Considering an overseas business expansion in 2024?

How and when to do a USA business setup from Australia

Complex regulations and fierce competition make the USA a hard nut to crack. Ensure you nail your US expansion with expert advice.

Heading offshore in the hunt for growth

Australia’s private businesses are broadening their horizons and eyeing overseas markets, with 69% of SMEs planning to operate outside Australia by 2027. While foreign markets offer untapped potential, deciding where to expand requires careful forethought beyond the exchange rate.

The United States is a popular choice – over 10,000 Australian businesses are already selling to or operating in the US. While language isn’t a barrier, our business culture and laws are vastly different and pose significant challenges. 

Before making the move, it pays to get the right advice informed by expertise specific to AU-US business expansion. Let’s get you started with the basics.

Is the US the right market for your business?

Expanding into the US is an effective way for private business owners to accelerate growth, but a successful expansion requires focus, courage and curiosity. Assess your business’s suitability for a US expansion by:

  1. Understanding US financial and regulatory obligations – the US market is a highly regulated environment with differing rules and regulations across states. Committing to an expansion means committing to a stringent and ongoing process of understanding and adhering to these regulations to ensure compliance and avoid costly penalties.
  2. Conduct thorough market research and intelligence. Market research is critical to understanding local consumer preferences, the existing competitor landscape, the local economy, and the core complexities of the regulatory environment. Market intelligence will inform your expansion plan with crucial external contexts, such as the cultural nuances and language differences that may impact recruitment, operations, and marketing.
  3. Getting professional, proven advice – engaging an advisor, broker or accountant with a proven track record of assisting successful US expansions will provide priceless experience, local knowledge and contacts to ensure you’re across the unique challenges and opportunities of expanding your business into the US. 

Setting up a foreign subsidiary company in the US

Ready to make the move? The most common way to expand into the US is to set up a foreign subsidiary company. Put simply, a US subsidiary is a company incorporated in the US that is controlled by a foreign entity – known as a holding company.

To set up a US subsidiary for your Australian company, you incorporate a US company and hold its shares as assets in your Australian holding company. This allows whatever value your US subsidiary generates to pass through to your Australian holding company.

  • Two of the most popular options for incorporating a subsidiary in the US are:
  • Limited Liability Corporation (LLC) – generally less complex and provides personal liability protection and pass-through taxation.
  • C-Corporation (C-Corp) – greater upfront costs and government regulation but provides the greatest growth potential with no limit on the number of shareholders.
  • Other factors to consider when opening a foreign subsidiary include:
  • Management – if your holding company owns all the shares in your subsidiary, it can manage the subsidiary. Ensure you appoint directors who understand the subsidiary’s role in your overall growth – or appoint yourself.
  • Location – unlike in Australia, you will need to establish a US-based company at a state rather than federal level. This decision requires careful consideration, with different states presenting different regulatory requirements, tax obligations and so on.
  • Intellectual Property – to protect your subsidiary, register a trademark in the US for your business name and logo and license any IP from your Australian holding company to your US subsidiary.
  • Tax – A US subsidiary of a foreign corporation is generally taxed like any other domestic corporation – i.e. as a separate taxable entity. Tax rules and regulations vary by state, so make sure you’re across the specific requirements for your location.

Pros and cons of expanding to the US market

The US market is vast but sophisticated, with some clear pros and cons to consider:


  • Free market-based economy.
  • 333 million people to market to means sizeable potential for growth.
  • Elaborate road, rail and air networks provide good access across the country.
  • Large commercial real estate market across 50 states provides many options for basing your business.
  • Ability to move goods quickly via leading online marketplaces like Amazon and eBay.


  • Crowded, sophisticated market with high entry costs and long lead times.
  • Vast geographical scale means large transport costs and long delivery times.
  • Intense competition requires dogged determination and the ability to hustle.
  • Highly regulated environment with differing rules and regulations state to state.

Managing new risks

With any opportunity comes risk, and expanding into the US is no different. Specific risks to manage and mitigate include:

  • Financial risk including currency exchange fluctuations, economic instability and unforeseen expenses associated with international operations.
  • Market risk including fluctuating demand, existing and future competition, and potential market saturation.
  • Operational risk including choosing the right location, finding the right staff, differences in work culture and ensuring HR compliance across benefits, entitlements and workers’ rights.
  • Supply chain risks including issues with shipping, customs and supply chain management which can disrupt operations and increase costs.
  • Legal and regulatory risks including the operational and compliance challenges of understanding complex US tax codes across states, licensing requirements and IP protection – all with potentially costly penalties.
  • Political risk including unforeseen political shifts can have huge ramifications on the safety and viability of business operations.
  • Immigration risk including challenges around sending executives or other management-level employees to US expansion sites.

American tax basics

Tax in the US is complex, so let’s cover the basics:
  • While there is no GST, the US imposes a corporate tax on the profits of US-based corporations (including those owned by foreign companies) at a rate of 21%.
  • Taxable corporate profits are equal to a corporation’s receipts minus allowable deductions – e.g. the cost of goods sold, wages and other employee compensations, interest, depreciation and advertising.
  • Sales taxes in the US are taxes placed on the sale or lease of goods and services in the US, calculated by multiplying the purchase price by the applicable sales tax.
  • Sales tax is governed at a state level and no national general sales tax exists. Only 5 states (Alaska, Delaware, Montana, New Hampshire and Oregon) do not levy a statewide sales tax.  

Cross borders with confidence

If you’re considering a US expansion, take the time to plan and know your market before you sign anything or make a commitment. It pays to engage the right business expansion support from a global accounting firm with US expertise to ensure you maximise the opportunity and stay on top of financial and taxation complexities.

Nail your US business expansion with expert accounting advice. 

Ask for a callback from Accelerate WA Accounting Group.