Expanding your business’ operations abroad can be a complex process, but depending on what country you choose to do business in, the benefits can outweigh the costs. For anyone thinking of spreading their reach into the United States, understanding the basics of the country’s business laws, economy and politics can help influence your decision. Unlike other parts of the world, the U.S. has extreme stability, both economically and politically, as well as taxation that favors international business.
A Brief History of the U.S. Economy
The modern U.S. economy started in the 19th century during the economic development that followed the U.S. Civil War. During this “Second Industrial Revolution,” the country’s infrastructure grew rapidly, allowing products from the furthest corners of the nation to be in demand across the country. Mass production became popularized and the people who owned these businesses amassed huge amounts of wealth. Average citizens saw this and the U.S. entrepreneurial spirit was born.
In 1929 the U.S. stock market crashed causing The Great Depression. The president at the time, Franklin D. Roosevelt, enacted a series of laws called the New Deal that introduced legislation regarding labor laws, banking regulations and others that tied private business more closely with the federal government. At the end of World War II, the economy bounced back quickly and the U.S. workforce increased dramatically.
The high inflation of the 60’s and 70’s brought in more government interference. In the federal government’s attempt to slow inflation, a brief recession happened from 1979 – 1982. However, once inflation was under control, the economy began to boom. Government interference in the economy shrank, and private business became more entwined with the global economy.
The U.S. economy has had two more recent recessions, the Great Recession and the recession due to the coronavirus lockdown. It is speculated that if the coronavirus had not impacted the United States, their economy would be at its greatest point to date. Regardless, economic rebound is apparent in the U.S. today.
Running a Business in the United States
The U.S. has pretty lax regulations over who can start a business. In fact, anyone can start a business in the United States as long as they file for the correct licenses and permits. Some businesses, like independent contractors, often don’t even need to be registered with the state they do business in.
Entrepreneurs often take on many roles in their business when they’re just starting out. This means they could act as the accountant, human resources manager, building manager, marketing team and more without needing any formal training in those departments. While doing so has the possibility of getting them into legal trouble down the line, for example if they filed their taxes incorrectly, it saves a lot of money that could be better spent growing the business.
Many small businesses in the United States will also outsource positions that they don’t have enough work for. This includes everything from accounting to IT to legal. These contracted professionals do work on an as needed basis and don’t have much to do with the day to day of the business. This gives business owners more control over their organization.
International Taxation Laws in the U.S.
One major advantage of doing business in the United States is that international persons and businesses don’t need to pay taxes to the United States for business that is conducted outside of the country. This is favorable for shareholders financing a company subsidiary as they don’t have to pay any U.S. taxes on capital gains. The U.S. also holds tax treaties with countries around the world that state that citizens of those countries aren’t subject to U.S. income tax or only need to pay a reduced rate. A few of these countries are:
However great these laws may seem, foreign persons and corporations conducting business in the United States do still need to file taxes or else they may be excluded from claiming these and other deductions as other U.S. taxes may apply. Payroll taxes, employment insurance and certain state-specific taxes may be owed by foreign businesses if there are any U.S. residents employed by the company or any taxable products or goods are sold in U.S. borders as well as if any U.S. real estate was bought or sold.
As you can see, running a portion of your business on U.S. soil has many benefits. The U.S. economic and political spheres are extremely stable and have always quickly bounced back from any setbacks which means U.S. consumers will more than likely always have the extra spending money to keep your business there afloat. Running a business in the United States is fairly simple as long as you follow local regulations and pay your fair share of taxes which shouldn’t be all that much after deductions and applying tax breaks from treaties with your own country. To make sure your move into the United States is completely legal, talk with our experts at Transcend. We have experience helping businesses like your expand into U.S. markets and can make your own that much easier.