Press Room | Newsletter Sign-Up | Connect | Careers

The Significant Challenges of Expanding your International Business to the United States.

Starting and operating a business is a risky endeavor even when you are operating within your own country. But, when business owners decide to enter new international markets that risk multiplies. International business owners that decide to expand to the United States are exposed to the typical challenges that business owners face such as domestic competition, but foreign-owned businesses also face cultural and language barriers that impact international operations. While these challenges are difficult to overcome, the most challenging obstacle facing foreign business owners is learning and navigating the legal and regulatory environment of the United States.

The U.S. legislative environment strictly governs employment and employee management practices. It is constantly evolving, which requires employers to remain up-to-date on and find ways to navigate the changing policies.

Employment law overview

The Key Legislative Factors International Business Owners Neglect

Payroll Taxes – The U.S. tax code is just as confusing to life-long citizens as it is for foreign nationals. In fact, the most common small business fine is directly related to payroll taxes. Neglect or any violations of the payroll tax codes will result in fines and sometimes may even lead to more severe penalties.

Payroll taxes are a common problem

In addition to the commonplace payroll issues, a foreign-owned business’s incorporation status might affect some of the business processes. Those incorporating at the state level (this processes varies from state to state), must register in the chosen state. Any income obtained in the U.S. is subject to U.S. tax laws, but international businesses incorporated in the U.S. may be required to pay an annual fee in the state where the business is incorporated.

Health care reform is a task for employers

The Affordable Care Act - Affordable Care Act (ACA) provisions (such as the employer mandate) do apply to international companies doing business in the United States. The ACA is still in its infancy here in the United States, so even the most aware companies require clarification on the rules. Some of the major confusion stems from identifying which provisions of health care reform apply to your business. Incorrectly assessing the number of full-time employees, missing an IRS reporting requirement, or failing to provide appropriate coverage to employees could result in penalties for international businesses. Determining responsibility for these regulations becomes significantly more difficult for foreign-owned businesses because of their limited exposure to the existing benefits requirements for employees in the United States.

U.S. Employment Practice Laws - One of the most significant cultural changes in the United States is the amount of diversity in the workplace. Many nations aren’t overly exposed to diversity amongst their communities, but the U.S. is a highly diverse culture. In an effort to make sure employment opportunities are fair for all U.S. citizens, the U.S. has implemented significant employment guidelines for business owners. Knowing and following appropriate employment practices is paramount to managing a successful business in the United States. Some of the most significant laws are:

  • Equal Employment Opportunity (EEOC) regulations
  • Department of Labor’s (DOL) Wage and Hour division
  • Americans with Disabilities Act (ADA)
  • Fair Labor Standards Act (FLSA)
  • E-Verify
  • Occupational Safety and Health Act (OSHA)
  • Employee Retirement Income Security Act (ERISA)

Solutions for International Business Owners: Partners That Can Help Navigate the Complex Legislative Environment

When conducting international business, many entrepreneurs seek partners that can help them navigate the legislative environment. Partnerships with workforce management specialists, like XcelHR, can provide foreign-owned businesses with the information and administrative relief to navigate the compliance environment.

XcelHR is an employee administration organization that specializes in managing legislative issues surrounding a business’s employees. The purpose is to provide all businesses with a competitive advantage in managing their reputation by protecting from fines, violations, and other litigation that can cause financial and social damages to a company.