Growth
UK to US expansion: Founder FAQs
- Growth
- Article
- 5 minutes read
Scaling your business to the US is a complex process that demands founders answer some challenging questions. This article addresses some of the most common queries.
- Expansion is best understood in 3 phases – forming a legal entity, getting operationally ready, and engaging the market.
- Understanding the protocols and procedures involved can help you to plan in advance.
- You will inevitably have more questions; engaging an experienced expansion team can help if you’re unsure.
Even though US expansion is the endgame for many tech founders, it is a process that inevitably brings up unforeseen challenges and questions.
Many of these are focused on practical, on-the-ground considerations that can be grouped by 3 key activities: entity formation, establishing operations, and go-to-market approach.
In this article, we will use that same grouping to answer some key questions founders may have once they’ve made the decision to scale to the US.
Entity formation: What do I need to register a business in the US?
To open a business in the US, founders need to set up a Legal entity and secure both Federal and State identification numbers. To do so, you will need to decide which type of entity to form – for example, a Limited Liability Company (LLC) or C-Corporation – based on your business needs.
Next, that entity needs to be registered with the Secretary of State where you’ve formed the business. Many assume that a Delaware Flip – a process in which you create a US holding typically in Delaware, to hold all of the shares in your existing UK company – is the only option, but remember that you do not need to limit operations to the state of Delaware just because that’s where you’re incorporated.
In addition, you will also need several key documents, such as Articles of Incorporation, Articles of Bylaws and Officer appointments to obtain your Federal Tax Identification Number (FEIN) from the Internal Revenue Service (IRS).
Finally, get your State tax withholding numbers and unemployment numbers, and hire a registered agent to receive any official correspondence, and you are almost there, because you will now have everything you’re likely to need to set up a US bank account for your business.
Entity formation: Where should I set up my business?
Once you’ve secured the necessary documents, a process in itself, you need to consider a site that suits your business, and makes your own life a little easier.
The first step is choosing a site . The US is vast, with several key tech hubs and varied regulations by state, so there are multiple factors to take into consideration.
- Which time zone is most manageable?
- How expensive is office space?
- Will you be able to secure the level of talent you need locally?
- How healthy is the innovation community in the area?
- How deep is the local customer base?
- Are potential partners located close by?
While those key questions might help pick the right spot to open shop, do not underestimate the person pressure of making this move. Making the move to the US can place severe strain on founders and their family – so if you can, try and embed yourselves in a community of expats who will support you.
Bonus if you can find a place that offers you a lifestyle that helps maintain a healthy, balanced lifestyle!
Establishing operations: What essential operations should I prioritise?
Before you’re officially open for business, you need to ensure the back-end necessities are in place.
We’ve already mentioned the need to open a US account. In addition to integrated account software to manage all of your accounts and payroll, many founders choose to work with a State Certified accounting firm to manage and file federal and state taxes.
Establishing operations: Should I hire a local Legal firm?
Much like making your first Legal hire, deciding when to connect with a US law firm is an important decision. While there may be additional costs to consider, local knowledge is indispensable in navigating the myriad processes and procedures that come with company formation, drafting and signing various contracts.
If you are shopping around for a firm, be sure to consider any Visa and immigration needs your founding team and family may have.
Go-to-market approach: What will the role of HR be?
Building your go-to-market team, and securing the right talent to not only hit key milestones but also embed your culture and purpose call for experienced HR professionals.
US employment protocols mean that benefits and insurance are a key differentiator to attracting talent – and you will need someone to help you structure those packages, vet candidates, and help you build a resilient, resourceful local team.
Any opinions expressed are merely opinions and not facts. All information in this document is for general informational purposes and not to be construed as professional advice or to create a professional relationship and the information is not intended as a substitute for professional advice. Nothing in this document takes into account your company’s individual circumstances. HSBC Innovation Banking does not make any representations or warranties with respect to the accuracy, applicability, fitness or completeness of this document and the material may not reflect the most current legal or regulatory developments. HSBC Innovation Banking disclaims all liability in respect to actions taken or not taken based on any or all of the contents in this document to the fullest extent permitted by law. Nothing relating to this material should be construed as a solicitation or offer, or recommendation, to acquire or dispose of any investment or to engage in any other transaction.
