8 Legal Issues To Consider When Expanding Into the US
They don’t call it the land of opportunity for nothing. If you’ve already expanded into the global market, chances are you’ve considered expanding to the United States. You may be surprised to learn about the legal issues you need to address when expanding into the US. This hiccup doesn’t mean giving up on the American dream though. Here are eight legal issues to consider when you’re expanding into the US.
1. How to expand your business into the USA
With fifty states to choose from, foreign business owners can be overwhelmed by different business regulations. Building a physical location is a massive headache: local ordinances, property taxes, and utility arrangements might have you pulling out your hair. Luckily, the American ethos is all about finding new ways to do things. Instead of opening a brick-and-mortar store, foreign enterprises can find success using a virtual office. With a virtual office, you won’t have to worry about building codes, real estate financing, rent, or utilities with a virtual office. You can let the virtual office staff manage your mail, phone calls, and faxes. With the headache and cost of a physical office out of the way, you can focus on other parts of your expansion.
2. Know the rules and regulations regarding employees
If you’re opening a new location, even a virtual one, you’ll need talent. Employment regulations vary by country, and in the US, they may vary by state as well. Human resources departments need to be aware of all tax and payroll regulations to avoid expensive fines further down the line.
3. Choose the correct business structure
Choosing the wrong legal structure for your business might cost you dearly, especially once you start selling products or services to consumers. Federal laws protect consumers in their country, not yours, and businesses that don’t have the structure to keep up with various consumer laws can put themselves at risk.
4. Follow rules when offering incentives
Local laws dictate the rules when it comes to employee incentives. If you offer stock options, you might run into trouble with employees in overseas locations. Incentives can be more costly than they’re worth for employees who live in places with strict tax codes. Foreign businesses should familiarise themselves with local tax codes regarding stock options and other employee incentives like signing bonuses and tuition reimbursement. Otherwise, your gifts might turn into curses for hardworking employees.
5. Registering intellectual property
Foreign businesses with unique intellectual property like trademarks and patents should review how that property functions in the US. Some protections won’t follow you across oceans into new markets. If the property is valuable, businesses should take legal action to make sure it’s protected in the US.
6. Handling disputes with employees and customers
If you’re not prepared for a dispute, it could wreck your expansion before it starts. Prior to expanding, businesses should talk to their attorneys about disputes they’ve had in the past. Being proactive about potential problems can help you keep them in control and protect your reputation in a new American market.
7. Localising contracts
Foreign businesses need to ensure their contracts are localised, especially if they sell to consumers. In the US, most customers speak English, so contracts should be written in English and use US legal terms. The easier your contracts are to understand, the more watertight evidence they’ll be if you encounter any legal trouble.
8. Understand local and federal taxes
Uncle Sam takes his cut from all of us, so moving into the US can be difficult for foreign businesses unfamiliar with federal, state, and local tax codes. Working closely with an attorney and accountant that understands the various tax codes makes it easier for foreign businesses to avoid fines from an angry IRS accounting.
In Summary
Expanding into the US is a complicated process for foreign businesses. You shouldn’t be discouraged, though. After a little help from lawyers and other resources, there’ll be a place in the land of the free waiting for you.
