Why should businesses consider the United States?
The US leads the world with a Gross Domestic Product (GDP) of more than $20 trillion US dollars. To put the size of the US economy into perspective, the state of California produces over $3 trillion of the US’ economic output. This is larger than the UK’s GDP of $2,710 trillion, making California the fifth-largest economy in the world.
When you consider that this revenue is only from one state in the US, imagine the profit-making potential of doing business here? Because of the size of the market, we always recommend international businesses entering the US market to treat each state as a separate country and adapt a state-by-state approach.
Another advantage of doing business in the US is the opportunity to take advantage of the favorable tax incentives that some states offer to ease the costs of doing business. For example, South Dakota and Wyoming levy neither a corporate income tax nor gross receipts tax. Additionally, Texas, Nevada, and Washington do not charge corporate income taxes but instead impose gross receipts taxes. Other notable states with low corporate tax rates below 5% include North Carolina which offers a flat rate at 2.5%, Missouri, North Dakota, and Colorado, to name a few.
As a high-income business leader in the US, if you choose to base yourself in a state with low or no personal income tax charges, you will have a considerably high take-home disposable income. Florida, Texas, South Dakota, Nevada, Tennessee, and Alaska do not charge personal income tax on your salary.
Did you know this about the US?
The US is home to less than 5% of the world’s population, however, accounts for around 25% of global economic output. Apart from taking the lead in most industries since 1871 - and making up a quarter of the global economy, as home to most Fortune 500 companies - the US is evidently known as the perfect location for any business expansion.
Taking third place on the world population podium, there were almost 44.9 million immigrants living in the US in 2019. The US education system and world leading innovation is often a tempting incentive for many, with more than 300 languages spoken the US is one of the most racially diverse nations worldwide.
Not only is the US extremely favourable for corporate expansion and immigration, the nation doubles up as an unforgettable location for vacationing and travel. During your travels you’ll tick off iconic landmarks such as The Statue of Liberty, The Grand Canyon, or have the ability visit the entertainment capital of the world, Las Vegas. No wonder only 1/3rd of US citizens have a valid passport. They have the land of opportunities and lifestyle they need right on their doorstep.
Key information you must know when setting up a business in the US
When setting up a business in the US, you must be prepared to navigate the complex legal and employment landscape. Each state has its own set of legislation, taxes, and employment laws, which differ on a federal, state, and local level. This means if you are hiring employees in different states, you need to be separately registered in these areas.
Our main advice for growing your business in the US, is to work with specialized experts in the fields of tax, accountancy, employment, and law to ensure you are compliant. You should place all your energy on what you do best, running your business, instead of getting tangled up in the world of US compliance.
Many of our international clients start their business expansion journey in their home country by hiring a US-based salesperson first remotely to build out their presence before physically entering the market. They can do this by using an employer of record to employ the US employee on their behalf. By using an employer of record to hire your US based employees; employee classifications, insurances, benefit plans, payroll, and different employment laws per state and city are some of the many factors you no longer need to worry about, as they take on these responsibilities for you.
If you are ready to make the physical leap stateside, you need to arrange visas and relocation plans. The most common visa when entering the US as a business owner is the E2 investment visa. You should seek legal advice from a US immigration specialist to secure your visa, as the process has many steps including putting together a business plan, legal documentation, and the investment of a significant amount of money to grow your business in the US. We often see business owners transferring a member of their senior staff once their E2 visa is approved, and junior employees later.
Another important step, before expanding your business to the US is to complete market research. You should choose a state based on the market demand for your business offering, personal income tax rates, cost of living and corporation taxes charged by local and state governments.
The US workforce
The US also has an extremely educated workforce, claiming 30 of the top 100 best universities in the QS World University Rankings, with the Massachusetts Institute of Technology (MIT) taking the top spot. Whether you require tech, life sciences, creative, or financial talent; you’re sure to find the top achievers in the US to drive your business goals forward. The saying really is true for both businesses and employees, ‘If you can make it in America, you can make it anywhere.’ That’s why as an ambitious entrepreneur, if you want to reach the heights of success, expanding your business to the US is a natural step to become a world leader within your industry.
If you embrace remote working, you have 50 different states to source talent from. Some states are known for being market leaders within industries. For example, if you are operating within the technology and IT space, areas like Texas, North Carolina, and California, are famed for their tech hubs and ability to attract top talent. Likewise, New York is a global leader in finance and creative industries.
What is unique to the US regarding employment laws and regulations?
When hiring within the US, it is important to be aware of the US work and legal culture. Employee benefits, paid time off, salary expectations, and communication styles may surprise you. 'At will’ employment is unique to the US. Within employment contracts, US employees are hired ‘at will’. This means that the employer or employee can terminate the employment at any time, with or without any notice (with a few exceptions!). There is also no-state sponsored healthcare, so employers are legally required to offer employees healthcare benefit plans. Again, this is something you do not have to worry about if you use a specialized employer of record your employment engagements.
To conclude there are many factors to consider when expanding your business to the US and most firms will often test the market temperature with a sales or business development representation. To find out more about employment in the US, here is our guide; to Hiring Employees In The United States.