Why is setting up a business in the USA so challenging, especially if you have never done it before?
Setting up a business in the USA should be relatively straightforward, shouldn’t it? After all, the USA entrepreneurial “can-do” business attitude, thriving and profitable multinational corporations, and reputation for business-friendly practices and laws are driving expansion factors. Unfortunately, the reality is different from what many perceive should be the case. Expanding into the USA, especially if you are not familiar with its local business practices, can range from “challenging” to actually “really hard.”
However, these challenges should not become an insurmountable barrier to entry, especially considering the numerous advantages of expanding to the USA as a foreign company, given its enormous and prosperous market. The key to success is thorough planning, and companies must actively learn everything there is to “know before they go.” This ensures well-organized and appropriately budgeted expansion and business plans, preventing unexpected hidden challenges from arising.
WHY should a company consider expansion into the USA?
The USA has the largest economy in the world, which means great potential to reach new clients, leverage resources, capture new markets, and increase profits. The USA boasts the world’s largest and most lucrative market, which makes finding success there very appealing for many companies.
Beyond simply its size, the USA is the world’s most technologically focused economy. It is intensely market-oriented. US businesses enjoy greater flexibility than many of their counterparts in Western Europe, China, and Japan (to name just a few countries). This flexibility extends to incentives for expansion, the ability to release or terminate unsuccessful employees without significant severance costs, and the ability to develop (and protect, from an IP perspective) new products. USA companies are at or near the forefront of global technological advances, especially in computers (including hardware, software, and networking equipment) and in the medical, aerospace, and military/defense sectors.
WHY is it so challenging to expand into the USA?
For those interested in expanding into the USA, the sheer size of the country can be daunting. Rather than think of the USA as a single country, it is essential to regard it as a series of regional markets with varying characteristics (similar to how Europeans would think about the EU as a whole, with regional market variation across each EU member state). The USA consists of many different consumer markets, each with distinct tastes, purchasing behaviours, distribution systems, regulations, and climates. Business and consumer practices not only vary from state to state, but city-to-city and town-to-town.
We know the USA is made up of 50 individual states. Each state is in many ways equivalent to a “mini country” (think EU member state), with its own and unique sets of rules & regulations. This creates a lack of consistency with respect to compliance and administration, depending on where you may wish to incorporate and operate your organization from, where your customers may be located, where product may be shipped to, differences whether selling to businesses or consumers, costs, and where you may employ staff. This is particularly relevant in these days of remote work, where it is increasingly commonplace for US employees to be located across a multiple number of different states. This adds employment and payroll complexity. Key areas where states will differ include
registration and state entity governance requirements,
corporate and sales tax legislation,
employment legislation and local HR rules
Employment structures
In the USA, companies often outsource HR administration, including payroll and employee benefits, to third-party Professional Employer Organizations (PEOs) in co-employment arrangements. These structures have become prevalent due to the complexity of state employment laws and the high cost of employee benefits, particularly medical insurance, which can be challenging for small companies. Utilizing a PEO allows smaller companies to bundle together, benefiting from group insurance packages and reducing per capita employment costs, thereby minimizing the need for an extensive in-house HR department.
HOW can HSP Group help?
Headquartered in the USA, HSP Group is a global organization. HSP Group is, therefore, well-placed to serve as your gateway into the USA. HSP Group efficiently and proactively manages the day-to-day start-up considerations as well as the ongoing practical compliance tasks. This allows you to focus on your business plan and optimize a successful launch into the USA.
Our Global Entity Services will assist you with setting up your operation in the USA (incorporations, bank accounts, start-up registrations, etc.), and on a recurring, ongoing basis, will pick up back-office tasks best addressed via outsourcing (bookkeeping, invoicing, collections, payables, HR, and tax filings), and ensure your operation will remain in compliance for all legal, regulatory, accounting & year-end tax requirements.
Our Global People Services offer an end-to-end solution to address your recurring HR and Payroll back-office needs. We aim to enhance your employees’ experience and support them as effectively as they would be if working for a domestic employer.
Our Consulting Solutions specialized services will assist with the unpredictable but consistent need for help with ad hoc projects and challenges as they arise, including Global Mobility support, terminations and other technical HR advice, introductions to Federal, State, County, and Municipal economic development organizations, best practice assessments, and state and municipal tax optimization strategies.
Instead of working with various providers for each of the different services required, often varying from state to state depending on where you operate, HSP Group can be your single point of contact, serving as your entire administrative back-office supporting your requirements across all 50 states, so you can fully focus on building your business, and finding success in the USA.
Start Today
If you would like to learn more about how HSP Group can be of assistance with our USA Inbound Services, reach out and contact one of our experts at USA-Inbound@hsp.com.
