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?
When is the right time to establish a subsidiary in the US?
Answers
Anon
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
5. Contracts with US customers-who becomes the contracting party on your side? The US entity? How does that impact your business insurance liability/
I am sure others in this community can add more!
Regards
Len
Filed Under:
FP&A