The size of the US market makes it an attractive destination for growing international businesses. Its federal system, however, means that many of the rules that matter most to a new entrant vary from state to state.
Entity and structure
International businesses commonly consider forming a US entity, such as a limited liability company or a corporation. Each option has different implications for ownership, tax treatment, funding and reporting. The right choice depends on the business’s plans and should be confirmed with licensed US legal and tax advisers.
Choosing a state
The state of formation and the states in which the business operates can each affect registration, tax and reporting obligations. Operating in several states may create obligations in each of them.
Federal and state tax
A US business may have obligations at federal, state and sometimes local level. Sales taxes, in particular, are set at state and local level rather than nationally. Planning for these obligations from the outset helps avoid unexpected liabilities.
Banking, payments and currency
Opening US bank accounts, managing currency exposure and setting up payment flows between the parent company and the US entity all need planning. Intercompany arrangements should be documented and reflected consistently in both sets of accounts.
Accounting and reporting
The US entity will need its own accounting records and may need to report under US standards locally while also reporting to its parent under a different framework. Agreeing the approach early simplifies consolidation.
Budgeting for entry
A realistic financial plan should cover formation and advisory costs, staffing, premises, insurance and ongoing compliance alongside expected revenue. Scenario analysis helps decision-makers understand the investment required under different assumptions.
Official sources
This article is general information and is not professional, tax, legal or financial advice. Requirements differ by jurisdiction and change over time; seek advice specific to your circumstances.
