For an international company, the decision to enter the US market is often the most consequential growth move it will ever make. The opportunity is enormous. So is the complexity. Getting the early structural choices right shapes everything that follows for years.
At Foothold America, we work with founders, CFOs, and country managers from the UK, Europe, and the Nordics every week. Most of them are weighing the same question: what is the right way to enter the US market in 2026? This guide is the answer we walk through with clients, distilled from years of supporting international expansions across software, fintech, life sciences, professional services, and industrial sectors.
The United States is the world’s largest economy at around $30.6 trillion in 2025, accounting for roughly a quarter of global GDP. New foreign direct investment into the country totalled $151 billion in 2024 according to the US Bureau of Economic Analysis. The flow of international capital into US businesses is consistent year after year. The flow of international companies trying to enter the US market and getting it wrong is just as consistent. We see both patterns up close.
This guide walks through the three main paths international companies use to enter the US market in 2026, the steps each one involves, and how to choose the right path for your stage and ambition.
Why international companies enter the US market
The reasons are usually a mix of market opportunity and customer pull. The US economy is large enough that even a single percent of market share in your category is often more valuable than dominance in a home market.
SelectUSA, the US Department of Commerce’s investment promotion organisation, has facilitated more than $400 billion of inbound investment supporting over 270,000 US jobs since its inception. Bureau of Economic Analysis data shows foreign-owned firms employed more than 8.6 million American workers in 2023, accounting for over 6 percent of total private-industry employment. The market rewards companies that show up well, and punishes those that show up unprepared.
Common triggers we see for entering the US market include:
US customers asking for a local presence or US contracting entity
Investor pressure to expand the addressable market before a fundraise
Access to US engineering, sales, or commercial talent
A US partner, distributor, or acquirer requiring local incorporation
Tax or regulatory advantages in specific US states
Brand credibility in adjacent markets that follow US trends
The cost of getting it wrong is high. Wrong entity type triggers years of unnecessary tax leakage. Wrong state choice creates compliance overhead. Wrong hiring infrastructure creates litigation exposure. A wrong approach in year one is rarely free to undo in year three.
“Most founders we work with arrive at US expansion thinking it is mainly a legal and tax problem to solve,” says Joanne, President and CEO of Foothold America. “It is actually a sequencing problem. The companies that succeed do not have better lawyers or accountants. They make the structural decisions in the right order and avoid the cost of reversing them later.”
Before you enter: foundations to get right
Before choosing any specific entry route, a small set of strategic decisions need to be made. Skipping these creates problems that compound quickly. We work through this checklist with every client before any paperwork is filed.
Market validation. Have you confirmed demand in the US? Distance from your home market sometimes flatters early signals. Real US customers usually want different things than your domestic ones.
Brand and entity name. Many international brands cannot use their home name in the US, either because of trademark conflicts or because the name reads differently in American English. Run a name check before committing to legal structure. Our guide to US entity name compliance walks through the most common conflicts.
Tax planning. Your home-country tax position and your US tax structure interact in ways that are expensive to fix retroactively. Get advice early on transfer pricing, profit attribution, and US federal versus state filings.
Capital and runway. US expansion is rarely cheap. Underestimating the cost of the first 12 to 24 months is one of the most common reasons international expansions stall before they generate revenue.
IP protection. US trademarks, patents, and contracts operate differently from European equivalents. Filing US trademarks before launching protects you from squatters who watch international company news for filing opportunities.
Timeline expectations. Setting up a US entity, opening a bank account, and hiring your first employee takes longer than most founders expect. Plan for three to six months minimum if you are going the full entity route.
Read more on US Market Strategies here.
The three main paths to enter the US market
There are three structural paths international companies use to enter the US market. Each suits a different stage and ambition.
Path 1: Set up a US entity and hire directly under it. The traditional approach. You incorporate a US company, open a bank account, get a tax ID, and hire employees under that entity. This is the right route if you have a clear long-term commitment, multiple US hires planned, and operations that need a US legal home.
Path 2: Use an Employer of Record (EOR). You hire US employees through a third-party employer that handles compliance, payroll, and benefits on your behalf. You direct the work; they hold the legal employment relationship. This is the right route if you want to move fast, test the market, or hire a small US team without setting up infrastructure.
Path 3: Establish a US presence via entity plus virtual office without hiring. You incorporate a US entity and rent a virtual office address, but do not yet hire any US employees. This is the right route if you need a US legal presence for contracting, banking, or investor credibility, but are not yet ready to commit to US headcount.
