Expanding Your Business into the United States

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What does it take to tap into the United States consumer base? We will discuss at a high level what it takes to own and operate a business in the United States, specifically in Texas.

Many may not realize that foreign, non-U.S. businesses can open up brick and mortar locations, hire employees, and sell goods and services within the United States. Although immigrant status is not required to operate the business, formally registering your business and paying taxes are required.

Per the Texas Secretary of State, non-U.S. businesses (corporations, limited liability companies, and limited partnerships) are required to register before transacting business in Texas. Additionally, the state imposes annual compliance requirements and Franchise Taxes on Texas businesses.

When is Registration Not Required?

Section 9.251 of the Texas Business Organization Code outlines 16 instances that do not qualify as "transacting business" in Texas, a few of which are: holding certain meetings, maintaining a bank account, owning real or personal property in the State. The aforementioned activities are not considered "transacting business" and thus do not require registration based on these alone.

What Are the Penalties for Not Registering Your Business When it is Required?

An organization that conducts business in the state of Texas but fails to properly register faces several penalties, including:

• unable to maintain a lawsuit or action in court

• could be enjoined from transacting business in the state

• civil penalty equal to all fees and taxes that should have been imposed had the business registered at the proper time; and

• if the organization has transacted business for more than ninety (90) days, the Texas Secretary of State will impose a late fee penalty onto the registration equal to the registration fee for each year or partial year of delinquency.

Benefits to Operating a Business in the United States

Operating a business in the United States offer many benefits such as: access the the Texas consumer market, the U.S. banking system, the U.S. financial capital, payment processors (Stripe, Paypal, Shopify); a more reputable perception; ease of dissolution if needed.

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Starting your business in the United States can feel both exciting and overwhelming, speak with experienced attorney today to discuss your strategy.

Request a consultation to discuss your options.