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Starting a company in the US: Key issues to keep in mind

Many German and European entrepreneurs and businesses toy with the idea of establishing a subsidiary or affiliate in the US. That is not much of a surprise: the US offers liberal economic policies, an inflation rate lower than 3 percent and the advantages of a huge market (approximately five times as large as the German market) – all of which makes the US a very desirable location for investments.

Key aspects when entering the US market

If you are considering starting a business in the US, there are four key things you should consider:

1. The legal form:
Whether you choose to establish your US-business as a Limited Liability Company, Corporation or Partnership, remember that you will want to choose a legal form that provides limited liability, tax advantages and flexibility. You should also take into account German or European law, because the US legal form you select will affect your German or European tax liabilities.

2. Selecting the right state:
The US is a complicated country with many regional differences. And every state has its own laws. But the state where you found your business does not have to be the same state where you open your office. Many US companies are incorporated in Delaware and then simply register their business in California and/or other states where they are doing business.

3. Founding and registering your business:
When you’ve chosen your legal form, you will have to deal with the applications and registrations – on federal, state and local levels. Fortunately, many applications and registrations can be completed online.

4. Employment visas:
Usually, you will need to send German or European employees to the US, so that they can pass internal business practices and procedures on to new US employees. Using ESTA (Electronic System for Travel Authorization) or a tourist visa is not enough. If an employee will be working in the US, he/she will need an employment visa. Which employment visa is necessary depends, among other things, on the type of work to be performed.

Entering the US market causes tax implications in Germany

In addition to these four key points, there are other issues to consider before entering the US market, including the German and/or European taxation of distributions, protecting the German parent or affiliate company from US lawsuits, agreements with US partners and the adaptation of products, processes, and company culture to the needs and demands of the US market.

We can help! Whether you have a single question, need someone to review a US distribution agreement, or need support from start to finish, our team of US and German attorneys and tax advisors can offer you advice and counsel that is tailored to your needs. Do not hesitate to contact us!

Continue reading:
Choosing a company name: not that simple from a legal perspective
Director Liability of a British Limited Company in Germany

Dr. H. Elizabeth Kroeger

Dr. H. Elizabeth Kroeger is admitted to practice in both Germany and the State of California. She brings with her a wealth of over 20 years experience in cross-border transactions, investments, financial planning and structuring. She is also counseling high net worth individuals and family offices in matters of wealth management, including business succession planning, asset protection, charitable planning and philanthropic management.

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