Many European-based companies are interested in expanding into the United States as they begin to realize the major limitations of their own continent’s economy and how that of the United States contrasts with it. Overall, the main reason for this change is the drastic gap in the willingness to take risks between these two giant economies; angel investment in the United States is more than double that in Europe.
It was reported that it is much more difficult for companies to raise venture capital in the EU than in the US due to the latter’s reluctance to invest, which has caused a corporate exodus from the EU to the US in hopes of increasing business growth through investment. This article explores in more detail the question of why companies are expanding into the United States and how to do so.
Why expand to the United States?
The U.S. economy is the largest in the world, which means those willing enough to take the plunge and grow there could benefit from a huge pool of new customers, a vast amount of resources to tap into and, after the previous two awards, significantly increased profits.
Moreover, British companies in particular are attracted to the United States because of the political and economic climate that has been built up over the last few centuries. Currently, the US is the UK’s largest import customer worldwide, accounting for nearly 15% of all UK exports.
Moreover, thanks to centers such as Silicon Valley across the United States, which attract some of the brightest and most innovative minds in the world, the country has acquired some of the most incredible minds and business spaces in the world. . In addition, British companies seek to capitalize on the pioneering philosophy of many members of American workers; their go-getter attitude and commitment to their work is extremely attractive.
Additionally, the United States is at the forefront of technological advancement, including advancements in aerospace, military equipment, pharmaceuticals and biotechnology, and computer operations. But most appealing of all is the fact that there is plenty of venture capital in the United States, making it a good place to raise funds for a rapidly growing business.
How to grow in the United States
Choose a State
Each state has its own regulations controlling how a business owner should organize and run their business. When deciding which state to incorporate your business into, consider that state: access to your target market, workforce talent, resources and suppliers, and the legal environment.
Several US states are infamous, especially among foreign companies, for their extremely tax-friendly regulations; this includes Delaware, Nevada and Wyoming. This may be a priority for some businesses, but incorporating in states solely for the purpose of reducing tax liability is not always the right decision, particularly when it may result in doing business in a different state. the one in which you are incorporated.
This could make your business liable for second state taxes in addition to annual payments in addition to the first.
Choose a business structure
For businesses that have opted for incorporation, there are three business structures to choose from: C corporations, S corporations, and LLCs. While the first two options have their advantages, LLCs are in most cases the optimal scenario for those looking to expand a business in the United States.
In particular, it is not necessary to be a US citizen (or even a permanent resident) to become a US business owner; these owners enjoy limited liability protection for their personal assets and tax benefits.
Papers to fill out
Required documents vary from state to state, but you can expect to complete four types of documents, those relating to: formation, governance and ownership, taxation, and due diligence. In order to start a business, you will need to complete an article of organization.
In addition, details of shareholder agreements as well as membership details of each shareholder should be prepared for governance and ownership. An EIN must also be obtained for tax purposes and due diligence checks must be submitted to verify that foreign nationals with assets are permitted to own US assets.
Trying to expand a business from the UK to the US is not easy, and there are a number of hurdles that UK businesses trying to register in America will face. The amount of paperwork to deal with alone is abysmal, not to mention trying to figure out a plethora of alien and extraterrestrial laws to make sure you’re not breaking any.
Add to that the challenge of finding professionals who can undertake these tasks and European business owners looking to form a US LLC can be left with a real headache.
Disclaimer: The information provided in this article is provided for informational and promotional purposes only and should not be construed as investment, tax or legal advice.
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