Expanding your business into the United States can be one of the most rewarding decisions for your company. As the world’s largest economy, the US offers vast opportunities for growth and profitability. However, the journey is fraught with potential pitfalls that can impede your success and lead to unexpected costs.
In this blog, we’ll summarize key mistakes businesses often make when expanding into the US market. To learn more about the solutions to these challenges, download the full eBook, “13 Costly Mistakes to Avoid When Expanding to the United States.”
1. Choosing the Wrong Business Entity When Expanding into the US Market
Selecting the appropriate business entity is critical. A common mistake is opting for a branch office rather than incorporating, which can expose your entire business to US taxes and liabilities. Instead, forming a subsidiary as a limited liability company (LLC) or a corporation can provide essential legal protections.
2. Defaulting to Delaware
While Delaware is popular for its business-friendly environment, it may not be the best choice for every business. Assess other states based on factors like talent availability, operational needs, and long-term business goals to determine the most beneficial location for incorporation.
3. Misjudging State Requirements
When expanding into the US market, keep in mind that each state has its own set of regulations, which can complicate compliance and operational procedures. Incorporating in a state where you do not operate can lead to additional complexities and costs. It’s often more advantageous to incorporate in the state where your business is physically located.
4. Overlooking Alternative Employment Approaches
Exploring alternative employment solutions such as partnering with a Professional Employment Organization (PEO) can significantly reduce HR and benefits costs while ensuring compliance across different states.
5. Misunderstanding At-Will Employment
The US follows an at-will employment doctrine, but this does not grant absolute freedom to terminate employment at any time. Protected categories and potential claims of discrimination must be carefully managed through well-drafted employment agreements and policies.
6. Neglecting Tailored Employment Agreements
US employment agreements and policies should be carefully crafted to align with state-specific laws and the unique aspects of US labor regulations. Generic or poorly structured agreements can lead to significant legal challenges.
7. Failing to Maintain Compliance
Compliance with US corporate, tax, and employment laws is non-negotiable. If your company is expanding into the US market, know that any lapse can jeopardize not only your US operations but also potentially impact your global business.
8. Leaving Intellectual Property Unprotected
The US is a hotbed for intellectual property disputes. Ensuring robust protection for your patents, trademarks, and trade secrets is crucial to safeguarding your investments.
9. Underestimating Tax Complexity
Understanding the layered structure of federal, state, and local taxes is essential to avoid overpayment and ensure compliance. Misjudgments in tax handling can lead to costly audits and penalties, which jeopardize your successful expansion into the US market.
10. Underestimating Litigiousness
The US is a highly litigious society, and businesses must be prepared to manage legal risks proactively through comprehensive insurance policies and robust legal strategies.
11. Ignoring Immigration Nuances
Navigating US immigration laws is essential for businesses bringing in non-resident employees. Work visa complications can severely disrupt business operations and lead to severe penalties.
12. Overlooking Financial Incentives
Many US states offer financial incentives for businesses to establish operations. Failing to leverage these can mean missing out on significant financial benefits.
13. Expanding into the US Market Without Domestic Expert Guidance
Expanding into the US market is an ambitious endeavor, but with the right preparation and expert support, it can lead to substantial growth and success for your growing company. The complexities of US expansion necessitate expert guidance. Partnering with a knowledgeable advisor like HSP Group can streamline the process, ensuring compliance and facilitating a smoother entry into the US market.
For more detailed guidance on how to solve for these 13 challenges, and to ensure a successful expansion strategy into the US market, download the full eBook, “13 Costly Mistakes to Avoid When Expanding to the United States.”
Expand Globally with HSP’s Expertise
HSP is an end-to-end global expansion solutions provider focused on helping companies scale their operations overseas effectively and efficiently. We are the only global expansion expert to offer growing companies a full suite of end-to-end solutions designed to help them scale to any size, in any country.
Our in-country experts have delivered the full spectrum of global expansion solutions—from EoR to entity set-up and management—across more than 100 countries (and counting). HSP brings full payroll, accounting, tax, legal, compliance and HR services to corporate teams, integrating with inhouse staff to both guide and execute across every domain. Contact us today so that we can start delivering your custom solutions.
