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Pros and cons of doing business in the USA: impressions after three years of development of two companies



A couple of years ago I wrote an article in which I shared my impressions of moving to the United States and doing business here. Enough time has passed and it is time to update the information and critically look at some thoughts.

A lot of things happened during these two years, I got another project, which means that the conclusions will be more relevant. So let's go!

Note : the article came out quite long. First, we will consider visa issues for moving, then we will talk about the process of registration and doing business, difficulties and general impressions.

Introduction


A little about myself - I am 31 years old, I have a family (two children), almost 10 years of experience in marketing, although I am a developer by education. In Russia, I was a journalist and marketer (developed my agency), I continue to do this now - my agency helps startups with product promotion in the USA and Latin America, I also launched my own technology project.

They initially decided to move out of interest, but recent events in the homeland show that the decision was right - the situation here is still more stable.

How to relocate to the USA


Impressions of the country begin with the process of moving to it. In the case of the United States, this process can be quite simple - if you are a strong specialist who is transported by the company, and very difficult if the initiator of the move is you yourself (for example, you want to transport your startup and yourself at the same time). My case falls into the second category, so I will describe it.

There are not many ways for entrepreneurs to move to the United States.

Visa H-1B


H1-B is a work visa by which foreign specialists come to the USA. Theoretically, not only Google or Facebook, but also a regular startup can arrange it for their employee and even the founder.

There are a number of features in applying for a visa for a startup founder. First of all, it is necessary to prove relations of the “employee-employer” format, that is, in fact, the company should have the opportunity to fire an employee, despite the fact that he founded it.

It turns out that the founder should not have a controlling stake in the company - it should not exceed 50%. There should be, for example, a board of directors that has a theoretical right to evaluate the work of an employee and decide on his dismissal.

There are quotas for H1B visas - for example, the quota for the fiscal year 2019 amounted to 65 thousand, while 199 thousand were submitted for receiving such a visa in 2018. These visas are awarded during the lottery. Another 20 thousand visas are issued to those specialists who received education in the USA (Master's Exemption Cap).

Visa for talented people O-1


O-1 visa is intended for talented people from different fields who need to come to the USA to carry out work projects - I moved with this visa. Business representatives are given an O-1A visa, while a subtype visa of O-1B is intended for artists.

In the case of startup founders, the design scheme is similar to the one used for the H1-B visa. That is, you need to create a legal entity in the USA - usually this is C-Corp. The founder’s share in the company should also not be controlling, and the company should have the opportunity to part with this employee.

At the same time, it is necessary to prepare a visa petition, which contains evidence of the “extraordinary” nature of the employee whom the startup plans to hire.

There are a number of criteria that need to be met; preparing a petition takes time and requires money. But then there are no quotas for O-1 visas. I am so often asked about the experience of obtaining this visa that I even created a specialized information service, where I collected all the materials (I wrote about it here ).

L-1 Visa for transferring an employee from an overseas office


This visa may be suitable for entrepreneurs who already have a working and legally registered business outside the United States. Such founders can start a branch of their company in America and move to work in this subsidiary.

It also has its subtle points. In particular, the migration service will require justification of the need for a company in the US market and the presence of physical employees who come from abroad.

The local office must be open before you apply for a visa. Among the supporting documents of the migration service officers will be interested in a detailed business plan, confirmation of office rent, etc. In addition, the employee must officially work in the foreign office of the parent company coming to the United States for at least a year.

We’ve finished with visa issues, now we’ll go directly to doing business.

Company registration


The first step, if you intend to do business, is to register a legal entity. To do this is actually not difficult, and certainly easier than in Russia. At home, when registering an LLC, my partner and I needed to collect a lot of pieces of paper and certify all this with a notary public. For a person who can’t sign the same way twice because he has already forgotten how to write with a pen - the quest was still the same.

In the States, everything can be done remotely, but there are nuances. Firstly, if you work in parallel to obtain a visa and create a company, then with high probability you will still do everything from your own country. Also, with a high probability of “successfully”, a visa lawyer knows the lawyers for starting a business - and how conveniently everything can be done in one place.

The first time I did just that and paid $ 3,500 to open a company. This, of course, is a complete divorce, but I realized this already having moved. We opened the second company on our own, and it cost much less. But difficulties were also not avoided.

Since the lawyers no longer wanted to pay, I decided to use Stripe Atlas to open the company . But this did not work out - it turned out that they did not work with Russian citizens (as well as with residents of Somalia, Iran and North Korea). I had to use the Clerky service . But in any case, the whole process cost about $ 700.



In general, if I register any more businesses, then I will manage without intermediaries at all. All necessary documents and instructions are on the websites of the business development department (Divisions of Corporations) of specific states. Here, for example, how much it costs to create my own company (LLC - an analogue of LLC) in Florida, where I live:



Customer acquisition


Finding customers in the United States is a serious challenge. Despite the fact that the market here is large, the competition is very great. A lot of difficulties - you came from another country, do not really understand the local specifics. Hiring employees is very difficult - Americans coolly splurge and sell themselves, and few can work just as well.

You will encounter these difficulties in any case: both developing a service project (in my case, a marketing agency) and a software product (I have this - a SaaS product for improving English texts).

Each has his own methods for solving difficulties, for example, you can try to enter the market first through former and current compatriots, attracting them to customers. We did this with our agency - we help companies from the post-Soviet space with marketing in the USA, while purely local customers gradually appeared.

