Expanding to the US: the safe, speedy guide for businesses

Whether you’re a startup, a small business, or a global enterprise, the US market is a game-changing new level of potential revenue growth.

But expanding stateside isn’t easy. Competition is high, and there’s a labyrinth of federal, state, and local compliance challenges to overcome.

In this comprehensive guide, we’ll explore how to overcome these challenges, and lay out the necessary steps to expand into the US in a cost-effective way.

So let’s dive straight in.

Why should I expand into the US?

The US has long been an attractive destination for companies that are aiming to expand. Here’s why:

The strength of the US market

With a GDP of over $23 trillion, the US has the largest economy in the world. It’s also situated strategically in the middle of North America, giving your business access to other large regional markets such as Canada and Mexico.

More importantly, Americans enjoy a higher standard of living than many other parts of the world, giving them significant spending power. This enormous consumer market makes the US highly appealing for businesses of all sizes, with the potential to tap into new customer segments and scale significantly.

Supply access and innovation

Historically, the US has welcomed international trade. As such, US businesses tend to have access to global supply chains and are able to form partnerships with organizations around the world. All of this can translate to more opportunities for your business.

The US is also renowned for its innovative spirit. Exposing your team to American business culture can help your company develop unique products and services that cater to a wide variety of consumer interests.

Branding and networking opportunities

An established market presence in the US can enhance your brand’s credibility and recognition across the globe.

The US is home to numerous multinational corporations and innovative startups, which opens the door to strategic partnerships, collaborations, and global networking. This, in turn, can attract new customers, partners, and investors.

Access to top talent

The US has an enormous pool of talented, well-educated workers to tap into. Having local expertise and support team members on the ground can make your expansion into the region easier, and boost your chances of succeeding.

What are the challenges of expanding into the US?

As mentioned, expanding your business operations to the US is not without difficulties. Here are some of the key challenges you’ll need to overcome:

A competitive labor market

The US is a notoriously competitive market, with over 33 million small businesses currently registered.

And, as a new entrant, that competition is only likely to grow. As an example, there were nearly half a million new business applications in April 2023 alone. In such a competitive landscape, you may have your work cut out attracting top talent.

It’s not impossible, though — even if your hiring budget is modest. If you work with an employment partner like Remote, you can offer tailored benefits to attract and retain the best employees, such as 401(k), health insurance, and even equity incentives.

Learn how to attract top talent with Remote's Global Benefits Report

Insights from 2,500+ decision makers and employees in key markets to help you uncover the benefits your team want and need in 2023.

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Cultural differences

While cultural challenges may be more subtle than market and labor challenges, they are still significant and should not be overlooked. Consider the following:

Communication styles. The US favors a more direct communication style, but employs a much more indirect approach to negative feedback. Both of these things may be radically different to what you and your existing team are used to.

Decision-making. Companies in the US generally prefer a flat or shallow organizational hierarchy and value individual input and contributions. This may be jarring if your company has a more hierarchical approach to organization.

Diversity. The US is characterized by broad cultural diversity, so a foreign company investing in it may have to adjust its products and go-to-market approach to suit a more diverse target market.

Relationships. Business in the US is often transactional, with less emphasis on building personal relationships.

Customer expectations. Consumers in the US generally have high expectations for customer service and product quality. They expect easy return and money-back policies for consumer goods, which can impact your company’s profit margin.

As you begin expanding into the US, misunderstandings and misalignments along any of these lines can have potentially profound effects. 

Regulatory compliance

US regulations can be particularly complex because they often differ at the federal, state, and even local level. Consider the following:

Tax and payroll. When paying taxes and managing your payroll, you must comply with federal, state, and sometimes city- or county-specific tax and overtime laws. Without a US payroll expert to guide you, this can quickly become overwhelming and land you in a whole world of tax and legal troubles.

Fortunately, Remote can handle all of this for you. We take care of all the compliance and calculations, making it quick, easy, and painless to pay your US employees.

