The approach to the US market: options and strategies

The US market still represents one of the most developed and competitive economies in the world. 

It is considered a target country in the commercial expansion strategies of companies, thanks to a open system and low bureaucracy, with infrastructure and logistics strongly developed and an administrative level of very efficient public and judicial sector.

With the new tax reform of the Trump government, defined as the most significant of the last 30 years, yes further lowered the tax burden for companies, encouraging more and more companies to consider the United States as an important target in the logic of international expansion. 

In order to have one direct presence in the United States, Italian companies should determine upstream which is the most suitable corporate structure to the achievement of their goals.

The main options are: 

– business corporation (“INC” or “CORP”): a new legal entity is created through its establishment. A Corporation is an entity separate from its owners. Regardless of what happens to the shareholders, it continues to exist until it is legally dissolved. It is a more complex structure than those that follow but particularly suitable for structuring investment operations on the market by foreign companies. 

– Limited Liability Company (“LLC”): operates as a limited liability company, but taxation and management falls to the partners as is the case for partnerships. Although it is a simpler company to manage, it hides a series of obvious limitations, in particular related to taxation, which make it a vehicle that is not particularly attractive for foreign investments.

– branch of a foreign company: it is considered as an extension of the foreign company formally registered in the US as a branch. It is not considered a separate legal entity, which confers limited liability on its owner, and will be subject to the jurisdiction of the courts of the state in which it operates. It is an optimal solution for companies that need to evaluate the potential of the market without committing themselves to direct investments on the market.

The decision which path to take requires adequate strategic planning and must be taken on the basis of careful analysis either from a legal and operational and fiscal point of view. 

Octagona can help your company evaluate the best strategies for entering the American market, thanks to a direct office in the USA and a network of specialized professionals.