The United States is a country famous for its business and work ethics and even though you can never know everything, it is very important to be ready and to have some roadmap. So is to have the network you can trust.
Do you really need to go to the US?
With 330 million people and a $21 trillion GDP, the US is an extremely lucrative market, with a vast consumer base with high disposable income that allows to charge higher prices in US – with plenty of market expansion opportunities.
Prestige and legitimacy:
Succeeding in the US market can create brand awareness and credibility on a global scale. This effect can enhance sales and pricing power in your home markets and support entry into other large emerging markets (like China or India).
The US is one of the most sophisticated markets in the world. A foreign company that can successfully launch products in the US market can gain learning/experience, connections and possible US partners or investors that will enable it to compete in any environment. The US is also home to some of the smartest and most educated people in the world, who come to the US from around the globe, so having a presence in the US market could give access to human talent that may be less available elsewhere. For markets such as technology or healthcare, this can sharpen cutting edge research and design capabilities.
Any new product in the US market may face competition from a large number of US competitive products or substitutes (or from other international offerings). Entrants need to offer a differentiated product, or have a unique niche in the market.
US customers are some of the most demanding in the world.
The US is actually made up of a countless number of sub-markets – each with its own characteristics, preferences and price points. International entrants must understand and reach their ideal customer base.
Even a very successful international brand must tailor its marketing approach to the US market. A single mistake or execution stumble can tarnish a company’s reputation [expectation] for years.
That is why we are a few key issues to consider:
Legal (Type of Entity)
Companies must choose the type of legal business entity to conduct business in the US. Each has different advantages and drawbacks:
- Corporation: very common choice for foreign companies entering US market (as C corp)
- Based on state law – each state has different rules, benefits, bylaws and financial costs.
- Corporation is legal person, so shareholders do not have personal liability.
- Companies may choose to incorporate in a different state than where they have primary operations.
- Companies will typically choose to incorporate in states that have business friendly laws and processes (such as Delaware).
- Double taxation is a drawback (S corp option not open to foreign companies).
- Limited liability companies (LLCs)
- Also by state law.
- Greater flexibility with structure (members vs shareholders) for financing and management (operating agreement may be optional and rules less stringent that corporation’s bylaws).
- Greater flexibility with taxation – can have corporate tax or act as pass-through for members.
- LLC is a legal person – limits personal liability of members like a corporation.
- Foreign company can create partnership with third party to do business in US.
- Written agreement not necessary for partnership but is advised.
- Does not have personal liability protection like corporations or LLCs.
- Important to engage appropriate legal counsel to clarify agreements and avoid misunderstandings between partners.
- Another option is for company to establish branch (representative) office instead of establishing a US entity:
- Generally not advised for tax and liability reasons.
- Unlike subsidiary, it is not a separate legal entity. Branch office may have significantly higher tax and liability structure than through US entity.
- Establishing a US presence may be necessary before opening US bank account.
- Even with US entity, US banking relationships, credit availability and lending terms may take time to build. Increased capital from banks should become available after the company successfully performs business in US.Banking relationship:
Proper visas for foreign workers in US
Contracts, employee hiring, tax matters (e.g., obtaining EIN), intellectual property, product liability.
The roadmap to the US market can also be found Дорожная карта с инвесторами – фуд ритейл, in Russian:
Doing business in Ukraine.
It is scary to go into unknown waters, but it is fun to dive in with the diving instructor. If you do not know why you would invest in Ukraine, maybe think why would you like to have a high-yield project. Here is how the European Bank for Reconstruction and Development (EBRD) describes Ukraine.
Legal environment in Ukraine is nicely described here
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