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When is the right time to establish a subsidiary in the US?

We have been providing IS development services to the US clients for more than 3 years. The IS delivery works are done and managed from UK and we fly over to the US only occasionally. Until now the business model worked well, however with the turnover in the US market going up we started considering an option of opening the subsidiary there. Could you please share your thoughts about when is the right time to establish and start selling the services through a US subsidiary as well as pros and cons of both scenarios?


Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Some aspects that you should consider:
1. Transfer pricing of services between US and UK and double taxation treaty considerations.
2. Intellectual property-if your company develops IT solutions, who owns the IP?
3. If you relocate UK staff to the US for a period, look at visa/work permit issues-e.g. will an L-1 visa be available for intercompany staff transfers?
4. UK staff working in US as residents (e.g. L-1 visa holders) may be liable to pay income tax on worldwide income, not just US earnings. How does that affect your staff compensation plans and health insurance while working in the US?
5. Contracts with US customers-who becomes the contracting party on your side? The US entity? How does that impact your business insurance liability/risk for US contracts.

I am sure others in this community can add more!


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