Expanding into the U.S. market offers international founders access to new customers, increased revenue, and long-term growth potential. However, forming and operating a foreign-owned U.S. business involves complex legal, tax, and compliance considerations that must be addressed correctly from the start.
In our recent webinar, How to Start a Business in the U.S. as a Foreign Owner, Tavola Group leaders Matt Schumacher, Director of Tax Planning, and Gabriel Malavolti, Founder and CEO, shared a practical roadmap for international founders looking to enter the U.S. market with confidence.
Below are the key insights every foreign business owner should understand before launching in the United States.
Understanding the U.S. Business Landscape
While often viewed as a single market, the United States operates as 50 separate jurisdictions, each with its own tax laws, employment regulations, and compliance requirements. Choosing the wrong structure or state can result in unnecessary tax exposure, ongoing administrative burdens, and long-term risk.
Successful U.S. expansion begins with aligning entity structure, tax strategy, and operational planning with both short-term goals and long-term growth plans.
Choosing the Right U.S. Entity Structure
One of the most important early decisions is selecting the correct entity type. The most common options for foreign owners are a U.S. LLC or a C-Corporation, each offering different advantages.
LLCs are often favored for flexibility, allowing foreign-owned businesses to choose how the entity is taxed while maintaining liability protection. C-Corporations, subject to a flat federal corporate tax rate, are frequently used by companies planning to raise venture capital or scale aggressively.
Selecting the right structure upfront is critical, as changing entity elections later can trigger significant tax consequences.
Entity Formation, EIN Registration, and Banking
Once a business is formed at the state level, it must obtain an Employer Identification Number (EIN) from the IRS. This step is required for tax filings, payroll, and opening U.S. bank accounts and does not require the owner to have a U.S. Social Security number.
Banking is often the most time-consuming part of the setup process. Due to heightened compliance requirements, foreign-owned businesses should expect additional documentation and longer approval timelines. Working with experienced advisors can help identify banks that are more accommodating to international founders.
Accounting, Payroll, and Employment Compliance
U.S. accounting rules differ significantly from international standards, particularly in areas such as depreciation, inventory valuation, and tax reporting. As businesses grow, many are required to transition to U.S. GAAP accounting.
Hiring employees introduces further complexity. Payroll compliance includes federal, state, and local requirements, and employment laws vary widely by state. Foreign founders often rely on payroll providers or professional employer organizations (PEOs) during early stages to simplify compliance while scaling.
Federal, State, and International Tax Considerations
Federal income tax is only one part of the U.S. tax system. State and local taxes, including income tax, franchise tax, and sales tax, can significantly impact a business depending on where it operates and how nexus is established.
Foreign-owned U.S. companies must also comply with international tax reporting rules, including transfer pricing documentation and cross-border transaction reporting. Proper documentation is essential to avoid penalties and ensure compliance with U.S. and international regulations.
Building a Strategic U.S. Expansion Plan
The core takeaway from the webinar is clear: entering the U.S. market requires more than filing paperwork. A coordinated approach across legal, tax, accounting, payroll, and banking is essential to reduce risk and support long-term growth.
When structured correctly, the U.S. can be one of the most powerful markets for international entrepreneurs.
Watch the Webinar Replay and Get Guidance
Expanding into the U.S. can feel overwhelming, but you don’t have to navigate it alone. At Tavola Group, we offer complimentary consultations to help foreign business owners make sense of U.S. business formation, compliance, and tax planning. Whether you’re just exploring the market or ready to scale, we’re here to guide you every step of the way.
Schedule your free consultation today, and catch the full webinar replay below.
