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Doing Business in the USA

As one of the world’s leading nations, the United States has been a vital place for international business over the past few decades. Boasting a strong economy, large workforce, and innovative market, it is home to some of the world’s largest corporations. Many businesses have and continue to expand to the United States in hopes of achieving success in the market.

As a global expansion company we help foreign enterprises to start, grow and sustain their business in the United States of America. We offer comprehensive support tailored to the needs of your business.

Table of contents

  • Business Environment in the US
    • Background
    • The United States Advantage
    • Challenges to Doing Business in the US
  • Doing Business in the US: Things to Know
    • US Public Holidays
    • Working hours in the US
    • Overtime in the US
    • Rest periods in the US
    • Maternity Leave in the US
    • Sick Leave in the US
    • Holiday Entitlement in the US
  • Termination/Severance
  • Forms of Business Entities in the US
  • United States Work Visas
  • US Healthcare
  • US Tax
  • Why INS Global

Business Environment in the United States

Background

The US is located in the center of North America, bordered by Canada and Mexico. It is the world’s fourth largest country and also third most populous, with a population of 331 million people. Thanks to its highly developed economy and large share of domestic natural resources, the US maintains the world’s highest GDP – $22.68 trillion. Of this, 70% is made up of consumer spending. Although the average salary in the US is $63,000 per year, salaries range considerably across industries and locations.

The United States Advantage

As the center of much of the world’s global business and the nexus point of countless new technologies and innovations, the United States offers tremendous opportunities for global market expansion. Products and services that gain traction in the US access a market of 132 million highly active consumers and, because of the worldwide cultural influence the US possesses, have the potential to set worldwide trends. Also, the diverse cultures and people groups in the United States are a powerful source of ingenuity and cross-cultural business acumen.

According to the Ease of Doing Business Index, the United States ranked 6th easiest country in the world to do business, thanks to the US government’s pro-business stance. Additionally, the US dollar remains the worldwide standard means of transaction, simplifying exchange and accounting.

Challenges to Doing Business in the US

There also exist some challenges to doing business in the US. The US tax system is challenging to navigate and has experienced significant shifts in the past decade and may continue to change in the near future. There also exists high competition from multinational corporations, many of whom are based in the US and benefit from their strong economic and political influence. Additionally, complicated electricity and construction rules can make setting up a brick-and-mortar operation in the US a challenge. Finally, the diversity of the United States can also present its own challenge, as employers need to be conscious of and demonstrate respect for a wide range of beliefs and viewpoints.

As a highly competitive environment, businesses must be careful of high administrative costs. Using a partner with deep knowledge of the market can be a make-or-break advantage.

Doing business in the US: Things to know

US Public Holidays

The following public holidays are celebrated in the United States:

  • New Year’s Day – January 1st
  • Birthday of Martin Luther King, Jr. – Third Monday of January
  • Washington’s Birthday – Third Monday of February
  • Memorial Day – Last Monday of May
  • Juneteenth – June 19th
  • Independence Day – July 4th
  • Labor day – First Monday of September
  • Columbus Day – Second Monday of October
  • Veterans Day – November 11th
  • Thanksgiving Day – Fourth Thursday of November
  • Christmas Day – December 25th

Working hours in the USA

For adult employees, there is no legal limit to the number of hours that one can work per week. Traditional working hours in the US are Monday to Friday from 9:00am to 5:00pm, with half an hour for lunch. However, workplaces are becoming more flexible, with many companies now allowing their employees to set their own work schedules.

Overtime in the US

The Fair Labor Standards Act (FLSA) states that any work over 40 hours in a 168 hour period is counted as overtime. On a work week basis, this act requires employers to pay a wage of 1 times an employee’s normal pay rate after that employee has completed 40 hours of work for workers 16 and over. Weekend or night work does not apply for overtime pay unless it is over the mandated 40 hours.

Employees can become administratively exempt by accepting a flat salary for a job that requires working extended hours, and many professions, such as those in the medical and emergency services fields, are exempt from overtime.

Rest Periods in the USA

The US Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations, sick leave or federal or other holidays. These benefits are matters of agreement between an employer and an employee.

Maternity Leave in the USA

In the US, the Family and Medical Leave Act (FMLA) provides certain employees with up to 12 weeks of unpaid, job-protected leave per year. It also requires that their group health benefits be maintained during the leave period.

FMLA applies to all public agencies, all public and private elementary and secondary schools, and companies with 50 or more employees. These employers must provide an eligible employee with up to 12 weeks of unpaid leave each year for any of the following reasons:

  • For the birth and care of the newborn child of an employee;
  • For placement with the employee of a child for adoption or foster care;
  • To care for an immediate family member (i.e., spouse, child, or parent) with a serious health condition; or
  • To take medical leave when the employee is unable to work because of a serious health condition.

Employees are eligible for leave if they have worked for their employer at least 12 months, at least 1,250 hours over the past 12 months, and work at a location where the company employs 50 or more employees within 75 miles. Whether an employee has worked the minimum 1,250 hours of service is determined according to FLSA principles for determining compensable hours or work.

