Doing Business in the US
The US economy, which is the largest in the world, is open to foreign business and investment better than many destinations. The reality as it is now is most of the start-ups in the technology sector are started by foreigners. One reason that is contributing to this trend is in the coming decade, when the so called baby boomers retire, the void that will be created would be around 80% creating opportunity for foreigners to get established with whatever they want to do.
The findings are, however, most of these aspiring foreign entrepreneurs fail to do the required research on the business culture and American way of doing business and that will end hamstringing their aim to attain the American dream. To start out familiarizing oneself with simple issues such as tax treaties could make a big difference. It is very important to understand from the outset what kind of cross-boarder transactions are allowed and failure to have a full understanding of the nature of such transactions and transfer rules could cause delays in tax filling and assessment that could be costly for any upstart business.
The Internal Revenue Service (IRS) in the US expects every business entity, local or foreign, to be thoroughly familiar with the procedure of documenting transactions so that whenever exhaustive scrutiny is called for, the businesses could withstand it Among the business aspects that requires to be very familiar with is to have a full understanding of the proper procedures while filing tax return, whether it is for individuals or businesses since every business entity, in whatever form it is had to disclose every business activity locally and around the world, although there are variations that will be discussed.
The key point to take note of here is any failure to follow proper procedure in filling tax return could result with up to $60,000 fine. Estate planning also requires similar attention simply because if foreigners who start business in the US at one point decide to become residents and want to transfer their assets, unless they had followed a proper procedure of estate planning they cannot avoid paying the gift and estate tax.
This is applicable to both domestic and foreign business owners and not making the right kind of preparation in advance could be costly for foreign investors. The whole undertaking could get more complicated if the wrong kind of business structure is chosen, because it possible to encounter problems in managing the business, as well as meeting the proper and beneficial tax requirements.
In addition, a business started by foreigners will have to be very familiar with the tax requirements of the states they are opening their business in including to be very familiar with what kind of businesses or other activities are subject to what kind of taxes. Once a foreigner starts a business in the US it is possible that payroll tax, income tax, various insurance expenses will come into the picture and not being familiar with them and executing them according to the rules and regulations could end up being costly for any new business (1).