“Inbound USA”: HSP Group’s disruptive inbound solution for realizing success in the world’s largest market
Why is setting up a business in the USA so challenging, especially if you have never done it before?
Setting up a business in the USA should be relatively straightforward shouldn’t it? After all, the USA is well known for its entrepreneurial “can do” business attitude, thriving and profitable multi-national corporations, and a “business friendly” reputation for practices and laws. Unfortunately, the reality is different from what many perceive should be the case. Expanding into the USA, especially if you are not familiar with its local business practices, can range from “challenging” to actually “really hard”.
However, these challenges should not be allowed to present an insurmountable barrier to entry, when there are so many advantages of expanding to the USA as a foreign company given it is an enormous and prosperous market. Planning is key, and companies should absolutely learn everything there is to “know before they go”, so that the expansion and business plans can be well organized and appropriately budgeted, and those hidden “gotchas” don’t jump up unexpectedly.
WHY should a company consider expansion into the USA?
The USA has the largest economy in the world, which means great potential to reach new clients, leverage resources, capture new markets and increase profits. The USA boosts the world’s largest and most lucrative market, which makes finding success there very appealing for many companies.
Beyond simply its size, the USA is the most technologically focused economy in the world. It is intensely market-oriented, and USA businesses enjoy greater flexibility than many of their counterparts in Western Europe, China and Japan (to name just a few countries) in relation to incentives for expansion, the flexibility to release or terminate unsuccessful employees without significant severance costs, and the ability to develop (and protect, from an IP perspective) new products. USA companies are at or near the forefront in global technological advances, especially in computers (including hardware, software, networking equipment), and in the medical, aerospace, and military/defense sectors.
WHY is it so challenging to expand into the USA?
For those who are interested in expanding a business into the USA, the sheer size of the country can be daunting. Rather than think of the USA as a single country, it is essential to regard it as a series of regional markets with varying characteristics (similar to how Europeans would think about the EU as a whole, with regional market variation across each EU member state). The USA consists of many different consumer markets, each with distinct tastes, purchasing behaviours, distribution systems, regulations and climates. Business and consumer practices not only vary from state to state, but city-to-city and town-to-town.
We know the USA is made up of 50 individual states. Each state is in many ways equivalent to a “mini country” (think EU member state), with their own and unique sets of rules & regulations. This creates a lack of consistency with respect to compliance and administration, depending on where you may wish to incorporate and operate your organization from, where your customers may be located, where product may be shipped to, differences whether selling to businesses or consumers, costs, and where you may employ staff. This is particularly relevant in these days of remote work, where it is increasingly commonplace for US employees to be located across a multiple number of different states. This adds employment and payroll complexity. Key areas where states will differ include
registration and state entity governance requirements,
corporate and sales tax legislation,
employment legislation and local HR rules
Employment structures in the USA are also different. It is not uncommon for companies to “outsource” the HR administration (payroll, employee benefits) to a third party, producing what are known as “co-employment” arrangements. Referred to as a Professional Employer Organization, or “PEO”. With this approach there are three parties named in an employment relationship – the employee, the underlying company and the third-party PEO firm that is responsible for administering the payroll and employment benefit programs. Why have these structures become prevalent? The main reason for this lies in the complexity of multiple state employment laws requiring specialist state employment knowledge, as well as the significant cost of employee benefit provision (particularly in relation to medical insurance) which can be crippling for small companies. For sure, the world of employment benefits as a whole is much more complicated in the USA, due to the lack of any meaningful government mandated “statutory” benefits. By using a third-party PEO co-employer, smaller companies effectively “bundle” together to benefit from umbrella or group insurance packages, spreading the costs across a wider employee base, and thereby significantly reducing the per capita employment costs. This also reduces the need for an extensive in-house HR department, again leveraging economies of scale across a group of employers.
HOW can HSP Group help?
HSP Group is a global organization but we are headquartered in (by far) the world’s largest economy, the USA. HSP Group is therefore well placed to serve as your gateway into the USA, relying on HSP Group to efficiently and proactively manage the day to day start up considerations as well as the on-going practical compliance tasks, enabling you to focus on your business plan and optimize a successful launch into the USA.
Our Global Entity Services will assist you with setting up your operation in the USA (incorporations, bank accounts, start-up registrations, etc.), and on a recurring, ongoing basis will pick up back-office tasks best addressed via outsourcing (bookkeeping, invoicing, collections, payables, HR, and tax filings), and ensure your operation will remain in compliance for all legal, regulatory, accounting & year-end tax requirements.
Our Global People Services provide an end-to-end solution to fulfill your recurring HR and Payroll back-office needs, to provide your employees with a better experience, and support them as effectively as they would be supported if working for a domestic employer.
Our Consulting Solutions specialized services will assist with the unpredictable but consistent need for help with ad hoc projects and challenges as they arise, including Global Mobility support, terminations and other technical HR advice, introductions to Federal, State, County and Municipal economic development organizations, best practice assessments, and state and municipal tax optimization strategies.
Instead of working with various providers for each of the different services required, often varying from state to state depending on where you operate, HSP Group can be your single point of contact, serving as your entire administrative back-office supporting your requirements across all 50 states, so you can fully focus on building your business, and finding success in the USA.
If you would like to learn more about how HSP Group can be of assistance with our USA Inbound Services, reach out and contact one of our experts at USA-Inbound@hsp.com.