The United States of America is the world’s largest economy, with a GDP of $20.9 trillion per year and an annual growth rate of about 2.6%. The easy access to new markets and U.S. capital, along with the vast pool of talent and innovation, attracts many businesses to enter this profitable sector. There is a huge potential to reach new customers, leverage resources, and diversify risk.
However, working in such a broad field can be difficult and challenging for those who are unfamiliar with it. Companies must take into account a variety of pain points because the procedure can be labor-intensive and expensive. The U.S. federal system of government has a unique nature that creates a complex web of laws and regulations from the federal government, 50 state governments, and the municipal level. If you decide to enter the world of business in the United States, your growth and expansion strategy must include all the requirements for doing business in that country.
It is imperative to seek advice from seasoned legal, accounting, and tax professionals who are conversant in the specifics of international business and the local business scenario.
Importance of Compliance in Business
Taking steps to meet legal obligations may seem like a no-brainer for managers, but meeting the minimum requirements can be a missed opportunity. Understanding the basis for the various rules, laws, and regulations that govern your business will help ensure compliance at all times while taking advantage of all the benefits they offer.
1. Growing business and compliance
The importance of compliance becomes even more apparent as the issues become more complex as the business grows. You will have expanded responsibilities related to employees, including hiring, termination, discrimination, harassment, safety, wages, salaries, and benefits.
2. Lowered legal issues
Compliance reduces the risk of fines, penalties, business suspension, litigation support, or business closure. If you don’t meet any compliance requirements, you might get a warning and a chance to correct the problem, but in some cases, you might have to face costly sanctions. It is advisable to hire a compliance expert so that you understand all the legal requirements and how to comply with them.
3. Better operations and safety
Rules and regulations improve the operations and safety procedures of a business. For example, rules on discrimination and harassment can help create a better working environment for employees, leading to better productivity. By following safety rules, you can prevent injuries, fires, and building evacuations that affect your profitability. It is important to be aware of all the legal obligations. Still, it is equally important to regularly review suggested business practices on the websites of government agencies to learn more ways to strengthen and safeguard your company’s operations.
4. Improved public relations
When it comes to complying with legal obligations, one of the benefits of compliance is being able to advertise it on your website and marketing materials. When hiring new employees, highlight the company’s commitment to both physical safety and mental health by listing key health policies and benefits such as extended maternity and parental leave or free gym memberships.
5. Higher employee retention
Many compliance issues in businesses concern employee safety. You will have better employee retention if employees feel they are working in a fair, professional, and safe environment. Including policies and procedures in employee handbooks that reflect compliance obligations also helps in building trust.
What are the benefits of expanding into the US market?
1. Professional experts
America’s reputation for innovation and productivity owes much to its highly skilled workforce. With a solid professional education system, more than 50% of upper-secondary graduates have professional qualifications. This means that any company you want to set up in the US will always have qualified employees.
2. Business Capital
The United States is one of the top three markets in the world with the largest number of entrepreneurs. The nation’s entrepreneurs have a forward-thinking mindset and this is a big incentive for expanding your business into the USA market.
3. Financial benefit
The US has the world’s largest foreign direct investment (FDI) initiative. It invests heavily in international companies. In 2020, the FDI initiative was valued at $4.6 trillion, and in 2021, US venture capital firms invested $160 billion in over 10,000 companies.
4. Market size
The United States has the world’s largest economy, with a gross domestic product exceeding $20 trillion. GDP growth was 5.7% in 2021, and the trend is expected to continue. Also, the population is 330 million, making the US an ideal country for investment.
How to Expand your Business in the USA?
1. Business registration
To register your business name, you must choose either “Doing Business As” (DBA) or a “Fictitious Business Name” (FBN). This allows state or federal authorities to know the name you want to use for business. You can use this name to increase brand awareness of your product or service, even if this name is not trademarked. If you don’t go through this process, the company name will automatically be set to the legal owner’s name.
2. Choosing an entity
Taxes and other legal regulations depend on what type of business structure you want to create. The first is a Corporation governed by State laws. It is possible to incorporate a company in one country and have its principal place of business in another. The most common type of business is a C Corporation, which is taxed at the corporate tax rate that is separate from the owners or shareholders of the corporation. In a Limited Liability Company (LLC), you can be taxed as a corporation or at the member level. Other corporate structures such as partnerships and sole proprietorships have few internal legal requirements.
An Employer Identification Number (EIN) from the IRS is mandatory for any corporation, partnership, or business with employees. It is very important as it can be used to file tax returns, open bank accounts, and apply for business permits and licenses. The structure of your business determines your federal tax obligations. Even independent professionals are subject to Federal income tax obligations such as self-employment tax, income tax, and sales tax. State and local taxes are also payable in addition to Federal taxes and vary between States. These include self-employment tax, payroll tax, income tax, property tax, and consumption tax.
4. Permits and Licences
All companies and independent contractors have to obtain legal permits and licenses depending on the company’s location. In some cases, permits are required at both the Federal and State levels. A Federal license is required in all cases where business activities are controlled by Federal authorities.
5. Financial requirements
There are several ways to meet your financial needs. You could apply for a Small Business Administration (SBA) loan, but it comes with many restrictions. Getting funds from an angel investor, crowdfunding, and factoring are some of the other options that you may consider for your financial requirements.
Overall, the US is a great country if you want to grow your business. However, if you’re not local, the process can be troublesome. Fortunately, we are here to help you.
The qualified professionals at Paralegal Service Provider can help you navigate the maze of business practices and make the right decisions. Contact us so we can advise you on what it takes to form a company in the United States.