Trying to grow in the US from an overseas office rarely delivers the results you need. To become a market leader, you must establish and succeed locally. But with 50 states, each with its own laws and market dynamics, expansion is complex
This eBook outlines 12 essential steps for US entry, but execution is key. Many companies make costly mistakes, such as:
• Hiring senior US executives too soon
• Choosing expensive office locations
• Falling out of legal compliance
• Scaling hiring before proving market fit
To succeed, you need a local partner who knows how to launch European scaleups in the US. US Expansion Partners can help you launch, manage, and scale—successfully.
The first step of US expansion is creating a US corporate entity. This involves obtaining the appropriate federal and state identification numbers, as well as completing the required steps for establishing a corporation in a specific state.
Be sure to file Form BE-13B within 45 days of Incorporation
As part of establishing your US operations, you will need to set up accounting operations to support the business. In addition, it is recommended to engage a Certified Public Accounting firm to handle transfer pricing and taxes.
Opening a US bank account is critical for operating a subsidiary corporation in the United States, but it can be a much more challenging process then you may think.
Your US corporation will need to establish a physical office location, and with 50 states and hundreds of cities to choose from, selecting the ideal location can be challenging. Here are 7 criteria to consider when choosing the best location for your US office.
Overlapping operating hours with your home office is a critical site selection criteria. If you’re a UK or EU based company, locating your US operations in the Eastern Time Zone is a strategic imperative
Locating your US operations in areas that are close in proximity to a combination of major universities, large tech employers, and other tech startups is a winning formula for recruiting top talent.
The costs for talent, office space, professional services, and taxes vary significantly from state to state and city to city in the US. Where you establish your US operations will have a material impact on your company’s overall burn rate.
Ensure your US office is located near an international airport with frequentdirect flights to and from the major US cities and business hubs.
There are several regions in the US with robust startup ecosystems. Locating your US office near a startup ecosystem gives you direct access to the right talent, service providers, and venture capital.
Depending on your company’s go-to-market strategy and motions, locating your US operations near customers and partners of strategic importance may be an advantage.
The social disposition of a city, state or region may also play a role in matching comfortable policy stances and other ideological alignments. Some states have a strong tendency toward more liberal or more onservative viewpoints and governance
A business-friendly environment refers to factors such as favorable tax policies, supportive government initiatives, streamlined regulations, and access to funding.
As a tech company, one major consideration for accessing talent with specific industry experience is to locate your US office in a city that has developed into a sector-specific tech hub.
Try our site selection assessment tool:
www.usexpansionpartners.com/siteselection
Doing business in the United States requires your US corporation to have certain insurance coverages that are required by government entities, customers, partners, and vendors.
When opening a subsidiary of your company in the United States, your US corporation will need to comply with numerous federal, state, and local tax laws, each with its own schedule for filing and payment.
When opening a US subsidiary, companies can choose from multiple immigration and visa options for employees and executives who will be traveling or moving to the United States. Factors to consider when choosing the best visa options include duration, processing time, qualifications, and difficulty. Some of the US visa options are as follows:
Companies with at least one entity abroad and one in the US, may transfer executive/ managerial or specialized knowledge employees.
Investment visa for treaty country nationals in executive/managerial or essential position.
Companies needing “professional” employees in positions that require at least a bachelor’s degree. But subject to cap lottery.
Entrepreneurs of “extraordinary” ability who has won awards and media attention may head and direct a new entity in the US.
What most companies expanding to the US do not realize is just how competitive it is to hire top talent in the US market. If your company wants to compete for top talent, it had better be prepared to answer the detailed questions a potential employee may ask during the interview process. Being “talent ready” to hire in the US market requires extensive pre-planning, research, and decision making.
When opening a US subsidiary, companies can choose from multiple immigration and visa options for employees and executives who will be traveling or moving to the United States. Factors to consider when choosing the best visa options include duration, processing time, qualifications, and difficulty. Some of the US visa options are as follows:
The is a 6% FUTA tax on the first $7,000 of an employees’ wages. Once an employee earns over $7,000, the employer will no longer have any FUTA tax liabilities or payments for that employee.
State unemployment tax rates, cutoffs, and calculations vary greatly from state to state. In North Carolina, new corporations pay a 1% SUI tax on the first $28K of an employee’s wages.
Both the corporation and the employee pay 7.65% FICA in taxes on the first $147K in wages. The corporation is responsible for collecting and paying both the corporation’s and employee’s FICA taxes.
Worker’s Compensation Insurance is required to be carried by corporations on their employees in almost all states in the US. The rates vary by state, job class code, and company history of claims.
Creating a financial forecasting model that adequately captures the costs of US employees can be quite challenging given the tax cutoff limits and variance of costs for state taxes and worker’s compensation insurance premiums. Below is an example of the monthly costs of a Senior Sales Executive in North Carolina and California:
Expanding to the US can be a great growth opportunity for your company, given the size of the market. However, it would be a mistake to think the goto-market strategy that succeeded in your home country will be successful in the US market. You’ll want to reexamine your entire go-to-market strategy for the US and consider the following items:
Does your product fulfill the US target customer’s needs and solve the user’s specific problems? What alternatives does your product compete within this market?
How does your company’s brand differ from the competition in the US? How is your company positioned in the market?
What is the best pricing strategy for the US market? License, subscription, or usage model? How should you price against competitors?
Who are your target customers in the US? Who is the buyer? What are the best routes to market to reach them?
How will you build awareness, create content, drive leads, nurture interest, and manage leads in the US market?
Is your focus on top-down direct sales or bottom-up product-led growth? How will you recruit, hire, manage, compensate, train, and enable your US sales and client success teams? What tools do they need to succeed?
How will you create contracts and agreements for customers and partners in the US?
