Launching in the US? Sort these out before you get on the plane

A lot of founders I talk to are looking at the US because they kind of assume they have to. For some of them, it's really just not right for their business, or they need to go and do a lot more homework before they get to the point of launching.

Start with one question

Can you really envisage the US being your biggest market?

If it is, it's absolutely worth it. If it isn't, go back and do the homework.

Doing well in the UK or Europe doesn't mean it'll cross over. There are significant differences in culture, scale and infrastructure, particularly in markets like fintech and health tech. You can have a super successful, fast-growing business at home that just doesn't land here. Equally, a business that's never going to scale that quickly in the UK could fly in the US.

It's not a dip-your-toe-in market. It's too big. Unless you're fully committed, you can spend a lot of time and waste a lot of money.

Sort your own affairs out, not just the business

You get lots of advice about setting up the business, getting your bank accounts, entity right and all that kind of stuff. Nobody really talks about how you relocate yourself. And unless you've got support with that, it sucks a huge amount of time out of your ability to focus on the business.

Make it your family's adventure too. I moved over with my family. There's a lot I got wrong, but this bit I got right. From the outset, it was their adventure just as much as mine. We came out on trips, looked around schools, looked around neighbourhoods, and they settled really quickly because they were excited about it. I know a lot of people who moved their family over as an afterthought, and the family was unhappy and unsettled. If you're taking kids away from their friends at certain ages, that's a real challenge. You've got to put the time in.

Be ready for the tax system not to like you very much. As the majority shareholder of a foreign-owned business living in the US, you get all the problems of a multi-billion-dollar conglomerate, except you're an early-stage startup. If your business is headquartered elsewhere, makes most of its revenue elsewhere and keeps its money elsewhere, you're a triple negative from the IRS perspective. The banks don't love you either. And your personal finances are viewed as much more connected to your company than you would be in the UK.

So, consolidate. Before I moved, I was building a life in the UK: multiple business accounts, multiple properties and a bank account for each property. All of that was a living hell from an IRS perspective when I came to file my first tax returns, because you're reporting on those accounts every year. Every bank account or pension or asset held internationally with an amount or value over $10,000 requires its own set of tax forms. It’s incredibly onerous and if you get it wrong there is an immediate $10,000 fine and then questions asked later. The tax treatment on any foreign assets you sell whilst a resident in the US isn’t going to make you smile either. Get your bank accounts down to as few as you can, and look hard at any revenue-generating assets outside the US and whether they're worth keeping or exiting before you move

My first tax return was so complicated and messy, as I had established a tax residency but had part of the year with a salary and other streams of income in the UK and part in the US. I ended up at a Taxpayer Assistance Center, because I didn't have the right accounting advice. I'd been there an hour with my entire family, and we got escorted out by an armed guard because our case was too complex. We found ourselves in the car park going, well, that didn't go well. Get advice early. If you have a UK accountant, ask if they partner with anyone in the US. Preparation is way better than trying to figure this out on the fly.

Start building your credit before you arrive. Pretty much everything in the US is tied to your credit rating, and it's very difficult to build from scratch. Top tip: get an Amex in the UK and put everything on it before you move. Amex will then give you a US credit card straight away, and you start doing the same thing here. I was sole signatory on a Citibank business account with a significant amount going through it, and when I asked our bank manager for a personal credit card, they laughed in my face. My credit rating was zero. Without Amex it would have taken me a lot longer. And get a Social Security number as soon as you arrive.

Do things in the right order

A lot of things in the US have an order you need to do them in. Skip a step and it really hurts you down the line. You think you're making progress, and then you have to go right back to the beginning again.

Get your entity and your EIN as soon as you can. You can start exploring with contractors or an employer of record before you have an entity. But if the US is going to be your biggest market, you're going to need the right entity, and you're going to need advice on it. Pretty much everything you want to do will ask for your EIN, your employer identification number, so the quicker you have it, the easier everything gets.

Let where you're going decide the entity. There are tax implications and exit implications. Speak to a tax adviser, and if you're VC-backed, ask your VC what they prefer. Most VC-backed companies set up in Delaware because it makes it easy to change your cap table and do further rounds. Tax has nothing to do with it. If you're not VC-backed and not looking for investment, there's no real logical reason to be there, and other states might suit you better, on tax for instance. Whatever's driving your decision should drive the type and the location.

Bank in two stages. When you're just starting to transact and run payroll, you need something simple. We work with Revolut, Wise and Mercury, and they're all good options for a quick setup. Once things get more complex, the choices get harder.

A lot of US banking means physically going into a branch and having a cheque book. I had no idea how much business here is done by cheque. We've had clients pay us with $50,000 or $60,000 cheques. We paid a year's office rent with a cheque book. For five years I had to go into the bank every month to pay my mortgage. So choose a bank that understands international business, where there's someone you can get on the phone or walk in and see.