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Labor laws. This applies to state and federal employment laws, too, including legislation around minimum wage, working hours, anti-discrimination, and safety regulations. Non-compliance — intentional or otherwise — can result in heavy fines, penalties, and reputational damage, so it’s crucial to get everything right from the get-go.

For example, it’s often assumed that all salaried employees are automatically exempt from overtime, but factors like the nature of the duties, the number of hours worked, and the employee’s salary level play a significant role.

Remote can help ensure that you’re adhering to the relevant labor laws in your employees’ locations.

Trademarks and intellectual property (IP). Any trademarks, patents, and copyrights that you possess will need to be protected under US law, which can potentially create problems. At the same time, your business operations, products, or services must not infringe on the IP rights of others.

Remote’s experts can help you navigate any potential issues, and protect your IP.

Data privacy. Like many regions around the world, the US has specific laws and regulations concerning data privacy. Some states, like California, even have their own individual data privacy laws. It’s important to ensure that you adhere to these regulations.

Immigration laws. If you’re planning to relocate employees to the US, you will need to navigate the US visa and immigration system. Without the right guidance, this can be complicated and time-consuming.

Read Remote's expert guide to hiring in the US

Use our expert hiring guide for information on local benefits, taxation, and compliance requirements to help you employ in the US with ease.

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How do I expand my business into the US?

While the process of expanding into the US is a sizable one, it can be broken down into several broad steps — as follows:

1. Understand the market

Begin by identifying your competitors, your target audience, and their consumer behavior. Who has market share? How do they communicate with their audience? How do customers tend to convert?

To answer these questions, you will need to rely on multiple resources and potentially even external parties. But once you have compiled and analyzed your answers, you will be able to identify opportunities and challenges, and understand what’s viable and what isn’t.

From here, you can outline the labor and resources you’ll need, including which roles to hire for and what kind of expertise you’ll require.

2. Develop a business plan

Once you’ve done your research and identified where the opportunities and challenges lie, you’ll need to craft an expansion plan.

Outline your objectives, strategies, and financial projections, and include timelines, benchmarks, and milestones. This plan will serve as a roadmap for your expansion and be used to attract potential investors.

3. Choose a business structure

Weigh up the pros and cons — including tax implications and exposure risk — and determine the most suitable US business structure for your company. Depending on your size and goals, this could be a corporation, LLC, or partnership. Note that Remote can help you meet local state incorporation requirements.

Alternatively, you can work with an employer of record (EOR), like the one provided by Remote. This allows you to hire, pay, and manage people in the US without having to set up an entity there.

Using an EOR is discussed further below.

4. Register your business

If you are setting up your own entity, you will need to register it yourself. This can potentially be a lengthy process, and involves the following steps:

Choosing a business structure. The type of entity you choose — whether it’s a limited liability company, corporation, or partnership — affects your tax obligations, your reporting responsibilities, and your liabilities.

Choosing a name (and “doing business as” (DBA)). Your business name should be aligned with your brand and not infringe on any copyrights or trademarks. You can also opt for a DBA if you want to operate under a different trade name.

Filing the relevant tax information. You may need to file multiple tax documents, depending on where your business will operate. At the federal level, you will typically need to obtain an employer identification number (EIN) from the Internal Revenue Service (IRS), while each state will have its own requirements regarding sales tax, employment tax, and more. Note that some local governments enforce their own business tax rules, too, which can vary for cities and counties within the same state.

Register with the Secretary of State. Finally, you will need to register with the Secretary of State in the state where your business will be based. If you plan to operate in multiple states, you may need to register in each state separately. Remote can help you manage your Secretary of State compliance requirements 

5. Obtain the required licenses and permits

Depending on what your business does and where it’s based, you may need certain permits or licenses to run it legally. For example, you may require a general business license, and/or an industry-specific license, such as a health or safety permit. Ensure that you understand what exactly you need at every level, and ensure you’re able to comply.