Each path is covered in detail below.
Path 1: Set up a US entity and hire under it
This is the route most international companies eventually take, even if they start elsewhere. It gives you complete operational control, a clear corporate structure, and the foundation for scaling US headcount.
Step 1: Choose your state of incorporation
The most common choice is Delaware. The state’s corporate law is well-developed, the courts are experienced in business disputes, and most US venture capital prefers Delaware C-corps. The Delaware Division of Corporations processes filings quickly and the annual fees are predictable.
Wyoming and Nevada are alternatives with lower fees and stronger privacy provisions. For most international companies expecting to raise US venture capital, Delaware remains the default. For bootstrapped or self-funded companies with no US fundraising ambitions, Wyoming can be more cost-efficient. Our Delaware vs other states comparison explains the trade-offs in detail.
Remember that the state of incorporation is separate from the states where you operate. A Delaware company employing people in California must also register as a foreign entity in California, and comply with California’s separate rules.
Step 2: Choose your entity type
For most international companies, a Delaware C-corporation is the right answer. It is the standard structure US investors expect, it ringfences US liabilities cleanly, and the tax treatment is predictable. The US Small Business Administration publishes a useful overview of available business structures for context.
LLCs can be tax-efficient for certain ownership structures, but the pass-through treatment often creates filing obligations for non-US owners that outweigh the benefits. We always advise clients to talk to a US tax adviser who understands cross-border structures before deciding.
Step 3: File the formation documents
The state filing itself is straightforward and usually takes a few days to a few weeks depending on the state and processing speed chosen. You will need a registered agent in your state of incorporation, which is a service that receives legal notices on the company’s behalf.
Step 4: Get your EIN
The Employer Identification Number (EIN) is your US federal tax ID. Without it, you cannot open a bank account, hire employees, or file taxes. International founders often face delays getting an EIN if they do not have a US social security number, but the process is manageable. Our step-by-step EIN guide covers the international founder path in detail.
Step 5: Open a US bank account
This is often the slowest step. Most US banks now require an in-person visit, US identification, and proof of US activity before opening an account for an international company. Some banks specialise in international clients and can onboard remotely, but the process has tightened in recent years. See our guide to opening a US bank account as an international founder.
Step 6: Register as a foreign entity in operating states
If your Delaware company employs people in California, New York, Texas, or anywhere else, you must register as a foreign entity in those states. Each state has its own filing fees and annual reports.
Step 7: Set up payroll, benefits, and HR infrastructure
You need a payroll provider, workers’ compensation insurance, state unemployment registration, health insurance options, and an employee handbook. For one or two hires this is overhead-heavy. For five or more, the infrastructure starts paying for itself.
Step 8: Hire your first US employees
With infrastructure in place, you can hire directly. Offer letters, employment agreements, and benefits enrolment follow standard US patterns.
Typical timeline. Three to six months from decision to first hire if you handle it yourself, faster if you use a managed service.
Typical cost. State filings $300 to $2,000, registered agent $100 to $500 annually, EIN free if direct, bank account fees variable, payroll setup $500 to $2,000, plus ongoing legal and accounting. Most international clients we work with budget $15,000 to $40,000 for the first year of compliance and setup work alone, before any operating costs. Our complete US company registration guide covers the full sequence.
“The founders who succeed at this path are the ones who plan the sequence properly,” says Laurie Spicer, Director of US Expansion at Foothold America. “Banking before EIN does not work. State qualification before incorporation does not work. Hiring before payroll infrastructure leads to expensive compliance gaps. The order matters more than the speed.”
Path 2: Use an Employer of Record (EOR) to enter the US market
An Employer of Record is a third-party company that legally employs workers on your behalf in the US. You manage the day-to-day work. They handle the employment relationship, payroll, taxes, benefits, and compliance.
When EOR is the right route
EOR makes the most sense when:
You want to hire one to five US employees quickly
You are testing US market demand before committing to a full setup
You need to hire a US-based executive or sales lead before incorporating
You do not yet have the capital or commercial certainty to justify entity setup costs
You want to focus on revenue rather than compliance in year one
A typical client scenario
One European industrial automation client came to us early this year wanting to hire their first US sales lead before Q3. Their original plan was to set up a Delaware C-corp first, then hire. We walked them through the math: full entity setup would push the hire to Q4 at earliest, missing the Q3 sales pipeline they had been building for nine months.