I got this one wrong too. Our first office was in New York, there was a Citibank on the corner, so we opened an account there. Then I moved to Texas, and it turns out you can't just walk into a Citibank in Texas. You assume a brand like that is in every state. It isn't. Over time we've had to change all our banking arrangements.

Top tip: get a US mobile number first. You go through all the lists online, you've got your EIN and your entity documents, you're in the bank for hours, and right at the end they say, we need to set up two-factor authentication, what's your US cell phone number? They can't do it on an international number. I ended up running round the streets trying to find a burner phone. As soon as you arrive, get a Mint Mobile or something similar with no contract, because you can't get a contract without a credit rating.

Get your visa right

If you're here on an ESTA visa, going to conferences, things like SF Tech Week, that's fine. Day-to-day business isn't. So be careful about what you're doing, and what you're recording in your calendar, because they may well check it at immigration.

The process of getting a visa is actually pretty straightforward. But it's strict. If you meet the criteria, you'll most likely get it. If you don't, you won't. There's not much flexibility, and it's taking a bit longer than it used to. The US does want international people to start businesses here and grow and scale. It's just strict on the criteria.

Be wary of the O-1. There's been a trend of founders going for it, and they've tightened up the criteria an awful lot. It's for people of extraordinary ability. If you're a pop star or a sports star, or you've done TED Talks, you'll probably get it. It used to work if you were the founder of a VC-backed business, but that doesn't really cut it anymore. Get rejected, and every subsequent visa gets harder. I wouldn't listen to anyone who says it's a good option unless they can tell you categorically why you're going to qualify. There are services that will help build your case and get articles in the press etc on your behalf – it can work but if you qualify for a more straight forward visa just do that rather than take the risk.

I wouldn't recommend the H-1B either. It's very well publicised, but the numbers are limited and it's not really the right route for most founders. The $100k cost is punitive and it’s rarely the right choice for expanding companies.

Look at the L-1, E-1 and E-2. Both for you and for the people you bring over after you.

• L-1 is good for a founder, exec or top-level individual contributor who's been in the business for more than a year. It's straightforward to set up, and it gives you a route towards residency.

• E-1 and E-2 are straight forward to set up for the business compared to others. It depends whether you're already trading with the US or prepared to make an investment here. The investment can include things like what you'll spend on office rent in the year, so it doesn't mean transferring a huge amount of money into a US bank account. Check whether your country of origin qualifies for a treaty.

Talk to a decent immigration attorney who specialises in this. It's not something to be trifled with and there are a lot of nuances. Put the time in to get it right, so you can keep building, rather than doing something unintentionally that stops you coming back. I know people it's happened to, and it really stalls the business.

And don't get a DUI. This can lock you out of access to the US for years!

Choose how you engage your first people

People get very confused by this, and it works quite differently in the US, mostly because of benefits: medical, dental and vision cover, and a 401(k). There are three main structures.

Agent of record, for contractors. If you want to engage contractors to start exploring the US, you can get into trouble if they're not classified correctly. A corp-to-corp contractor needs their own company. A 1099 contractor doesn't, but must be classified very carefully, and your agreement with them has to be worded very carefully. If they're deemed an employee, you can fall foul of back taxes, and the IRS can be aggressive on this stuff. And if you fall out with them, they can sue you for the benefits you should have been providing. An agent of record makes sure your contractors are classified correctly, handles the payroll and tax, and keeps you compliant.

Employer of record, to move quickly. This lets you take on permanent employees and give them benefits before you've even got an entity or a bank account. For instance: If you've met a salesperson who could help launch the business and you want to move quickly, it's a viable option. The employer of record takes on employment, liability of the employee and all the administration, payroll and benefits and effectively leases them back to you so you manage their work activities. I wouldn't recommend it long term, because it can get quite expensive and there are limitations around protecting IP and issuing equity etc.

PEO, where most companies end up. It's co-employment. You keep the contract of employment, and the PEO provides payroll, benefits administration and HR support. It's common across the US, for domestic companies as well as international ones, because healthcare companies don't really want to provide solutions to companies of five or fewer people, and make it very expensive when they do. A PEO gets you access to benefits earlier and at better value plus takes care of a lot of the compliance and insurance that's very difficult to handle when you're based overseas.

Ask for help

This was a real cultural thing I had to get over. Being from England, I didn't really ask people for help. I just assumed nobody would help you unless you paid them. The US is very different. There's a significant ecosystem that helps international companies launch here, and people genuinely want to help without really wanting anything in return.

So, as you work through all of this, figure out what you're going to need help on, make a list of people who might be able to help, and start asking them questions.

Work with In2America

In2America is the PEO built for international businesses making their first US hires, with no headcount minimum. We manage payroll, taxes, benefits, insurance, HR and compliance, and when a question needs a lawyer or an accountant, we'll introduce you to people we know have done a good job before.