I have a great product; how do I take it to the US market?
Are you looking to bring your products and services to the US market? Good market entry foundations can help your business quickly take advantage of the US market’s bountiful customer base and investment opportunities. Australian businesses have several options for entering the US market:
Use your existing Australian-registered company to sell in the United States – The system in the US is slightly different from Australia and businesses must be registered in the State where it is ‘doing business’ rather than federally (there is no ASIC equivalent). ‘Doing business’ can mean the business has a certain number of sales, has an employee, or has an office in that State.
Set up a US business entity – Many foreign businesses choose to set up a subsidiary in the state of Delaware, on the east coast of the US. Delaware offers a simple path to form a business entity, its laws are easy to navigate, and the cost is generally low. One thing that is often overlooked is that once set up in Delaware, a business will still have to register with another State’s authorities if it is doing business outside of Delaware, so it is worth considering setting up only in the states where you will do business rather than having multiple registrations.
I’ve decided to set up a US business; what type of entity should I set up?
The most popular options are setting up a Limited Liability Company (an “LLC”) or a Corporation (“Inc”), in both cases, the liability of the owners is limited.
LLCs are a little simpler than Incs. The owners are called ‘Members’ and have a ‘Membership Interest’ (instead of shares). The LLC is managed either by a Manager or the Member. There are fewer corporate compliance requirements for LLCs as compared with Corporations, which generally require less paperwork to set up and ongoing filing obligations.
Corporations have shareholders and can raise more capital by issuing more shares. A Corporation also has a more formal management structure: it has a Board of Directors and must have ‘Corporate Officers’ such as a President, Treasurer, and Secretary. Incs have more stringent compliance requirements and you must generally file an Annual Report.
Do I need to be on the ground or have a US director to expand to the US?
Many states, including Delaware, do not require a US resident or even a US address to set up a business.
How do I manage US employees from Australia?
You can engage a service company called a Professional Employer Organization (“PEO”) to run payroll. When you have employees working in several states, PEOs take care of employee and employer State tax withholdings which is a significant administrative burden to keep track of.
What other issues should I consider before entering the US market?
Apply for your US tax ID number as early as possible to avoid holding up other set-up activities, once you are ready to go. Think about protecting your intellectual property, obtain tax strategy advice and requirements for travel to the US for business.
If your Australian company is providing back-office services to your US entity, with the appropriate documents in place, you can charge your US entity for the services the Australian entity provides.
How can Serus Legal help you?
From helping you with US entity setup, US contracts, registering your intellectual property (e.g. trademark), obtaining visas, and employing US employees, we have you covered. We also have a great network of professional service providers to help you hit the ground running.
What are my next steps?
Get in touch with us! We provide a free consultation where we determine together the most appropriate way forward in your situation. Contact edamianos@seruslegal.com
About the author & Serus Legal
Elannie Damianos is a Partner at US-based law firm Serus Legal, New York. Born and raised in Sydney, Elannie is a qualified lawyer in Australia and the US and has worked with international businesses for nearly 20 years. Elannie’s practice focuses on helping Australian businesses enter the US market and she can help you navigate the complexities of the American system.
The content of this insight is general in nature and should not be relied upon as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to the reader’s individual circumstances. ATTORNEY ADVERTISING, Serus Legal PLLC, 48 Wall Street, Fl 11, New York, NY 10005.(201) 989-8901