The world's largest economy, with a nominal GDP of over $20 trillion and a 2.9% real growth in 2018, total population of 327mln and unemployment rate at 3.6% in October 2019, the United States represents a worldwide attraction for investors, entrepreneurs and corporations of all sizes.
Transacting business in the USA not only appeals for the large market base, but also for its business-friendly legislation and environment, which has made it possible for many entrepreneurs to "hit the jackpot".
Do I need to form a company in the USA to transact business there?
Several factors come into play as it greatly depends on the type of industry, your business structure, and your business plan.
For example, using an established US importer to sell products, is an easy option although the least lucrative too.
Alternatively, one might open a local branch, but this is rarely recommended because of the tax and the liability implications for the principal company.
Another option is forming a US subsidiary, which may involve a larger investment on your behalf, but it would bring far better results than using the importer/distributor model indicate above.
What are the most flourishing industries in the US?
According to IbisWorld, which is a company specializing in business information and market research, the following industries were the fastest growing when measured by their revenue:
1) Wind turbine installation, annualized growth 53.5% to 2018
2) Manufacturing of automated guided vehicles, annualized growth 48.2%
3) Solar power +38.8%
4) Social networking +38.2%
5) Telehealth services +37%
6) Peer-to-peer lending platforms +34.8%
7) Medical & recreational marijuana stores +30.9%
8) Medical & recreational marijuana growing +27.9%
9) Massage franchises +27.6%
10) Online mortgage brokers +24.8%
Domestic or Foreign Corporations
A corporation is considered “Domestic” in the state where they incorporated. Alternatively, a corporation is considered “Foreign” in the state(s) where it registers to do business outside of their domestic state.
A company incorporated in e.g. Delaware would be considered a foreign business entity in New York if it were to decide to register in New York to do business.
For a corporation to be allowed to do business outside its incorporation state, it will need to register as foreign entity in every state where it intends to transact business. Thus, if a Nevada corporation intends to do business in New York and California, it will need to register as a foreign entity in both those states.
The process of registering as a foreign entity is called foreign qualification/registration.
Doing business
Because doing business involves some degree of physical presence, a company will be required to have an office, a warehouse or shop or have a registered agent, in each state where it is either incorporated or registered for business.
Moving forward, in future articles we will discuss the different types of business entities, the compliance requirements on US companies, the role of registered agents, and more.
Stay tuned!