Doing business in the United States of America
The United States of America remains the world’s largest economy and one of the most attractive markets for international expansion.
However, companies entering the market must navigate a complex regulatory environment at federal, state and city level, covering taxes, incorporation, employment, licences and ongoing compliance.
The United States of America (USA), commonly referred to as the United States (US), is located in North America and bordered by Canada to the north and Mexico to the south.
An economic powerhouse, the US is a federal republic comprising 50 states, a federal district and several territories. It is also the world’s third largest country by both size and population and home to around a quarter of the globe’s economic output.
The US is a leading member of the World Trade Organization (WTO), the Organisation for Economic Co-operation and Development (OECD), the United States-Mexico-Canada Agreement (USMCA), the Asia-Pacific Economic Cooperation (APEC) and the Organization of American States (OAS).
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While the US is one of the less complex jurisdictions globally, ranking 70th in TMF Group’s Global Business Complexity Index (GBCI) 2026, it still presents practical and regulatory challenges for companies entering the market.
Doing business in the US therefore requires a deep understanding of the country’s federal system, where each state has sovereignty relating to business formation procedures, labour laws, tax obligations and local registrations. Counties and cities may also impose requirements for business licences and local taxes.
Advantages of doing business in the US
The US has long sought to provide foreign investors with a stable and welcoming market for doing business. It offers a transparent legal system, advanced infrastructure and access to one of the world’s most lucrative consumer markets, which now exceeds 340 million people.
Foreign companies benefit from a large domestic market, robust capital markets, skilled labour, strong intellectual property protections and an extensive network of state and local incentive programmes. These can include tax credits, grants, long-term subsidised loans and exemptions designed to encourage business investment and job creation.
At federal and state level, investors may be eligible for funding allowances, including support through the Economic Development Administration, the Small Business Administration and the United States Department of Agriculture. The availability and structure of incentives vary by location, sector and investment type.
The US also provides access to cross-border trade with Canada and Mexico through the USMCA, which supports trade in goods and services across North America. For companies with regional supply chains, the US remains a major hub for logistics, finance, innovation and customer access.
Business culture in the US
The United States’ business culture is generally direct, results-driven and focused on efficiency.
Meetings often have clear objectives, time is closely managed and decision-makers typically expect concise information supported by relevant data points.
Although exact practices vary by region and sector, punctuality, a written follow-up and clear accountability are all highly valued.
Business communication is normally direct but professional and companies entering the market should be prepared for a competitive environment where responsiveness and speed of execution are seen as particularly important.
Challenges of doing business in the US
The size and federal structure of the US can create complexity for international companies.
Each of the 50 states has its own laws and regulations, meaning corporations must comply with both federal rules and state-level requirements. In many cases, companies must also address county and city obligations.
The US has a complex tax environment, with federal, state and local taxes, as well as more than 80,000 tax jurisdictions nationwide.
The Internal Revenue Service (IRS) is known for strict enforcement and state tax authorities may apply different income, sales, payroll and reporting requirements.
Companies may also be required to appoint a local registered agent in each state where they operate. Local licences, employment rules, payroll obligations, sales tax registrations and ongoing filings should be assessed before operations begin.
Accounting and taxes in the US
In the United States, taxes are imposed at federal, state and local levels.
The federal corporate income tax rate is 21%. State corporate income taxes generally range from 1% to 12%, although some states, such as Texas and Ohio, impose no corporate income tax.
The US does not levy VAT or sales tax at federal level. Instead, state and local jurisdictions may impose sales and use taxes, with combined rates varying significantly by location and exceeding 10% in some localities. The corporate capital gains tax rate is 21%, while long-term individual capital gains are generally capped at 20%.
The US has not adopted International Financial Reporting Standards (IFRS) as the official accounting standard. Instead, companies use US Generally Accepted Accounting Principles (US GAAP) and public companies registered with the Securities and Exchange Commission (SEC) must meet its own specific reporting requirements.
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The US also periodically adjusts trade and tariff measures affecting imports from specific jurisdictions and strategic sectors. Companies importing goods into the US should therefore carefully review current tariff schedules, customs classifications, sanctions and trade restrictions before entering the market.
HR and payroll in the US
The US Department of Labor (DOL) is the primary government organisation responsible for enforcing labour regulations. It administers and enforces more than 180 federal labour laws, including the Fair Labor Standards Act, which governs wages and overtime pay, and the Occupational Safety and Health Act, which covers workplace health and safety.
Federal and state laws prohibit employers from discrimination in hiring on the basis of race, colour, religion, sex, age, ethnicity, national origin, disability or veteran status. Employers must also verify the identity and work eligibility of employees using Form I-9.
Each state establishes its own regulations on payroll cycles. Wages may be paid weekly, biweekly, monthly or semi-monthly. The federal minimum wage remains US$7.25 per hour, although many states and localities have now established higher minimum wage rates.
The US social security system comprises Old-Age, Survivors and Disability Insurance (OASDI) and hospital insurance (Medicare). Employers and employees each contribute 6.2% of salary towards OASDI up to the annual wage base of US$184,500 in 2026 and each contribute 1.45% towards Medicare, with no wage base limit for Medicare tax.
Employers are also subject to federal and state unemployment taxes, known as FUTA and SUTA respectively. FUTA is a 6% tax based on the first US$7,000 of wages paid to each employee, while SUTA varies by state and an employer’s experience rating, which is its past history of laying off workers and the number of unemployment claims filed by former employees.
Regulations and legislation in the US
The US regulatory landscape continues to evolve, making it important for companies to monitor federal and state developments closely. The country’s anti-money laundering (AML) laws comprise several statutes and regulations, beginning with the Bank Secrecy Act, which has laid the foundations for subsequent AML obligations.
The Corporate Transparency Act (CTA) framework has changed materially in recent years. Under the Financial Crimes Enforcement Network’s (FinCEN) interim final rule, effective 26 March 2025, entities created in the US are exempt from Beneficial Ownership Information (BOI) reporting requirements. BOI reporting obligations now generally apply only to certain foreign entities registered to do business in the US, unless an exemption applies.
The US is a non-participating jurisdiction under Common Reporting Standard (CRS) regulations and has not adopted IFRS. However, the Foreign Account Tax Compliance Act (FATCA) continues to impose information reporting obligations aimed at increasing tax compliance by US persons with financial assets held outside the US.
Other tax and compliance rules include the Base Erosion and Anti-Abuse Tax (BEAT), country-by-country (CbC) reporting requirements for certain multinational groups and the corporate alternative minimum tax applicable to certain large corporations.
Starting a business in the US
Foreign investors commonly use a corporation, limited liability company or partnership when starting a business in the US. The choice of entity should be made with counsel and a tax adviser as it affects liability, taxation, reporting and ongoing governance requirements.
The first step is to decide on the entity type and the jurisdiction in which to register. Formation documents are then filed with the relevant state and every foreign-invested company formed in a US state must apply for a federal employer identification number. Depending on the activity and location, companies may also need business licences, sales tax registrations, employer registrations, workers’ compensation insurance and local permits.
Companies may be required to register in each state where they operate. Broadly, a company may be considered to be conducting business in a state if it has a physical presence there, its revenue from that state exceeds a threshold amount or employees work in that state.
Although the US remains a popular market for companies looking to expand, the scale of federal, state and local requirements can present challenges. Working with advisers who understand local regulations can help companies establish operations, maintain compliance and manage ongoing obligations more efficiently.
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