When you’re expanding your UK based business to the US, one of the factors you’ll need to consider is who’s going to work for you overseas. Hiring US workers can feel like a logistical nightmare, so it’s natural to feel tempted to send some of your UK-based workers to America. However, without residency permissions, they’ll only be able to visit the States intermittently. Or, you’ll have to embark on a complicated process to relocate a portion of your workforce permanently – and that’s if your workers are prepared to move at all.
But, there are other ways to build a team in the US. Here’s how you can do it.
If you want to keep your costs down and make little in the way of permanent commitments, hiring contractors to perform tasks for you could be an option. However, proceed with caution if you plan to build your team this way.
For one thing, you can’t technically call them contractors ‘members of your team’ as US court may determine that a contractor is in fact an employee – particularly if they’re working for you exclusively. Secondly, you need to ensure you understand how the Internal Revenue Service is going to tax you if you’re using contractors – something that could see you in serious trouble if you don’t fully understand or comply with the rules.
Finally, contractors may not be the best option at your business’s current stage: if you’re expanding internationally, you’ll need someone you can trust to make critical decisions – someone who is likely to be be better-versed with your company than a contractor is.
Use A Third Party
If you don’t like the idea of relying on contractors to run the US arm of your business, and you’re not comfortable with the idea of setting up a subsidiary (see below), there is another way – using the service of a third party that specialises in setting up in America.
They will hire employees on your behalf under their own established US company. The employee will work exclusively for you, will carry your business card and even use your business email address, while the US company will administer all payroll, pensions and other benefits associated with hiring a US worker.
Ultimately, this method means you can have all the perks of having a US team without any of the complications or risk you’d usually encounter if you pursued a more ‘traditional’ route.
Hire Employees Directly
Alternatively, you can build your team by forming a legal entity for your company in the US – in other words, establishing a ‘subsidiary’. There’s a great deal to learn about how to do this, so be sure to seek information an international tax advisor, a company attorney as well as a trusted business advisor. You’ll also need to do some reading for yourself – this article explaining how to set up a US company as a non-resident is a good place to start.
However, there are a few essential points worth highlighting from the outset. First and foremost, you must form a subsidiary if you want to hire employees directly. Secondly, you will be required to obtain an Employer Identification Number (an EIN) from the Internal Revenue Service in order to operate in the US; you won’t be able to hire US workers without it.
Finally, if you hire US employees directly, you’ll be responsible for administering their payroll, deducting their taxes and calculating their benefits, as well as understanding how a 401(k) works. None of these things should be obstacles to forming a team in the US, but it’s worth giving due consideration to whether or not you really want to take this level of administrative work on while you’re expanding your business overseas.