Expanding to the U.S. can be a lucrative opportunity, but also one ripe with challenges. The legal and tax requirements at every phase of expansion are difficult for foreign investors to successfully navigate without the right team of U.S. experts. Building a team you are confident in can be overwhelming, especially in the early stages of planning. Learn which partners you need by your side and how they can help you successfully expand to the U.S.
Key Elements for U.S. Team
When building your U.S. expansion team, make sure they check the below boxes:
- Foreign Direct Investment (FDI) Expertise – To effectively address the unique challenges foreign companies face when expanding to the U.S., your U.S. team needs to be experienced not only in each of their respective professions but also in FDI.
- Connected Locally and Globally – Your company will benefit from collaboration among your U.S. and global teams, as well as their involvement in global professional organizations that help expand their networks and expertise.
- Growth-Focused Mindset – From the start of your expansion planning, it’s important to work with a team that can proactively advise you on the best ways to achieve your long-term U.S. expansion goals.
Now let’s look at the roles of each team member.
Accountant & Tax Advisor
Your U.S. accounting and tax advisors are the cornerstone of your team because they are responsible for the accounting and tax treatments within all key areas of U.S. expansion and operation. Here are some key focus areas for your U.S. accounting and tax advisors when expanding to the U.S.:
- Planning – During this stage, your U.S. accountant will help you make the right decisions regarding U.S. tax structure, business plan, and forecast. They will also help you manage your investment from abroad.
- Establishing – When setting up operations in the U.S., your accounting and tax team will support accounting and reporting solutions for the U.S. company to meet the local and global needs of the group. U.S. tax compliance requirements must be met, and your U.S. tax advisor will manage strategies to minimize tax liability and exposure to transfer pricing adjustments and penalty.
- Growing – As accounting and reporting needs become more complex, your U.S. accounting and tax advisors should be skilled at anticipating and supporting the changes needed for growth. Tax strategies aligned with operational growth are needed to minimize tax and improve cash flow. Your U.S. accountant can also help you prepare for and execute acquisition goals.
It’s important to have the right legal advisors on your team throughout your U.S. expansion journey. The collaboration between your attorney and tax accountant is also important as most legal matters have a tax perspective to understand and optimize.
- Establishing a U.S. Entity – When choosing the legal structure for your U.S. operations, your legal and tax team will advise you on the best liability protection and tax treatment to meet your circumstances.
- Immigration – Your legal team will lead the immigration process with the support of your accountant. A five-year business plan, often prepared or reviewed by your accountant, will be required for a visa application. Additionally, once a visa is obtained, your tax accountant will need to advise and assist you and the expatriate employee with the U.S. tax requirements of the visa.
- Employment Contracts – Attracting and retaining talent is crucial to a growing business. It is important for your U.S. attorney to prepare the employment agreement to capture all relevant terms, especially for global businesses where differences exist between employment practices in different countries. Your U.S. accountant should advise and assist with any tax or accounting aspects of the employment agreement including the taxability of allowances or stock options.
It is important to have a U.S. bank on your team who can assist you with short-term and long-term banking and lending needs, both which have intersections for collaboration with your accountant.
- Short-Term Banking Needs – Many foreign companies start their U.S. operations with a small sales or service office, often funded by the parent company. Initially, your immediate banking need may only be to open a business checking account with a U.S. bank. However, it is important from an accounting perspective to choose a bank with the ability to synchronize with your accounting software applications to automate the recording of transactional activity and payment of vendor bills and expense reimbursement. Your U.S. accountant can assist in the selection and set-up of the bank and accounting software applications.
- Long-Term Banking Needs – Many companies expanding to the U.S. have plans which include outside financing for future growth. For a new foreign-owned subsidiary to obtain financing from a U.S. bank, a credit history must be built over time or a guarantee may be required from the foreign parent company. Once a lending relationship is established with a U.S. bank, your U.S. accountant will need to assist in meeting the bank’s reporting requirements for the debt covenant.
Payroll Service Providers
One of your biggest challenges in your U.S. expansion will be attracting and retaining the right workforce. Once you successfully hire U.S. employees, you need the right payroll related service providers on your team to assist you in meeting all the requirements of a U.S. employer. You may need to use multiple payroll service providers, or you may find one provider offering all services needed for your U.S. workforce.
- Payroll Processing – You will use a provider to process payroll, manage tax withholdings and file all payroll tax returns. Your accountant will need to coordinate with your payroll provider for the tax treatment of certain types of compensation and state payroll registrations.
- Employee Benefits – Health insurance and retirement benefits are a competitive necessity for your U.S. workforce, and you will need a provider to assist with obtaining policies and plans to offer your employees.
- HR Services – Until your U.S. operations are of a size to support an internal HR resource, you will need outsourced HR support to manage your U.S. workforce and employer obligations.
Insurance providers are another important part of your U.S. team. Depending on your business needs, this could include insurance providers specializing in general liability insurance for buildings, auto insurance for company cars, or worker’s compensation insurance. U.S. employers also typically coordinate medical insurance for employees, which could include health, vision, and dental. Some insurance brokers are a one-stop shop, but you may require more than one insurance company to meet all your company’s needs.
When considering a global expansion, your company will want access to key information about cash and tax incentives, site selection, workforce, customer and supplier connections and more to determine the optimal location and establish an accurate business plan. In the U.S., government organizations at the federal, state, regional and local levels have economic development programs to assist foreign companies with their U.S. expansion plans.
Many countries have organizations and programs to support the international growth of companies outside their native borders. U.S. economic developers often work closely with these foreign economic development organizations to provide strong support for foreign companies investigating an expansion to the U.S.
As a leader in global expansion consulting, we have access to a knowledgeable network of professionals, each experienced and working at the top of their game. We work closely with foreign companies of any size who are interested in taking advantage of the opportunities in the U.S. market. We are confident in our ability to tailor solutions for your subsidiary to not only meet the needs required by law but also to exceed expectations so your business has room to thrive. Our team is ready and excited to help every step of the way. For additional information, call us at 248.208.8860 or contact us directly. We look forward to speaking with you soon.