The Hidden Costs of Launching & Scaling Your Business in the US (and How to Avoid Them)

Starting & expanding your business in the United States can feel like the ultimate growth move, and for good reason. The US offers the largest economy in the world, a deep talent pool, and countless opportunities to scale.

But alongside the obvious costs of office space, salaries, and travel, many companies underestimate the hidden costs of entering the US market and these can quickly erode profitability if not planned for.

Here are some of the most common hidden costs to watch out for when expanding to the US and how to avoid them.

🧾 1️.Legal & Compliance Surprises

What it costs:

Registration and formation of a US entity ($1,000–$5,000+ depending on state & corporate structure)
State-by-state business registration fees
Ongoing corporate filings & registered agent services
Workers’ compensation insurance (mandatory in every state, varies widely)
Legal fees for employment contracts & handbooks

Why it’s hidden:
Unlike the UK and many other countries, where compliance is fairly centralized, the US has 50 states each with its own rules and costs. Many first-time entrants assume compliance is uniform, which it isn’t.

How to avoid it:
✅Work with an experienced US-based attorney and accountant early.
✅Consider using a PEO (Professional Employer Organization) or EOR (Employer of Record) to handle registrations, payroll, taxes, benefits, insurance and compliance without necessarily needing your own entity or registrations immediately.

Why In2America:

- We can introduce you to attorneys, accountants and a raft of other advisors that are fully vetted, understand your industry and location. We’ll save you time and ensure you are paying an appropriate price for the services you need.

- We operate as a PEO and EOR, crucially with all our own entities, licenses and advisors.

- All our PEO and EOR services include workers compensation insurance in all states so you are always covered.

- We’ll help you work out your entire EVP including providing employment contracts, and handbooks specific to every location and your industry.

🏥 2️.Employee Benefits & Payroll Taxes

What it costs:

Employer-side payroll taxes: ~7–10% on top of salary.
Health insurance: $7,000–$20,000+ per employee annually for competitive coverage.
401(k) matching, dental, vision, disability, all commonly expected in the US.

Why it’s hidden:
In the UK and many other countries, national healthcare and minimal employer pension obligations keep costs lower and more predictable. In the US, health insurance and benefits are employer-driven and candidates often expect generous packages.

How to avoid it:
✅Budget at least 20–30% on top of salary for benefits & taxes.
✅Use a PEO to access group rates for health insurance & retirement plans.
✅Be transparent with candidates about your benefits offering to avoid surprises.

Why In2America:

- We can provide accurate, location specific cost estimates before onboarding any employee so you know exactly what you will have to pay.
- We provide corporate-level health insurance and benefit options at vastly reduced market prices and also enable the employer to fully customize their contributions i.e. a fixed amount or percentage of overall costs for each employee which can be varied by level.

- We provide a 401k which is also significantly better than a typical early-stage company could provide giving you a much better EVP

- We also enable your customize EVP to be matched on our PEO and EOR offering so you can blend your strategy across states.

🌎 3️.State-by-State Cost Variability

What it costs:

Office space, wages, taxes, and compliance vary dramatically by state.
For example: hiring in New York City can cost 2–3× as much as hiring in Austin or Raleigh.
Some states (like California & New York) also have additional payroll taxes and strict labor laws.

Why it’s hidden:
Many companies pick a city because it’s a “tech hub” or “financial capital” without fully exploring alternative locations that offer lower costs and still access to great talent.

How to avoid it:
✅Do a location strategy analysis before committing to a state or city.
✅Consider starting in business-friendly states like Texas, Florida, or North Carolina to keep costs down while growing.

Why In2America:

- We have coverage in all 50 states and a sister recruitment business with comprehensive data on talent availability and cost. We also have office hubs in multiple US locations. We can help you with your location’s strategy based on what’s most important to you and ensure you execute the best possible plan unique to your requirements.

⏳ 4️.Time & Opportunity Costs

What it costs:

Senior leadership time spent navigating compliance, banking, contracts, and HR instead of focusing on clients & revenue.
Costly delays if you miss key deadlines or make missteps (e.g., late final paychecks, incorrect filings).

Why it’s hidden:
These costs don’t show up on a P&L but they slow down momentum and hurt morale if not managed.

How to avoid it:
✅Delegate compliance and HR to trusted advisors or a PEO/EOR.
✅Have a clear project plan with timelines and responsibilities mapped out before you start.

Why In2America:

- We’ve felt this pain as founders and built In2America to remove this issue completely. We’ll minimize every forecastable time suck for you and take the strain on executing it on your behalf wherever we legally can / our commercial agreement enables us to.

- We can introduce you to suppliers and partners that understand your industry and location and will act efficiently and cost effectively. As a small company a lot of suppliers and providers might not prioritize you but our partnerships treat our customers differently as we provide an opportunity for significant business. Use the benefit our buying power to your advantage.

⚖️ 5️.Misclassification & Legal Risks

What it costs:

Misclassifying an employee as a contractor can lead to fines, back taxes, and lawsuits.
Misclassifying an employee as being exempt from overtime and also lead to extremely costly lawsuits.
Wrongful termination claims, discrimination suits, and wage disputes can also arise from poorly written contracts or misunderstood state laws.

Why it’s hidden:
US employment law is more litigious and fragmented than most other countries,and the risks aren’t obvious until something goes wrong. The resulting costscan be devastating to an early stage business.

How to avoid it:
✅Use compliant employment contracts tailored to each state.
✅Invest in HR training or partner with an organization that provides compliant onboarding and offboarding processes.

Why In2America:

- We understand not only the financial cost but the time burden of these issues. We also understand how alien a lot of this can be for international companies. Whether you are a US or International Founding Team, ensuring you have this right from the outset is a critical part of our advisory service.

📝 Final Thoughts: Plan Smart to Protect Your Investment

The US market is full of opportunity but it rewards companies that prepare properly.
By understanding and planning for these hidden costs, you can avoid nasty surprises, keep your expansion on budget, and focus on what really matters: growing your business.

✅ Quick Checklist to Avoid Hidden Costs:

Hire local legal & tax advisors.
Budget 20–30% above salaries for benefits & taxes.
Choose your state strategically.
Train your team on US employment law basics.

Use In2America as your launch and scale partner and we’ll make sure you understand everything critical and take the pain and time away from executing a strategy that mitigates your risk. We specialize in supporting early-stage business in the US and international expansion so you can specialize in launching and scaling your business In2America.

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The Hidden Costs of Launching & Scaling Your Business in the US (and How to Avoid Them)