How to arrange payment acceptance


If you are determined to do business in the USA, then doing it most easily will be already here. Opening a bank account without the personal presence of a company representative will fail.

To connect various payment gateways and services from PayPal to Braintree and Stripe, you will need a company tax identification number (EIN, employer identification number), bank account information and address in the USA.

Otherwise, there is nothing complicated, I accepted payments in my companies both to a bank account, and by check, and through PayPal / Braintree / Stripe . Nobody almost ever requires any additional pieces of paper even when transferring from abroad, which is quite convenient.

But not always everything will be so easy, while you are in the country simply by visa, and not permanent resident (you do not have a green card). For example, I still couldn’t connect the billing function in QuickBooks accounting software. At first, they refused me because of a lack of credit history, six months later, when it already appeared, they themselves suggested connecting, they sent



me a list of documents: When I prepared everything and sent it, I was refused - after telephone conversations it turned out that this function was not allowed to non-residents.

Accounting and taxes


After Russia, the workflow device in the United States seemed to me much simpler. No acts, invoices and other waste paper. To conclude an agreement with a new customer, it is often enough just an invoice, which contains a list of works.

Bookkeeping can be done either in the paid and most popular tool in the States called Quickbooks, or you can use partially free applications like Waves .

With the formulation of costs (payroll), everything is a little more complicated - you need to calculate taxes every month and pay them. If you, like me, work in your own company, then you will need to figure out how to pay both the company's taxes (an analogue of contributions to funds in the Russian Federation) and the tax of a private person. Personally, I did not bother with this and hired an accountant. For a few tens of dollars per month, the payroll task closes.

This solution had other nice bonuses. Firstly, until I figured out how to draw up various taxes, an accountant also helped with this. Secondly, in the United States it is a very difficult tradition for beginners to mask email spam (both paper and electronic) under certain very important messages, including on behalf of government agencies.

In past articles, I have already shownsuch spam, and I thought that in three years I had learned to distinguish it, but just recently, spammers managed to embarrass me again. Here is a letter from a company with a solid name that mentions some kind of tax debt:



In such obscure situations, I always turned to my miracle CPA, and she always told me when to really pay attention to the letter.

On taxes, I won’t go into much detail, but I will say that corporations like me (C-Corp) in Delaware pay income taxes (now 8.7%), also Franchise Tax (usually somewhere around $ 400- $ 450 per year) .

In my case, since I live in Florida and the companies are actually located here, there is still a need to register them separately in this state and pay somewhere else at $ 150 per year in order to maintain an active legal status. And while franchise tax and Florida tax are still easy enough to calculate yourself, then I still trust the licensed accountant for the annual report with income tax. I recommend that you do exactly the same at the first stage, since the price of an error here can be large.

General impressions: pros and cons


In general, I like to do business in the USA - here are pretty clear rules, they try to make life easier for entrepreneurs. For example, all interaction with government agencies can take place by mail or electronically. It's comfortable.

On the other hand, there are also disadvantages due to local traditions and customs. I have already mentioned sophisticated spam masquerading as important messages - if you get it, you can easily spend a couple of thousand dollars on unnecessary services.

Also, as an introvert, I have not yet gotten used to the local custom of constantly discussing everything and making calls for any reason. You need to find out how much a certain software costs - leave a request, they will contact you to schedule a call. Most likely they will not tell you the price on the call, but ask a bunch of questions, leave to think, then offer another call.

With many counterparties, in principle, you can only contact by phone. This is directly seriously annoying, in Russia this was not.

And of course, one cannot fail to say about business and lawyers. Good corporate lawyers here can cost $ 750 per hour, and you are unlikely to manage without them. Here everyone sends legal threats whenever possible. For example, a competitor of one of my companies sent a letter with the threat of harassment the day after the release of the site - somewhere they saw a distant color similar to that used in their product. And they decided to intimidate.

This is a very common practice - such threat letters are called cease and desist letters. The service is so popular that one of my agency’s clients is a startup that automates their distribution for only $ 200 - and a good lawyer will take at least $ 750 (an hour) to write. And to answer such letters, you also need a lawyer. So if you have a major competitor with money, it can quite easily ruin you with the help of legal pressure.

For three years, I twice faced situations in which I needed a lawyer. Payment for services was a blow to our pocket, but in the end both times the problems were resolved as we needed. So this ultimately saves money, but in the moment you have to be prepared for the costs.

Conclusion


In conclusion, we will highlight the key thoughts in a small memo to those who want to move to the United States and do business here:

  • Understand which move method to use first . There are different types of visas with their pros and cons, you need to choose the path that is best for you.
  • Register the company yourself without intermediaries or use specialized services . For the first company, you can use the services of the Clerky resource, the second you can already register yourself on a memo on the website of the Division of Corporation of your state.
  • Think ahead with your customer acquisition strategy . You will have to either come up with some original moves, or attract specialists who are versed in marketing in a new market for you.
  • It is very difficult to do business without a legal entity. It will be very difficult to find an option for connecting payment acceptance, etc.
  • Hire an accountant . You need a licensed accountant (CPA), it will help you deal with taxes and salaries.
  • Be prepared for local specialties . They can sue for any trifle, so everything should be perfect, partnerships and deals will go slowly due to a lot of calls, nothing can be done about it.

In general, in my experience, despite some difficulties, doing business in the USA is generally easier than in Russia, and there are more prospects in this market. So I do not regret moving and I plan to launch the next company in America too.

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