The facts below will not tell you everything you need to know about business in America. Instead, they address some key pieces of information you need to understand if you’re seriously considering operating in the USA.
A patchwork market.
First and foremost, you need to bear in mind that the United States is not a homogenous market. Instead, think of it as a patchwork of local markets, each with their own quirky characteristics: corporate taxation varies from state to state, as do employment regulations, and even customer service expectations change depending on where you’re doing business. Therefore, if you’re thinking of ‘taking on America’, start by thinking smaller: take on a particular state first.
Preferential states for low taxation.
There are a handful of states that are generally thought of as being ‘good choices’ for foreign businesses who are looking to expand to the US. That’s due to their low rates of taxation, and in many cases, tried-and-tested business case law. These states include Nevada, Delaware and Wyoming, though there are many other US locations that are worthy of consideration too.
Corporate tax in the USA.
Corporate tax is levied at both the federal and state level, and on average, businesses can expect to pay approximately 35 – 39% in corporate income tax depending on a number of factors. If you choose to expand to do business in America, you will be required to register with Internal Revenue Service in order to receive a federal Employer Identification Number (EIN) – a necessity in order to file a tax return.
At-will employment.
The most defining characteristic of US employment law is something called ‘at-will’ employment. This is a doctrine that US workers are hired ‘at-will’ rather than under a contract of employment, which means that employees can cease to work for their employer at any time without giving notice. Equally, employers can terminate a working relationship with an employee at any time too, provided that doing so does not constitute a violation of a class of protected people.
Federal and state labour law.
Of course, businesses must comply with employment and labour laws to ensure that US workers are not exploited. Each state has its own laws for businesses to comply with, and the specific federal laws that apply to businesses vary depending on the size of the business and other factors. This tool will help you find out which federal laws apply to your business if you choose to expand into the US.
Establishing a subsidiary.
Finally, if you want to hire US employees to work for your business as you expand to America, you will need to create a subsidiary company. This is often a complicated and lengthy process and will likely require input from US attorneys and international tax advisors. But, there are other legal ways to have US staff working for your business while you’re expanding; there is more information about this online via companies such as Foothold America, as well as answers to other related useful FAQs, if it’s something you want to look into.
There are many other business facts about the USA you’ll need to know before you start expanding into America. Contact the US Chamber of Commerce if you’d like more information, and take some time to read extensive guides such as this one from HSBC.
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