Many international business owners aim to grow their products and services in the United States. Operating in the world’s largest economy is a dream come true for business owners, but many challenges exist, and the process can be slow and costly.
Texas is a prime destination for many of these companies due to the state’s streamlined regulations, favorable tax laws and dynamic, skilled workforce. Still, entrepreneurs must consider the complicating factors along with the potential benefits.
What are the main challenges?
Foreign companies must be aware of and follow specific state, federal and local laws and regulations. Here are three basic but complicated issues they face:
Choosing a business entity:
- Deciding on the correct business structure is essential for an international company’s success in the U.S. The choice of entity type is generally driven by tax considerations. International tax treaties and US laws must be evaluated to determine the optimal structure. Other factors relate to record-keeping requirements and reducing potential liability. In many cases, the best structure may require several entities.
Employment laws:
- The U.S. has some of the most robust and complicated protections for workers, especially those guarding against discrimination. Both federal and state employment laws apply to companies operating in the Lone Star State, but it is crucial to understand that each state has its own set of laws and federal laws also apply.
Tax implications:
- Texas is one of the top states for doing business and protecting income because it is one of seven without a state individual income tax. The U.S. does not collect a value-added tax (VAT), but local and state jurisdictions in Texas and other states impose sales taxes, which are similar. Employers must also pay state unemployment insurance taxes.
Missteps in these areas can result in delays, fines, lawsuits or reduced revenue.
Reduce the risk related to your expansion
Complimentary or conflicting state and federal requirements often confuse foreign entrepreneurs who must comply with all jurisdictional requirements. That is why it is essential to seek experienced legal advice from the earliest stages of considering an expansion to Texas or any U.S. market.