Instead, we placed the employee through our EOR within two weeks while running the Delaware entity setup in parallel over three months. The client closed two US contracts before the entity was even fully registered, then transitioned the employee onto their own entity at the start of the following year. The total cost of the EOR period was a fraction of the revenue secured.
How EOR works
You identify the candidate you want to hire. The EOR signs the employment contract with that person, runs payroll, withholds taxes, manages benefits, and handles all compliance in the relevant state. You sign a service agreement with the EOR and direct the employee’s day-to-day work.
The cost is typically a fixed monthly fee per employee, ranging from a few hundred to a few thousand dollars per month depending on services included. Health insurance and benefits are added on top.
Timeline and speed
A well-run EOR can onboard a new US employee in one to two weeks, compared to the three to six months of full entity setup. For companies under time pressure to hire, this difference matters more than almost any other factor.
When to graduate from EOR to entity
Most companies we work with stay on EOR until they have between five and 15 US employees, at which point the per-employee fees start to outweigh the cost of running their own entity. Others stay on EOR indefinitely if they prefer to keep US employment off their balance sheet.
Limitations of EOR
EOR does not give you a US corporate presence. You cannot use an EOR to sign US contracts, hold US assets, raise capital from US investors, or apply for US government grants. If those things matter, you need an entity.
“Clients are often surprised at how quickly an EOR can get them into the US market,” says Angelique Soulet-Bangurah, PHR, Head of EOR Services at Foothold America. “Two weeks from decision to first hire is normal when the paperwork is set up properly. That speed unlocks revenue conversations months earlier than the alternative.”
Path 3: Set up a US entity plus virtual office without hiring
This is the quietest of the three paths. You incorporate a US entity and rent a virtual office address, but you do not yet hire any employees in the US.
When this approach is right
You might choose this if:
US customers want to contract with a US legal entity
You need a US business address for banking, marketing, or shipping
You are raising capital and want a US corporate presence for credibility
You plan to hire in 12 to 24 months but want the legal structure ready
Your founders or executives travel frequently to the US and need a business base
Steps involved
The entity setup follows Path 1 above. The virtual office adds a US business address you can use on contracts, websites, and bank forms. Many virtual offices also offer mail handling, phone answering, and occasional physical meeting space.
Limitations
A virtual office is not a substitute for actual US operations. Some banks and tax authorities scrutinise virtual office addresses more carefully than physical ones. You also cannot use a virtual office as a legitimate “permanent establishment” for tax purposes if you have no real US activity.
When you are ready to hire, the entity is already in place and you can move directly to setting up payroll and onboarding employees. This is the lowest-risk way to maintain optionality while you decide whether the US market is worth the full commitment.
State selection: where to incorporate when entering the US market
Beyond Delaware, the state choice depends on what you are trying to achieve.
Delaware is the default for venture-backed or international companies expecting US fundraising. Around 66 percent of Fortune 500 companies are incorporated there, according to the Delaware Division of Corporations 2024 annual report. The legal system is mature and predictable.
Wyoming is increasingly popular for bootstrapped or self-funded international companies. Low filing fees, strong privacy provisions, and no state corporate income tax make it attractive for holding companies.
Nevada offers similar advantages to Wyoming, with no state corporate income tax and limited reporting requirements.
California, New York, Texas, and Florida are operating states more than incorporation states. You will register as a foreign entity in any of these where you have employees or significant operations, regardless of where you incorporate.
For most international companies entering the US market for the first time, the default sequence we recommend is Delaware incorporation plus foreign qualification in whichever state your first employees sit. Resist the temptation to overthink this. Get it 80 percent right and move on. Optimisation comes later.
US banking, EIN, and tax infrastructure
The financial infrastructure behind US operations is more involved than its European equivalent. International founders consistently underestimate how long this takes, and it is the area where our clients hit the most unexpected delays.
Your EIN
The Employer Identification Number is your federal tax ID, issued by the IRS. Without it you cannot file taxes, open most bank accounts, or run payroll. International founders without a US social security number can still apply, but the process takes longer.
Your US bank account
This is often the slowest part of entering the US market. Banks have tightened their compliance procedures for international owners. Some require an in-person visit. Some onboard remotely but with extensive documentation. Building a relationship with a banker who has handled international companies before saves weeks.
