EXPANDING MY BUSINESS INTO THE UNITED STATES 

1. Selection of the Entity Structure 

When deciding where to locate your U.S. operations, it's important to look at available tax incentives: federal, state and local. 

The choice of U.S. entity structure determines how your company will be taxed and is a significant decision to be made when establishing a U.S. entity. The most common entity types used by businesses establishing in the U.S. are corporations and limited liability companies (LLCs). 

There are unique reporting requirements applicable to U.S. entities with foreign ownership. Failure to comply with these reporting requirements could result in significant penalties. 

A Form BE-13 Claim for Exemption must be filed for any acquisition, establishment or expansion by a foreign entity in the U.S. when the cost of the transaction is $3 million or less. 

A U.S. corporation must report direct and indirect foreign ownership, as well as transactions with foreign related parties, with its federal income tax return. 

A U.S. company making certain payments such as interest, dividends, rents and royalties to related or unrelated foreign parties may be required to withhold U.S. income tax and file an annual report of the transactions. 

2. Federal, State and Local Registrations 

Once you establish a legal entity in the U.S., an Employer Identification Number (EIN) must be obtained from the Internal Revenue Service (IRS). An EIN is needed to open a U.S. bank account and to set up U.S. payroll. 

State and local registrations may be required when your business is established in the U.S. Registrations are unique to each jurisdiction, so it is important to understand the requirements applicable to the locations where your business will operate. The typical registrations you may need include the application for authority to conduct business in a state in which you are not incorporated or organized, payroll registration in the states in which your employees are located, and registrations for the types of taxes imposed in a state in which you do business, such as income tax, franchise tax or gross receipts tax. 

Depending on the type of business conducted in a state, a registration to collect and remit sales tax from customers in the state may be required. Other state and local permits and licenses may be required in advance of beginning certain types of operational activity. 

3. Immigration 

Coming to the United States, even for business trips, is becoming more of a challenge. An ever-increasing number of foreigners are being stopped and questioned at the airport. It is important to understand that technical staff being sent to the US to install, commission, service or repair equipment are technically required to have work visas to do so. Over the years, this requirement has not been enforced. However, there is increasing scrutiny at the border. Please understand that the immigration officer has a right to refuse entry for anyone who is going to "provide meaningful services on US soil”. This would include the aforementioned services. 

4. Employment Agreements 

It is important that employees of the US company have a written employment agreement that is adapted to US legal circumstances in order to clearly define the relationship and minimize the risk of any claims made by the employee against the US company in the event of a dispute or termination. 

While many foreign-owned companies in the U.S. start by sending a few key employees from the parent company or a global affiliate, there may eventually be a need to hire U.S. employees. 

When your U.S. company has employees, it will be required to pay payroll taxes and meet specific employer responsibilities. To manage the U.S. payroll 

requirements, it is customary to use a payroll company to process payroll, withhold and remit taxes and prepare the quarterly and annual payroll tax returns. 

Social Security and Medicare taxes are paid equally by both the employer and the employee. However, if an employee is sent from the foreign parent company to work in the U.S., the employee may be able to opt out of the U.S. social tax system with documentation of continued coverage in the foreign country. 

The U.S. imposes tax on a foreign individual based on their U.S. residency status. Once a person is deemed a resident, they become subject to tax on their worldwide income in the same manner a U.S. citizen is taxed. It is important for these employees to understand how transactions in their home country could impact their U.S. taxes. These employees need to receive proper tax advice to ensure they meet their individual U.S. tax obligations. 

5. Insurance 

It would be irresponsible to do business in the US without insurance, notwithstanding the expensive insurance premiums. 

6. Trademarks 

All companies have trademarks. The trademarks should be searched and registered at an early stage of US business activity. This is both a defensive step, to avoid claims of trademark infringement by third parties, and also an offensive step, in that it generates additional credibility and protects the company from third parties seeking to register or use the same mark.