International startups entering the US face many legal hurdles and market challenges

6 Tips For International Startups Entering The U.S.


Acclimating to a new country is always complex on a personal level, but whole new levels of complexity are reached when a startup makes the big decision to enter the U.S. market. Learning the intricacies of a foreign market takes you out of your comfort zone, and it can be challenging to grow and prosper in your new environment. 

We’re here to give some quick tips for international startups entering the U.S. market to help make your market entry a smooth one. By following these tips, you’ll be able to get the complicated parts out of the way and get to focus on the larger strategies of your market entry.

1. Do Your Homework on American Payroll Rules

Being competitive after entering the U.S. will always involve a thorough knowledge of that market. International startups should remember that the U.S. market may be very different from their domestic market, especially when it comes to regulations. 

Something that often trips up companies is payroll regulations. This is because every state has its own payroll regulations - you should always familiarize yourself with the payroll rules in your chosen state. This means that every state can have a different minimum wage, overtime rules, and severance package rules. 

It’s also required that American employers track and without a federal income tax, social security contributions, and Medicare contributions from paychecks. If you are entering the U.S. market, all of these will be required accounting tasks. 

2. Select and Register a Business Entity

One of the first steps to entering the U.S. market is to select and register a business entity as a Limited Liability Company (LLC) or a Corporation.

The difference between these two types of entities is worth an entire article on its own. Essentially, the two business entities have different rules when it comes to liability, taxation, and maintenance. For example, an LLC can choose to be taxed as a corporation or a partnership, a corporation counting as its own unique taxable entity. 

Once you’ve picked a type of business entity, you need to register in the U.S. International startups can register in the U.S., but need a state-based office, and a registered agent. Finding an office and registered agent should be top of your list. 

3. Don’t Forget Your Corporate Documents

Documentation is never fun, but it is best to get this out of the way before your market entry. Depending on what kind of business entity you formed, the kinds of documentation you need before entering the U.S. market may be very different.

If you are forming an LLC, you will need an operating agreement. If you formed a corporation, on the other hand, you will need structure bylaws, as well as a recorded vote for a board of directors. These documents will lay out your obligations and rights as the owner of your startup. 

4. Make Sure to Create a Tax Setup 

This is another piece of bureaucratic paperwork you need to make sure you check off your list. The IRS requires all companies in the US to establish a Federal Employer Identification Number with them, and state governments will need a State Employer Identification number. You may also need to get a sales tax identification number as well. You may want to ask the help of an accountant or attorney to make sure all of these small but important details are squared away before entering the U.S. market. 

5. Establish Your Bank Accounts Quickly

Often, international startups dither on getting their bank accounts in order. This does make sense - there are a lot of regulations that make setting up bank accounts in the U.S. a hassle for foreign companies. However, the sooner your bank accounts are ready, the sooner you can start to smoothly handle your income and expenses. It never hurts to get started on this as soon as possible. 

6. Find Local Talent

Who knows America best? Americans, of course. When international startups make their market entry into the U.S., nothing is more helpful than local expertise. These employees will better understand the regulations, work style, and culture of the American business world. Remember that America has its own set of regulations regarding hiring, compensating, and firing employees that you should familiarize yourself with before entering the U.S. market. 

Need More Tips on Entering the US Market? 

If you need any more advice on entering the American market, we’re here to help. 

A skilled domestic accounting team is invaluable in navigating the American market, and at Punch Financial we specialize in providing high-growth companies with a modern accounting experience. 

Instead of hiring an accounting and bookkeeping team at great expense, you can outsource your financial back-end to a firm with proven results for a fraction of the cost. Each account is assigned a staff accountant, a Director, and a CFO.

Our mission is to help you streamline your back office and provide you with actionable data and reduce your overhead. Let’s connect to give you a customized quote and free consultation. You have nothing to lose but so much to gain.

Join hundreds of small business owners who trust Punch

Let’s have a quick, no frills chat to discuss how we can help you.