FAQ's
Establishing a US presence
Get answers to your questions and take the first step toward US business expansion.
What is a US subsidiary, and do I need one to operate my business in the USA?
If you plan to operate your business in the US as the legal employer (also known as the Direct employer) for your US employees, or are thinking of entering in a co-employment relationship with a PEO, you will need to form a subsidiary company. A subsidiary is a distinct legal entity that is more than 50% controlled by a parent company. Because a subsidiary is a separate legal entity, the liabilities, taxation, and regulations are also treated distinctly, limiting exposure to your parent company. Our step-by-step company registration guide walks through the process in full.
There are a number of different types of subsidiaries you can establish in the US, such as LLC (Limited Liability Company), C Corporations, Non-profit (also known as 501(c)(3)) or LLP (Limited Liability Partnerships).
Whether a business needs to establish a US subsidiary to operate in the US will depend on their business objectives, legal considerations, and the type of business activity. The primary benefit of forming a subsidiary is creating a legal separation between the parent company and the subsidiary, which can offer liability protections and tax benefits. If a foreign company decides to operate in the US without a subsidiary, they can choose to work as a branch office or a representative office. However, unlike a subsidiary, these do not offer the legal protection created by a separate legal entity.
Ultimately, the decision on whether to establish a US subsidiary or not should be made on a case-by-case basis, taking into account legal, financial, and business considerations. If you are considering establishing a US subsidiary, it is important to seek professional advice and assistance to ensure that the process is carried out correctly and with compliance with US regulations and laws.
Find out more about our Entity Setup Service and how we can help you establish your US subsidiary.
Further reading
What is a US subsidiary?
A US subsidiary is a separate legal company formed in a US state and controlled by a parent company abroad. The parent usually owns more than half of its shares. Because it is a distinct legal entity, its liabilities, taxes and regulatory duties sit with the subsidiary, which helps protect the parent company.
Do I need a US subsidiary to sell to US customers?
No. Many foreign companies sell to US customers directly from their home country. A subsidiary becomes more useful when you hire US staff directly, sign larger contracts, hold stock or want local liability protection. Some enterprise customers also prefer a US counterparty. Our guide on when to set up a US subsidiary covers the usual triggers.
Is a US subsidiary the same as a branch office?
No. A branch office is part of the foreign parent rather than a separate company. That means the parent carries the branch’s liabilities directly and is exposed to US lawsuits and tax. A subsidiary is its own legal entity, so it ring-fences risk. For this reason most foreign companies choose a subsidiary over a branch.
Who controls a US subsidiary day to day?
Its directors and officers. The parent company, as shareholder, appoints the board, and the board appoints officers to run daily operations. Many foreign parents appoint head office executives as directors and a local manager as an officer. Keep proper minutes and separate accounts so the subsidiary operates as a distinct company in practice.
Can I hire US employees without a US subsidiary?
Yes. An Employer of Record can legally employ US staff on your behalf, running payroll, benefits and state tax registrations. Your team can start much sooner than if you waited to form an entity. Foothold America charges a flat monthly fee per employee, never a percentage of salary. Read more about our Employer of Record service.
How to establish your business presence in the USA?
The US continues to be fertile for business innovation and growth, inviting businesses from around the world to make their mark in the 50 states. But how do you get started? Explore the Q&A’s below to find out more about what it takes to establish your business presence in the USA, how to set up a US entity, how long it takes & more. If you have any other questions for us about entering, growing or scaling in the USA, please feel free to get in contact with us here.
Only the best for you and your team
At Foothold America, we offer top-notch service for you and your team. Our core services include:
Employer of Record Service (EOR)
Our Employer of Record Service offers a turn-key, cost-effective solution for your company to have a legitimate US presence with US employees anywhere in the country in as little as one week without the cost and complexity of setting up a US entity.
PEO+ Cross-Border Support™
Our full PEO+ Service goes beyond traditional PEO offerings. From tailored implementation assistance to smooth onboarding for first-time hires or transitions from other hiring models, we help you manage your US entity and people operations. This service is a great option for international businesses looking to conquer the US market with absolute peace of mind.
People Partnership Service (PPS)
We’ve created our People Partnership Service (PPS) to help you navigate the process of setting up your US entity, becoming the Employer of Record (the direct employer), onboarding US employees, and managing the complex operational and HR processes of doing business in America.
Exclusive Talent Acquisition (ETA)
Businesses around the world partner with Foothold America and save thousands of dollars on their US hiring costs. With our ETA service, you can find and hire the best employees compliantly and competitively. We make it easy and affordable for you to hire the right candidate at the right time and at the right cost.
Entity Setup
Establishing a legal entity in the US brings enormous potential for growth – and a unique set of challenges and complications. Partnering with Foothold America for your US entity setup ensures smooth and compliant incorporation in your chosen state – all whilst cutting through layers of bureaucracy and giving your company the freedom to concentrate on its larger business objectives.
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