Tax structure
US federal corporate tax is 21 percent. State corporate taxes vary widely, from zero in states like Wyoming to over 11 percent in others. Sales tax obligations depend on where you do business, not where you are incorporated. This is one of the most complex areas of US expansion and one of the most frequent sources of unexpected liability.
Cross-border tax issues
If your US entity is owned by a foreign parent, transfer pricing rules govern the price at which goods, services, or IP move between the entities. Get this right early. Restructuring transfer pricing retroactively is expensive and creates audit risk.
“I see international clients underestimate US tax complexity more than any other part of expansion,” says Rosalynn Core, SVP of Finance and Accounting at Foothold America. “The federal layer is the simple part. State tax, sales tax, transfer pricing, and the interaction with home-country rules need attention from day one, not when you are filing your first return.”
Hiring and employment when you enter the US market
Once you have an entity or EOR in place, hiring follows US norms. Most employment is at-will, which gives flexibility but does not mean unlimited freedom to terminate. Federal anti-discrimination law applies in every state. State protections layer on top, varying widely by jurisdiction.
You will need a US-compliant employee handbook, workers’ compensation insurance, state unemployment registrations, and benefits aligned with US expectations including health insurance, paid time off, and a 401(k) plan if you want to attract experienced talent.
Multi-state hiring multiplies the compliance overhead. A single employee in California can trigger more state requirements than your entire UK or German operation. Plan accordingly.
Common mistakes international companies make when entering the US market
After years of watching these patterns repeat across hundreds of expansions, these are the mistakes we work hardest to help our clients avoid.
Treating the US as one market. Selling in California is different from selling in Texas. Hiring in New York is different from hiring in Florida. State boundaries matter more than international founders expect.
Wrong state choice. Incorporating in California because that is where your first employee lives, instead of Delaware. Setting up in New York for the brand without understanding the franchise tax. These choices cost money for years.
Wrong entity type. LLCs taxed as partnerships create filing nightmares for non-US owners. C-corps without proper transfer pricing leak tax. Get this advised early.
Banking delays. Companies regularly book their entity formation, hire a US employee, and discover they cannot pay them because the bank account is still in onboarding. Sequence banking earlier.
Brand name conflicts. Filing for a US trademark only after the entity is set up. Discovering the name is already taken. Having to operate under a different name in the US than at home.
Hiring before infrastructure. Onboarding an executive on a verbal agreement before payroll, benefits, and an employment contract are ready. Creating compliance gaps that take months to fix.
Underestimating timeline. Promising US customers a Q2 launch when entity setup alone takes until Q3. Setting unrealistic board expectations and burning credibility.
“What we see most often is companies trying to skip steps because the timeline feels frustrating,” says Geanice Barganier, Chief Client Officer at Foothold America. “Every step skipped becomes a problem to fix later. The companies that move fastest in years two and three are usually the ones that took year one slowly and built the foundations properly.”
Choosing the right approach: a quick decision matrix
To simplify the choice, here is the framework we use with clients:
Hiring 1 to 5 US employees, want speed, no US presence required yet: EOR
Hiring 5 or more US employees, planning long-term US operations: Set up an entity
Need US presence for contracts or banking, no hires planned for 6 to 12 months: Entity plus virtual office
Already on EOR, scaling past 10 employees, costs rising: Transition to entity
Fundraising from US investors: Delaware C-corp before the round opens
The right answer is rarely binary. Many of our clients start on EOR for the first hires, set up an entity around the same time, and transition the EOR-hired employees to the entity once infrastructure is ready.
How Foothold America helps you enter the US market
We are a Boston-based firm specialising in helping international companies, particularly from the UK, Europe, and the Nordics, enter the US market. Our services cover the full sequence from first conversation to scaled US operation:
Employer of Record for fast US hiring without entity setup
PEO+ Cross-Border Support for companies with their own US entity but limited HR capacity
US entity setup including state selection, formation, EIN, registered agent, and foreign qualifications
Virtual office in multiple US states for presence without physical premises
US bookkeeping for international owners managing cross-border finances
Talent acquisition for US hiring at any level
Cultural Intelligence Advisory for European leaders managing US teams
Most clients use more than one of these services. The right combination depends on where you are starting from and where you are heading.
Final thoughts
Entering the US market is one of the more rewarding moves an international company can make, and one of the easiest to do badly. The fundamentals are not complicated. The sequencing, state-by-state nuances, and timing decisions are where international founders consistently underestimate the work.
