be viable decision as they can help you at every footstep during your business expansion. The legal advisor or legal support services will advise you on various aspects related to business location, documentation process, help you understand all the contracts, etc., as every state has its own law and you might be unaware of it. Whereas, hiring an accountant can help meet the taxman efficiently as they’ll keep your books organized

 

Final Words

Expanding your business overseas is not diffident, but for most businesses, it is foreseeable as global markets offer greater opportunities for business growth. By paying attention to details and outsourcing administrative functions, the task of “going global” can produce great results.

 

Author’s bio;

 Adriene Raynott is an independent business analyst. She loves to write and research on different business subjects like outsourcing, business technology, accounting, law office management, and data. Her objective is to share innovative information that leads to business growth. Her email ID; adriene.raynott@gmail.com

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This is a post from a CEO Blog Nation writer. CEO Blog Nation is a community of blogs for entrepreneurs and business owners. Started in much the same way as most small businesses, CEO Blog Nation captures the essence of entrepreneurship by allowing entrepreneurs and business owners to have a voice. CEO Blog Nation provides news, information, events and even startup business tips for entrepreneurs, startups and business owners to succeed.

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