You must also make sure you comply with additional state requirements. For instance, some states have unique requirements that go beyond basic registration, such as publishing a notice of your business formation in a local newspaper, or filing an initial report.

Note that, to avoid any legal issues, it’s important to obtain all relevant permits before you start doing business.

6. Set up a US bank account

Open a US business bank account, and set up the necessary financial network to facilitate smooth business operations.

7. Start hiring

Once all your paperwork has cleared, you can start hiring and onboarding employees (or relocating your existing ones).

Before you commit to hiring locally, you may want to test the waters. One common approach is to work with independent contractors before making things permanent as if it doesn’t work out, you can easily part ways.

Remote allows you to easily manage and pay your contractors, and automatically completes the relevant tax documents (such as Forms W-9 and 1099).

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What are the typical costs of expanding to the US?

Expanding to the US can generate some serious expenses, both up front and longer-term.

In many cases, cost categories can include:

• Legal and registration fees

• Licensing and permit fees

• Office space rental or purchase (if applicable)

• Hiring and payroll costs

• Marketing and advertising expenses

• Technology and equipment investments

• Supply chain and logistics expenses

Expenses can vary widely depending on your industry, location, and size, so there’s no set, standard cost for expanding a business to the US.

However, there are some benchmarks to keep in mind. Initial setup costs can be in the tens of thousands of dollars, and this figure doesn’t account for ongoing expenses, such as payroll, supply chain, and logistics costs.

For a detailed breakdown of what you can expect, see our guide on the real cost of opening a business entity.

If these overheads seem prohibitive, don’t be put off just yet. For many businesses, there is a more cost-effective way to break ground stateside.

The cost-effective way to expand to the US

As mentioned, working with an EOR removes the need to establish a legal entity. This immediately takes away a lot of the setup costs.

It’s not just about saving money in the short term, though. We handle all the heavy legal and administrative lifting, including compliance, payroll, and benefits, and allow you to hire and onboard quickly.

Given the complexity of the US’s multi-level statutory structure, this is particularly valuable. Without localized expertise, your business can quickly find itself on unsteady ground.

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With an EOR, you’re not just restricted to the US, either. If you also plan to hire in other countries, or you have existing employees, you can hire and manage them all through Remote.

Remote’s EOR service saves time, and removes the need to hire an expensive, in-house HR team. This allows you to focus on what matters: running your core operations, and actually growing your business.

What if I don’t want to use an EOR?

If you want to open your own entity, we can still help in a number of ways, depending on your preferred path.

For instance, if you have an entity but you don’t want to arrange your own benefits, insurances, and registrations, you can use our US-specific professional employer organization (PEO) services to pay and manage your people. You can learn more about the differences between EORs and PEOs — and which is more suitable for your business — in our detailed guide.

Alternatively, if you are comfortable with arranging your own benefits, insurances, and registrations, you can use our Global Payroll service to quickly, easily, and compliantly pay your US-based personnel.

Expand into the US with Remote

Expansion into the US market can be a game-changer for many businesses. Despite the challenges and costs, the potential rewards are immense.

It’s not a simple process, though.

If you’re thinking about expanding to the US, it’s highly advisable to lean on the support and expertise of an all-in-one, proven global employment partner, like Remote.

Our EOR service can save you time and money, and give you the flexibility to hire and manage your US team. 

Alternatively, if you want to set up your own entity, our one-stop shop of global HR services can simplify and streamline your operations. With Remote, you can:

• Run your US payroll in minutes

• Select and offer market-leading benefits

• Ensure you’re compliant with state regulations

• Outsource critical HR tasks

• Manage and pay local (and international) independent contractors

• Manage your day-to-day HR needs, such as leave and expense management

Most importantly, you gain access to our experienced, in-house, local experts, as well as our knowledgeable partners. We can steer you through the whole process of hiring in the US, ensuring that you have the knowledge and support you need.

To learn more about how we can help you grow in the world’s biggest market, check out our tailored US expansion offerings — or speak to one of our friendly experts today.