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      Want to do business in the US

      Growth forecasts suggest the economy is firmly back on track and open for foreign investment

      Despite concerns about the US federal government’s recent shutdown and the impact of the Affordable Health Care Act, the US has rebounded from the debt crisis of 2008 and has once again become an attractive place for investors from around the globe.
      Some facts:

      1. The only country to achieve the top score of 100 in the 2013 venture capital and private equity country attractiveness index
      2. Ranks 4th out of 185 countries for ease of doing business (International Finance Corporation/World Bank)
      3. For the first time since 2001, the US ranks 1st in the Foreign Direct Investment Confidence Index
      4. The International Energy Agency predicts that the US will be energy independent by 2030
      5. Housing markets have increased by nearly 30% in some US cities
      6. Both foreign and domestic investors are seeing real value in both strategic acquisitions and asset acquisitions in the US. Countries such as Japan, the Netherlands and France have invested more than US$20bn each in the US last year.

      The most prevalent industry for foreign investment is manufacturing (particularly chemicals, electrical equipment, and machinery), and the fastest growing industry is information technology.

      Just one example of a success story is that of a Belgian-based designer and manufacturer of high-lift devices and mechanical assemblies for aircraft manufacturers, which in July 2012 announced a new investment in a production site in Stillwater, Oklahoma. Phase one began immediately, creating 75 jobs by the end of 2013. Early success has ASCO on track for full operation by the end of 2015, with a total investment value of US$73m and employment of 380 people.

      What you may encounter
      One of the biggest changes in the US marketplace is healthcare and employment law. From 1 January 2014, US businesses with more than 50 full-time employees (or equivalent) will be required to offer their employees health cover or face possible penalties.
      If you’re considering opening up a branch or moving a portion of your operations to the US, take note of the following:

      • Federal, state and local tax structures with their own compliance rules. Many have incentives for new investment or employment.
      • Complex employment laws that vary by state and cover independent contractor relationships.
      • The Affordable Care Act and its implication on the workforce.
      • High demand (and competition) for talent.
      • Specific credit relationships that may require guarantees from the parent company or ownership.
      • Regulatory compliance, which may include the Securities and Exchange Commission (SEC), Department of Justice (DOJ)/Foreign Corrupt Practices Act (FCPA) and a host of industry regulations.

      The right structure
      Structure options include operating through partners, or setting up a branch or corporation. All have unique legal opportunities and complexities, which drives the need for legal counsel with experience in the US.

      After determining your structure and market penetration plan, you will need to address the common steps to begin operations such as:

      • reserving the company’s business name
      • evaluating your existing intellectual property rights
      • applying for a federal identification number (EIN) – used for tax and employer purposes with the IRS
      • registering to collect state sales tax
      • registering as an employer with the unemployment insurance division of the Department of Labor (DOL)
      • arranging for workers’ compensation insurance and disability insurance
      • arranging for publication with the county recorder
      • hiring qualified employees and identifying required local representatives
      • selecting accounting software and setting up financial accounting structures (e.g. payroll)
      • selecting a facility for an office and/or manufacturing
      • selecting a financial institution and setting up bank accounts.

      Find the right team
      Operations may be small initially to ‘test the waters’ – in which case, you should find the US a relatively easy place to do business. Many companies can be operational in less than 30 days. Resources are available from the federal government, local chambers of commerce and international organisations. However, many find the best connections are sourced through professional service providers. Ask your bankers, accountants and attorneys to work together to help you create your expansion plan and leverage their existing in-country relationships. The local US university systems have provided many foreign companies with a pipeline of talent so that reliance on expatriates can often be reduced over time.

      Bringing operations to the US in 2014 could make sense for many overseas businesses, and understanding the market is the first step. But having American partners on the ground will help you to navigate through the rules and regulations.

      For more information, contact:
      Jen Leary
      CliftonLarsonAllen, USA
      T +1 704 998 5283
      E jennifer.leary@CLAconnect.com

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