Sick leave in the US

US Federal law does not require payment for sick leave. The FMLA allows for up to 12 weeks of unpaid leave for particular or serious medical situations. If you quit your job before using all of your sick leave, your employer is not obligated to pay you for that time.

Holiday Entitlement in the US

The US does not guarantee its workers any paid vacation time, instead leaving it up to individual employers to provide these. Most new full-time employees receive one to two weeks of paid vacation per year.

Termination/Severance in the US

In the United States, except if otherwise provided in an employment contract or collective bargaining agreement, no law requires employers to follow a formal procedure when discharging individual employees. This includes making severance payments to terminated employees.

However, employees are protected from unfair dismissal in violation of federal, state, and local discrimination or anti-retaliation laws. Also, employers often offer severance payments to bind an agreement made between the employer and employee at the time of termination to waive any potential claims arising out of the employment relationship.

(For more on terminations and how we can help, click here).

Forms of Business Entities in the US

While there are many different forms of business entities, there are four main types in the United States: Sole Proprietorship, Partnership, Limited Liability Company, and Business Corporation.

Sole Proprietorship
Sole proprietorship is the simplest form of business type. It is a business owned and controlled exclusively by one person. This person is responsible for the business, including all liability and any profit or loss.

Partnership
It is an association of two or more persons (persons being people, corporations, other partnerships, LLC’s, trusts or others) to carry on, as co-owners, a business for profit. These individuals are responsible for the business, including all liability and any profit or loss.

Limited Liability Company

A hybrid of a corporation (with an ability to limit personal liability) and a partnership (with an ability to assess profits and losses to individuals), this type of organization provides a flexible structure to achieve these ends.

Business Corporation

A business corporation is a legal entity established by individual(s) under the laws of a state to conduct particular types of business or transactions. From the functional point of view, there are two kinds of corporations: a business corporation and a not-for-profit corporation.

A business corporation is formed for the purpose of carrying out general business transactions in the broadest sense, and these transactions are conducted in an effort to earn a profit.

A not-for-profit corporation is formed for the purpose of advancing a particular objective of an organization which is not established to make a profit. Generally, this includes charitable or educational organizations.

United States Work Visas

The United States has dozens of types of work visas. Some of the most common are the H-1B, L-1 and O-1 visas.

H-1B Specialty Occupation

Among the various work visa types in the U.S., the H-1B specialty occupation visa is the most popular. The temporary work visa is available to foreign nationals who work in specialty occupations, such as engineering and computer science.

L-1 Intracompany Transferee

The L-1 visa category is reserved for employers who need to transfer managers, executives or employees with specialized knowledge from a foreign entity to a U.S. entity. To qualify, the employee must possess essential qualifications that others in the company or industry do not.

O-1 “Extraordinary Ability”

The O-1 visa is a special classification for foreign nationals who possess “extraordinary ability or achievement in the sciences, education, business or athletics”. Extraordinary ability means the person has risen to the very top of their field of endeavor and is known internationally or nationally for his or her achievements.

Healthcare in the US

Health insurance is not required by the US federal government but is by some states to avoid a tax penalty. Many full-time employers provide health care as part of their benefits package, but this is arranged between the employer and employee. Contractors and part-time employees are often not eligible for healthcare through their employer and thus must either purchase their own healthcare or go without. For those under a certain income, government sponsored healthcare is offered in the form of Medicaid.

Taxes in the United States

US Taxes for Individuals

Any individual who resides in the United States for more than 183 days within a calendar year will be considered as a tax resident. All income earned by that individual will be taxed progressively dependent on the level of income declared. Residents are responsible for federal, state and sometimes municipal income taxes. Different scales depending on the family status (married couples under a joint system, married couples under a separate assets system, single and head of the family), limited to seven rates.

US Taxes for Corporations

A corporation organized or created in the United States under US law or under the law of any state is considered to any extent a domestic corporation, even in the case that it does no business or owns no property in the United States.

Employers are liable for social security tax of 6.2% on the first USD 142,800 of wages paid to employees and for Medicare tax of 1.45% on all wages. The different States can impose further contributions.Certain companies are subject to an accumulated earnings tax equal to 20% of “accumulated taxable income” if they are deemed to be accumulating earnings and profits for the purpose of avoiding shareholder personal income tax.

Importers, manufacturers, and sellers of ozone-depleting chemicals, or imported products manufactured using such chemicals, are subject to environmental taxes calculated per weight of the ODC.

In addition to federal taxes, state and municipal taxes vary from one state or community to another, including property taxes on real property, stamp duties, franchise taxes and taxes on the capital of a corporation.

Develop your business in the United States: Partner with INS Global

Starting a business or hiring in the US can be a daunting prospect. Although it boasts a business-friendly regulatory environment, remaining compliant with employment and business law is a must for any business to succeed in the market. INS Global has experience in the US market; we can help you to hire staff in the US quickly and compliantly, allowing you to fully focus on running your business.

Our transparent, low-cost solution means that there is no need to establish a costly subsidiary in the US, your employee is hired and can get to work on your company’s growth right away. Join hundreds of companies using INS Global’s PEO service to enter new markets. Contact our expert team today to learn how our PEO service and other services can help you reach your expansion goals today.

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