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Starting a recruitment business in the US

When expanding your recruitment business to the US there are plenty factors to consider. Covering questions from which state to incorporate in, to which visas you need, the following will help you decide what’s best.

 

Business Formation & Incorporation
The most common ways to form a business in the US include:

  • Sole Proprietorship
  • Partnership
  • Corporation
  • Limited liability Company

According to UK.Gov, many States now also have limited liability companies (LLC). The precise definition will vary according to State law but, in general, a limited liability company has a minimal corporate structure, without centralised management. This enables it to have limited liability for its members (who are not shareholders) while being treated as a partnership rather than as a corporation for taxation purposes.

Other types of businesses that can be formed include:

  • Cooperative
  • Contract sales
  • Joint venture/strategic alliance
  • Acquisitions

 

Incorporating a business

Incorporation is determined by the state in which you reside or plan to incorporate your business. Contact the office of the Secretary of State (this is a state government-level official, not affiliated with the U.S. Department of State). The Office of Authentication updates the list of Secretaries by State of the United States.

Delaware advantages:

  • Best state to incorporate a startup
  • Favourable laws for corporate governance
  • Clear and consistent legal system
  • State tax laws that favor companies not doing business in the state
  • For the non-resident company looking to expand into the US market, Delaware is a great base to start from.

Nevada advantages:

  • Nevada has no state corporate income tax and imposes no fees on corporate shares.
  • There is neither personal income tax nor franchise tax for corporations or LLCs (but initial and annual statement fees and a business license fee apply).
  • Shareholders, directors and officers of a corporation or members or managers of an LLC don’t need to be Nevada residents.

 

Foreign qualification

Foreign qualifying is simply registering to do business in a state other than the one in which you incorporated. That’s because corporations and LLCs are considered domestic only in their state of incorporation. For example, if you form an LLC in Delaware, it is only domestic in Delaware and considered a foreign LLC in other states.

While different states have different criteria for transacting business, consider the following:

  • Does your company have a physical presence in the state?
  • Does your company have employees in the state?
  • Does your company accept orders in the state?
  • Does your company have a bank account in the state?

If you answered yes to any of these statements, you will likely need to foreign qualify your business in the state.

 

Visas

Business owner visa

The E-2 Investor Visa allows an individual to enter and work inside of the USA based on an investment he or she will be controlling, while inside the USA. This visa must generally be renewed every two years, but there is no limit to how many times it can be renewed.

Typically, a long-term visa (E2 visa), once accepted, will allow for a stay of up to two years.

 

Relocating staff

Temporary work visas such as H1B and L1 (L1A and L1B) that allow the employers to hire and transfer foreign workers are the most applicable.

 

Different visa types

L-1 visa

Known as intracompany transferee, facilitates the temporary transfer of foreign worker in the managerial, executive or specialized knowledge category to the S to continue employment with an office of the same employer, its parent, branch, subsidiary or affiliate. L-1 visa is a temporary nonimmigrant visa that allows for the spouse and minor unmarried children under 21.

The visa is one year with the ability of up to three extensions.

The Employee must have worked for foreign, related company for more than one year in the last 3 years.

H-1 B visa

It is a specialised labor visa that lasts three years and is extendable.

Annual quota restricts the number of visas available. Cannot be used for self-employment.

 

Setting up a business in the US checklist:

  1. Whether to be a corporation or a limited liability company.
  2. Which state to incorporate in and which states to register in.
  3. Visas or other immigration needs.
  4. Are there any tax incentives available, and what options are available to minimize your tax burden.
  5. Determine the capitalization of the company (how many shares at what par value, and how much each shareholder will contribute to the
    company as their capital contribution.
  6. Determine who will be the shareholders, officers and directors.
  7. Determine the roles and responsibilities of the company’s officers and directors.
  8. Register the company in other states as needed.
  9. Obtain the federal Employer Identification Number.
  10. Open your bank account.

 

Three important items to sanity check:

  1. Making the right choice between LLC and Corporations. Both are insulated from liability as long as you are compliant but have several key differences. For a good overview visit usacorporate.com
  2. Choosing the right state. Delaware and Nevada offer advantages, however it is worth checking the following; how and where you need to open a business bank account, if you have to appoint a registered agent and what fees are required for operating as a “foreign entity” in your own state. Additionally, find out if you have to purchase a Certification of Goodstanding or Certified Copy of the Articles of
    Incorporation.
  3. Speak to a US-based solicitor. Granted, you don’t need to hire them to form an LLC or corporation as online services can help you represent yourself when creating a business entity. However, an online legal document filing service is not allowed to give you legal or accounting advice regarding your situation.

If the US isn’t for you at the moment, check out this article about on how to scale your current business.

How to grow your contract recruitment agency

Discover everything you need to know about entering, scaling and thriving in the UK contract recruitment market.

In this ebook

  • State of the contract market
  • Why enter the contract market?
  • Outsourcing to grow
  • Setting your growth strategy in motion
  • How to find the clients hiring contractors
  • How to work compliantly
  • How to build a network of contractors
  • 5 Sectors primed for growth in 2019

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