The pursuit of the ‘American Dream’ of prosperity and success is an attractive aim for many business leaders: How do they get there?
The US offers the largest consumer market on earth, where household spending is the highest in the world. These are claims stated boldly by SelectUSA, the US government programme to facilitate job-creating business in America and host of this year’s SelectUSA Investment Summit.
The organisation states the event is for “international businesses of all sizes seeking to establish or expand operations in the United States,” and whilst a jaunt to Washington is an appealing prospect, what for the majority who won’t make it? Where do you start when considering expanding a business to America?
It will come as little surprise that even a fairly tentative scratch of the surface of the topic of what’s involved in getting a business established in America reveals a potentially bewildering litany of things to consider and decisions to make, not to mention costs to endure.
Sophia Warnon is operations manager at cybersecurity company Garrison Technology, which has been through the process of establishing a US entity. She said:
“Don’t underestimate how long it can take to do things properly, especially if you are hiring people in different states – there’s a lot of different legislation in each state.”
It’s a big country
That point about the vast differences between the 50 states is a key one to grasp early on when considering moving into the American market. Some of the states are individually bigger than the UK and each has its own infrastructure, bureaucracy, social structure and laws. Research is key when deciding where to target and operate and that decision may be more onerous when creating a legal entity as a route to lawfully employ staff, which may or may not be necessary.
Three routes to employing staff in America
Broadly, there are three routes to consider as a means to begin employing staff in the US.
Creating a branch office is one that most will likely discount due to the way it may expose a parent company to litigation and taxes.
The other two options each have their place. In some cases, creating a subsidiary is likely to be the only route.
Where only a few staff are needed in America or it is particularly important to be able to move quickly to employ the right people, there are firms offering co-employment arrangements said to involve less cost and less commitment. In some cases, this can be as an alternative to creating a subsidiary but even those with their own legal entity, as well as many native firms, also use a co-employment provider to take on and manage areas such as payroll and benefits, which are particularly complex in the States.
Deciding which way to go is something that should be done with professional and expert input at an early stage.
Danny Lopez, British Consul General in New York and Director General for UK Trade and Investment USA, said:
“I have seen companies grow their sales in the US on a huge scale without actually setting up a company over here.
“Secure an initial set of customers, secure an initial geographical patch where you are going to try to make it before deciding to take the whole country on.
“My advice is always to work with somebody who is either a local or gets this market inside out If nothing else it will help with speeding up the process of doing business in this country.”
Boots on the ground still matter
That value of working with the right people and establishing boots-on-the-ground is still as relevant as ever and a point raised regularly by those who trade successfully in the States.
Understanding the local environment, the local market and local people will always be vital to a business, as discussed in the free download ‘Expanding your business into America’ – a guide from the firm Foothold America.
In the guide, Adam Uren, editor and CEO of Bring Me The News, an online news service in Minneapolis, Minnesota, said:
“Who you know is still important. Even in the digital age, relationship building is still a crucial part of doing business in America.
“My company has been helped to grow thanks to some mutually beneficial partnerships that came about through people we knew or have worked with before.”
When those boots-on-the-ground include staff from home without a green card, the visa monster rears its head.
Angie Rupert, an E2 investor visa attorney based in Los Angeles, California, and founder of Rupert Law Group, said:
“There are many different options when moving a business or employees to the US. They vary in intensity, time and cost, and they also vary depending on the goals of the company.”
The E2 visa is one option for international investors or employees of international investors who want to open an office in the United States, but it is by no means the only one.
An O visa or an ‘extraordinary ability’ visa allows someone to work for an American company when they can demonstrate unique skills – usually involving vigorous checks and high standards of evidence.
The H1B visa is the one people typically think of when they think about working in the US, but there is a cap on applications and a limited supply. Comprehensive details are available via the US Embassy.
Is moving into America worth the effort?
With competition even for visas fierce, expanding into America is clearly not for the faint-hearted, but what aspect of a business is?
A quote from the State’s International Trade Administration – albeit not wholly independent of bias – is a reasonable one to turn to in the face of the inevitable hurdles:
“As a place to do business, the United States offers a predictable and transparent legal system, low taxes, outstanding infrastructure, and access to the world’s most lucrative consumer market” – a decent argument for investing a little effort.
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