While many of our clients choose to establish a presence in the USA by having Foothold America employ US workers on their behalf, we can also work with your professional advisors to set up and manage your subsidiary or other dedicated legal entity if needed.
Contact us to find out exactly how we can help your business to establish a subsidiary in the USA.
"You made it effortless, enabling us to focus on servicing our customers and growing our sales."Finance Director, UK Pharma Services Company
Why set up a subsidiary or other legal entity in America?
There are some instances where it can be better to set up a subsidiary or other legal entity, rather than work through a shadow employer. For example:
Comparing a subsidiary with our Employee Management Service
Our Employee Management Service (EMS) involves us employing workers in the US on your behalf. This overcomes the cost and bureaucracy of employing US workers yourself through your US legal entity. However, we also help companies set up a legal entity themselves in the US if that is the better option.
If you’re unsure which route to take, we have set out some pros and cons below.
|Stand-Alone US Subsidiary or Other Legal Entity||Foothold America's Employee Management Service|
|Low upfront cost|
|Fast access to the US|
|Quick & easy exit from the US|
|Facilitates importation of tangible goods into the US||†|
|Need to raise US equity capital||‡|
|Planning to recruit staff in several different states in year one|
|Need to engage US and domestic tax and legal advisors|
|Need to open a US bank account|
|US entity needed to enter US contracts (e.g. to acquire real estate, laboratories etc.)|
|Need to implement payroll|
|Need to implement your own employee benefits (medical, dental, vision, 401k etc.)|
|Responsibility for compliance with US federal and state employment law|
† Foothold America may still be able to help with employment support in this instance.
‡ Many US investors these days are able to invest in UK legal entities, and do not need to invest in a US legal entity.
You can still make the most of our Employee Management Service while we help you to set up a subsidiary. Please contact us to find out more about this.
Please note that references to the term 'subsidiary' also includes other forms of legal entity. For consistency, subsidiary is now referred to throughout.
How to create a subsidiary in America
Our finance and legal team have helped several companies establish subsidiaries in the US. We’ll use our knowledge and experience to guide you through the process and prepare the necessary paperwork. Here’s a brief overview of what setting up a subsidiary entails:
Consider the best location to establish your subsidiary
This will depend on the results of your market research, taking factors such as geography, infrastructure, transport links and time zones into account, among other things. Tax, federal and state laws are also an important consideration. We recommend you seek professional legal advice.
Decide upon your subsidiary’s legal structure
There are several forms of US subsidiary. These include an LLC, C Corporation or an S Corporation. It is important to work with your tax and legal advisors to choose the best option for you. Most companies choose a C Corporation, which is similar to a Limited Company in the UK. Once you have a clear strategy, we can then help you implement your plan.
Open an American bank account
Opening a US bank account will enable you to trade with US customers and pay your workers, suppliers and third parties in a way that’s convenient. It will ensure you avoid delays, and eliminates the need to process foreign currencies or deal with exchange rates. You will need to file a SS-4 form, a W8/W9 and any other documentation the bank requires in order to open a bank account in the USA. Banks typically require that you come to the US to open the bank account in person. We can help with this process.
Once you have established a subsidiary and opened a US bank account, you’ll be closer to hiring US workers. We will hire US workers on your behalf via our Employee Management Service. If you would prefer to hire US workers directly, we will refer you to the relevant professionals to ensure you’re complying with US employment law, as well helping you to put 401(k) plans, health insurance contributions, and other related matters in place.
Contact us if you would like us to help setting up a US subsidiary.
How do we operate?
Basic entry plan
We offer a basic entry plan - a ‘hands-on’ service - performing on-the-ground operational support to file and submit paperwork while introducing you to key professionals and third party contacts.
We typically work with you in a flexible consultancy capacity on an hourly rate. We can quote a fixed fee for some elements of the work.
What can we do for you if you’re thinking of setting up a subsidiary company in the US?
Here are some examples of the tasks we can undertake for you at Foothold America:
- Create your subsidiary in compliance with US law, including preparing and filing all necessary paperwork and name reservation.
- Provide you with registered agent registration in your chosen state for 1 year.
- Registration of a new subsidiary in the state where your office is physically located.
- Obtain a US tax identification number for your subsidiary.
- Assist you to open a US bank account by obtaining a Good Standing certificate from the relevant state authority.
- Drafting and preparation of bylaws and resolutions, including bank resolutions.
- Creation of a corporate minute book and kit.
- Help you to obtain a US address and telephone number.
- Identify and establish relationships with third party companies to partner with, including manufacturers, sales representatives, distributors etc.
- Provide recommendations on what licenses and permits are needed where your subsidiary will conduct business.
Please note: Foothold America does not provide tax or legal services, and is unable to provide tax or legal advice in connection with the services we provide to you. However, we can provide you referrals to such professionals upon your request.
Foothold America’s incorporation services will provide you with a properly created entity within the corporate entity laws in the jurisdiction of formation only - it does not provide you with an entity that is legally authorised to conduct your specific business within the United States.
If you’d like some assistance with creating a subsidiary company in the USA, get in touch.
The best states for setting up a subsidiary corporation in America
If you’re strongly considering making a subsidiary, you may have already given some thought to where you’d like to be based. If you need a little assistance with this, the following information may help you:
DelawareDelaware is a popular state for many foreign businesses to incorporate in. Its advantages include the fact that it:
- has a reputation for favouring corporate managers over shareholders
- offers favourable taxation rates for large business or those with complex structures
- does not require directors or shareholders to be residents of Delaware
- has a well established Business Court of Chancery, and there’s high confidence and trust in the legal system among large businesses.
NevadaNevada is another very well-favoured state. As well as the fact that it’s easy to issue shares in Nevada, other advantages include the fact that this state:
- generally offers a very low rate of taxation
- does not enforce corporate or individual income tax
- does not require businesses to pay tax on corporation shares
- is known for its straightforward dealings with commercial litigation.
WyomingWyoming is fast becoming popular too. It offers many of the same benefits as Nevada, but at an even cheaper rate. Also:
- its annual renewal fees are cheap
- there are no business license fees
- the state places emphasis on privacy and asset protection for businesses.
Of course, the best state for your business will depend on a multitude of factors. You can find out more about choosing a state to incorporate in here.
Frequently asked questions.
If you’d like to read more answers to frequently asked questions relating to creating a subsidiary business, explore our FAQ section.