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Doing Business in the USA

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Doing Business in the USA

Published: March 23, 2010

Most foreign-owned companies expand their business in the USA by establishing a branch office or an online presence. Both processes are very similar to starting a new business as any American citizen would, except there are a few extra steps during registration and some special tax regulations. For foreign companies expanding their businesses in the USA, read on to learn more about conducting market research, opening branch offices, establishing an online presence, and staying compliant with laws.

Do Your Market Research First

Before you make the leap, make sure that expanding into the USA is the right move for your business by researching the US market:

  • Market Data. Start your research with Business.go;s Business Data and Statistics guide, for an overview of free business and economic statistics provided by the United States government. For general economic statistics, read the USA.go-s guide to Foreign Businesses Doing Business in the USA. For a deeper look into new markets for your products and industry comparisons, the Bureau of Labor Statistics is another free resource to consider.

  • Government Services. If you are interested in investing in the United States, the International Trade Administratio-s Invest in America supports foreign investors connecting with federal and state agencies. Whether you need more information about the economic climate, trade events, or government contacts, Invest in America is a good reference to look into.

Establishing a Branch Office in the United States

If you decide to establish a branch office of your foreign-owned business, you must register with the state in which the business will be located. Business.go's State Guide is a great resource for learning more about local registrations, state tax responsibilities, and employment requirements across the all U.S. states and territories. Once you have narrowed down your location, follow these basic steps:

  • Establish a Valid Address: If you personally do not have a valid address in the state (note: PO Box numbers are not considered a valid address), find a registered agent who can receive legal papers on behalf of your business. It is common for an attorney, business partner, or secretary to serve as a registered agent. If you do not have a business partner or secretary, learn about how to find legal representation at Business.gov.
  • Register with the Federal Government: Most U.S. businesses must obtain a Federal Employer Identification Number (EIN) from the IRS. The IRS provides special EIN guidance for foreign business entities, including contact information to expedite an EIN request. See Foreign Persons and IRS Employer Identification Numbers on IRS.gov for details.

Comply With United States Laws and Regulations

Once your business is established and registered, you must make sure that your business operations comply with local, state, and federal laws and regulations. You may need to follow some or all of the following depending on the nature of your business.

  • Obtain Licenses and Permits: Most small businesses must obtain a general business license, and possibly industry-specific operating permits from federal, state and local government agencies. Business.go's Business Licenses and Permits tool provides a listing of the federal, state and local permits, licenses, and registrations you'll need to run a business.
  • Comply with Import Regulations. All foreign businesses that sell goods in the USA must verify that the goods are approved under American import laws. Some industries, especially those dealing with food or controlled substances, are subject to more scrutiny If you plan to ship products overseas, familiarize yourself with international commerce laws.

Establishing an Online Presence
The process of starting an online business includes all the steps of starting a branch office in the USA, with additional compliance steps with online business regulations such as digital rights, copyright, and advertising. Follow this guide to Starting an Online Business from Business.gov' it provides resources to help you plan, create, and start up within the law. The guide also provides more context on e-commerce practices like securing a domain name, selecting a web host, and driving traffic.

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I think one important aspect to be aware of is labor unions.  Labor unions have the ability to protect their workers and drive up cost of production.  For example, a reason that foreign made cars were cheaper for a period of time was because foreign manufacturers paid the efficient market price (the selling price was made comparable to domestic cars through tariffs, but were cheaper).  Another example would be Wal-Mart as they stay away from areas heavily populated by labor unions because of the potential threat labor unions pose.  When Wal-Mart tried to gain market entry in Inglewood, CA they were resisted heavily as labor unions and lobbyist, that in essence made it impossible for Wal-Mart to operate within the city guidelines.  Labor unions can also make it a burden to get rid of workers as they can use the court system to protect the individuals within the union.  Although I think labor unions within the US is not a major issue, it is not an issue to be taken lightly.

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