U.S. Market Entry for Foreign Businesses & Startups
Selling into the United States, hiring here or raising from U.S. investors each brings the business into the U.S. tax system. How it enters decides what it pays for years.
We structure U.S. entry for foreign companies and startups: the entity, the ownership of intellectual property, the flows between the parent and the U.S. company, and the filings that follow.
A U.S. subsidiary is easy to form and hard to unwind.
A U.S. corporation owned by a foreign parent pays federal tax on its profits and state tax where it has a presence. A branch pays tax on effectively connected income plus a branch profits tax.
Where the intellectual property sits, how the U.S. company pays for it and how much profit stays in the United States are transfer pricing questions from day one.
Every transaction between the foreign owner and the U.S. company must be reported on Form 5472. The penalty for missing it starts at $25,000.
The figures that shape U.S. entry.
IRS rules for foreign-owned U.S. businesses.
Treaties can reduce withholding rates on dividends, interest and royalties, but only if the recipient qualifies and the paperwork is in place. Sources: IRS, Instructions for Form 5472; IRS, Taxation of Nonresident Aliens; IRS, Instructions for Form 1120-F.
What we do for companies entering the United States.
Subsidiary, branch or LLC
The vehicle chosen for tax, liability, investors and the home-country result.
Intellectual property and licensing
Where IP is owned, how it is licensed and the withholding and treaty consequences of royalties.
Intercompany agreements
Services, license and cost-sharing agreements that support an arm’s-length result.
Form 5472 and federal filings
Reporting of related-party transactions, the first corporate return and withholding forms.
State and local tax
Nexus, registration, sales tax and payroll in the states where the business operates.
Founders and employees
Equity, visas and the personal tax position of founders who relocate with the business.
How U.S. entry is set up.
Structure, documents, registrations, then operations.
Model
Revenue, people, IP and investors mapped against U.S. and home-country tax.
Form
Entity formed, EIN obtained, bank account opened, ownership documented.
Document
Intercompany agreements, transfer pricing support and withholding forms.
Operate
State registrations, payroll, Form 5472 and the annual calendar.
Lawyers who plan the structure and defend it.
Structure before the move, the investment or the sale.
Residency timing, entity choice, trusts and elections are decided together, with the home-country result in view. We coordinate with your accountants and counsel abroad so the plan works in both places.
Compliance and controversy in the same hands.
Foreign asset reporting, penalty exposure, streamlined and voluntary disclosures and IRS examinations. The firm also litigates and arbitrates, so a plan is written knowing how it will be tested.
A U.S. presence can begin before anyone decides to create one.
Employees, servers, inventory and contracts signed here can each create U.S. tax exposure.
- Decide the entity before signing U.S. customers or hiring
- Put intercompany agreements in writing before money moves
- Register in each state where you have people or sales
- Calendar Form 5472 with the first corporate return
- Let a founder sign U.S. contracts on behalf of the foreign parent without analysis
- Move IP into the U.S. company without valuing it
- Pay the parent without checking withholding and treaty rules
- Assume Delaware formation means no other state tax
From the firm’s writing.
International Tax Lawyer for AI & Software Startups
Entity, IP and state tax for foreign founders.
Read the articleHow to Open a U.S. Bank Account as a Non-Resident in 2026
What banks ask for and how to prepare.
Read the articleLoan to Your Company: Debt or Equity?
How funding from the parent is characterized.
Read the articleFrequently asked.
Most form a subsidiary. It contains liability, is familiar to investors and avoids the branch profits tax. A branch can make sense for a limited or temporary presence. The home-country treatment of each is part of the decision.
An annual information return for a U.S. corporation that is 25 percent or more foreign-owned, and for foreign-owned single-member LLCs, reporting transactions with related foreign parties. The penalty for not filing starts at $25,000 per form.
It depends on where it was created, where it will be developed, the tax rates in each country and the investors’ expectations. Moving IP across borders is a taxable event, so the decision is best made before the U.S. company is formed.
Yes, in each state where the company has sufficient presence through employees, property or sales. State rules differ widely. Registration and compliance are set up state by state.
Yes, through its U.S. subsidiary with an EIN, formation documents and ownership information. Banks apply identity and ownership checks; preparation shortens the process.
Other areas of the practice.
Inbound and outbound services, from pre-immigration planning to offshore compliance. Back to the overview.
Bringing a business to the United States?
A confidential consultation before the first hire or customer. We will tell you how the business should enter and what it will owe.