The companies that succeed do not necessarily have more capital or better products than those that struggle. They take the structural decisions seriously, build infrastructure ahead of need, and treat US expansion as a system rather than a single project.
If you are weighing your options for entering the US market in 2026, our team can help you think through which path matches your stage, your sector, and your appetite for setup complexity. Get in touch for a conversation tailored to your situation.
Frequently Asked Questions: US Market Entry
Get answers to all your questions and take the first step towards a US business expansion.
Using an Employer of Record is usually the cheapest way to hire US employees without setting up a full entity. EOR fees run a few hundred to a few thousand dollars per employee per month, far less than the legal, banking, and compliance costs of full entity setup in year one.
Through an EOR, you can hire your first US employee in one to two weeks. Setting up a US entity, opening a bank account, and getting payroll infrastructure ready typically takes three to six months. Add another month or two for foreign qualifications in multiple states.
No. An Employer of Record can legally employ US workers on your behalf without you setting up a US entity. This is one of the main reasons EOR has become popular among international companies entering the US market for the first time.
Delaware is the default for most venture-backed and international companies. Wyoming is a strong alternative for bootstrapped firms looking for lower costs and stronger privacy. The state where you incorporate is separate from the states where you operate or hire employees.
Some specialist banks onboard international clients remotely with extensive documentation. Most traditional US banks now require an in-person visit at some stage. Banking is often the slowest step in entering the US market, so start the process as early as possible.
Yes. An Employer Identification Number (EIN) is required to run payroll, file taxes, and open most US bank accounts. International founders without a US social security number can still apply, although the process is slower than for US-based applicants.
An EOR legally employs your workers on your behalf, so you do not need a US entity. A PEO co-employs workers alongside your existing US entity, sharing HR and payroll responsibilities. EOR is for companies without a US entity. PEO is for those with one.
Yes, particularly in the early stages. Many international founders manage their US operation from their home country during the first 12 to 24 months. The challenge is time zone management, customer expectations, and the need for senior US presence as the operation grows.
Underestimating state-by-state complexity. Founders treat the US as one country when in practice each state has its own tax, employment, and corporate rules. A multi-state US operation can feel more like managing five mid-sized European countries than one large one.
Most companies start to outgrow EOR around five to 15 US employees, when monthly per-employee fees outweigh the cost of running their own infrastructure. Other triggers include needing US contracts in your company's name, raising from US investors, or expanding into multiple states.
Market research is the foundation of any successful market entry. Foreign companies that skip this step often discover too late that US consumer behavior differs significantly from their home market, not just in preferences but in purchasing cycles, price sensitivity, and how buying decisions are made. A solid business plan built on real US customer data, not assumptions carried over from international markets, is what separates companies that gain traction quickly from those that spend 18 months correcting their positioning.
Yes, and they are among the most underestimated ones. Cultural differences shape everything from how you build a customer base to how you manage US employees and structure sales conversations. Business practices around contracts, negotiation, and relationship-building vary considerably between the US and European or Asian markets. Careful planning that accounts for these differences, including how your value proposition is communicated to a US target market, is just as important as getting your legal requirements and state of formation right.
Absolutely. If your market penetration plan involves rapid customer acquisition across multiple states, you need a legal structure that can scale without creating compliance requirements that slow you down. Articles of incorporation, liability protection, and regulatory compliance decisions should be made with your go-to-market model in mind, not treated as a separate exercise. A financial advisor with cross-border experience can help align your business growth ambitions with the right structure from the start.
For some sectors, yes. Joint ventures and strategic partnerships with established US companies can accelerate access to existing distribution channels, customer relationships, and local market knowledge that would take years to build independently. The trade-off is complexity. Shared ownership, aligned business practices, and clear contractual terms all require careful planning and sound legal advice. They work best when both parties bring something the other genuinely cannot replicate alone.
Beyond budgeting for entity setup and compliance requirements, financial planning for US market entry should cover the full cost of customer acquisition in a new market, the timeline to first revenue, cross-border tax obligations, and the runway needed if growth takes longer than projected. Local regulations, state tax obligations, and the interaction between your home-country finances and your US entity can all affect cash flow in ways that catch founders off guard. Engaging a financial advisor experienced in international markets before you file anything is consistently one of the highest-return decisions international companies make.
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