Do Australian Businesses Need a U.S. Company?
One of the first questions Australian business owners ask when expanding into America is:
“Do I need to set up a U.S. company?”
The answer is: not necessarily.
The correct structure depends on what you are doing in the United States, where you operate, how revenue is generated, your tax position, liability concerns, and your long-term expansion plans.
You Can Potentially Operate Without Creating a New U.S. Entity
The IRS recognizes that a foreign corporation can conduct business activities in the United States without necessarily creating a separate U.S. legal entity. However, depending on the activities involved, U.S. tax and filing obligations may apply.
That means creating an LLC or corporation should not automatically be the first step for every Australian business.
Instead, first determine what your U.S. operation actually needs.
When Should You Consider a U.S. Entity?
A U.S. entity may become useful when you need to:
- Establish a more substantial U.S. operation
- Hire U.S. employees
- Enter certain contracts
- Open specific banking or payment arrangements
- Manage U.S. liability considerations
- Bring in U.S. investors
- Establish a long-term physical presence
- Structure U.S. operations separately
The SBA notes that business structure affects taxation, liability, paperwork, fundraising, and ongoing compliance.
Don’t Confuse a U.S. Address With a U.S. Company
A U.S. business address does not automatically mean that you have incorporated a U.S. company.
A ghost office can provide a U.S. business address, phone number, mail handling, and professional presence without being the same thing as forming a legal entity. G’day Gateway specifically offers this type of infrastructure to help APAC businesses establish a U.S. presence.
What About Tax?
This is where professional advice becomes important.
A foreign business can have U.S. tax obligations depending on its activities. The IRS explains that foreign persons conducting a U.S. trade or business can have effectively connected income that is subject to U.S. taxation.
State-level requirements can also differ.
For this reason, Australian businesses should work with a qualified U.S. accountant and attorney before choosing a structure.
Start With the Business Model
Instead of asking:
“Which U.S. company should I create?”
Start with:
“What exactly will my business be doing in the United States?”
That answer will help determine whether you need an entity now, later, or potentially not at all.
G’day Gateway can help businesses understand the practical steps involved in entering the U.S. and connect them with experienced U.S. professional partners when legal or accounting advice is required.
Not Sure If You Need a US Entity?
Every business has different requirements when entering the US. Before forming an LLC or corporation, it’s important to understand your business model, tax obligations, and long-term goals.
G’day Gateway can help you understand the infrastructure you may need and connect you with trusted US accountants and attorneys when professional advice is required. Let’s discuss what your US expansion could look like.
Talk to G’day Gateway