Expanding your business into the US is an exciting step. It opens up access to one of the world’s largest markets, brings new revenue opportunities, and strengthens your global footprint. But while the US presents huge commercial potential, it also introduces a complex legal landscape that differs significantly from the UK.
Unlike the UK, where businesses operate under a single legal framework, the US has both federal and state laws—and state laws can vary widely. If you’re considering scaling into the US, understanding these state-by-state variations is crucial to avoid regulatory missteps, unexpected costs, and operational headaches.
So, what do you actually need to know? Here’s a breakdown of the key legal considerations when expanding into the US.
1. Setting up your business entity in the right state
The first decision you’ll face is which state to register your business in. Unlike in the UK, where a company is typically registered centrally with Companies House, in the US, businesses must choose a state in which to incorporate.
Popular choices include:
- Delaware – Known for its business-friendly laws and court system, it’s a top choice for tech startups and large corporations alike. Many investors prefer Delaware-registered companies.
- Wyoming – Offers low tax rates and strong privacy protections for business owners.
- Texas – A major commercial hub with no state income tax, making it attractive for scaling businesses.
- California – A key location for tech and media companies but comes with higher taxes and stricter regulations.
Even if you register in one state, you may still need to register in others if you’re physically operating there or employing people in different locations. This is known as foreign qualification and requires filing for a “Certificate of Authority” in each additional state where you do business.
2. Tax laws differ by state
In the UK, businesses deal with HMRC for tax matters. In the US, however, taxes are split between federal and state levels, and the state rules vary significantly.
Key tax considerations include:
- State income tax: Some states (e.g., Texas, Florida, Wyoming) have no state income tax, while others (e.g., California, New York) have high corporate tax rates.
- Sales tax: Unlike VAT in the UK, the US has sales tax rather than a uniform consumption tax. Each state sets its own sales tax rate, and businesses must collect and remit this tax when selling in certain states.
- Employment taxes: If you’re hiring a US team, you’ll need to withhold state and federal employment taxes, which vary depending on the state.
If you plan to sell goods or services to US customers, you’ll need to determine where you have tax nexus—the legal obligation to collect and pay state taxes.
3. Employment laws and worker rights
Employment law is one of the biggest areas of difference between the UK and the US. Here’s what you need to know:
- At-will employment: Most US states follow at-will employment, meaning that employees can be dismissed without notice (as long as it’s not for discriminatory reasons). This is very different from UK rules, where notice periods are required.
- Minimum wage: Each state sets its own minimum wage, which can be higher than the federal minimum wage ($7.25 per hour). For example, California’s minimum wage is over $15 per hour.
- Employee benefits: Unlike the UK, there’s no legal requirement for employers to offer paid holidays or sick leave at a federal level. Some states (e.g., New York, California) have local laws requiring certain benefits.
- Non-compete agreements: Many states enforce strict non-compete clauses in employment contracts, but some (e.g., California) ban them entirely.
If you plan to hire a US-based team, your employment contracts will need major adjustments from UK templates.
4. Data protection: no single GDPR equivalent
Unlike the UK, which follows GDPR, the US does not have a single, unified federal law governing data protection. Instead, data privacy laws are state-specific.
- California (CCPA/CPRA): The strictest data protection laws in the US, similar to GDPR. If you’re handling customer data in California, you must allow consumers to opt out of data collection and request data deletion.
- Virginia, Colorado, and Connecticut have also introduced their own consumer privacy laws, with more states following suit.
If you collect customer data in the US, your privacy policies and data handling procedures must comply with individual state laws.
5. Intellectual property: trademarks and copyrights
If your business owns intellectual property (IP), protecting it in the US is essential.
- Trademarks – UK trademarks do not automatically apply in the US. You’ll need to register separately with the United States Patent and Trademark Office (USPTO).
- Copyrights – Copyright protection exists automatically, but formal US copyright registration is needed if you ever need to enforce your rights in court.
- Patents – If your business holds patents in the UK, you’ll need to apply separately in the US to prevent competitors from copying your product or technology.
Given how competitive the US market is, securing IP protection early is vital to safeguard your business.
How to approach scaling into the US
Scaling into the US is a major strategic move, but the legal landscape is significantly more complex than in the UK. Here are some practical next steps:
Decide where to register your business – Choose a state that aligns with your operational needs and tax efficiency.
Get tax advice early – Understanding sales tax and income tax rules will save you time (and penalties) later.
Adjust your employment contracts – Ensure compliance with state-specific laws if hiring a US-based team.
Review your data protection policies – Particularly if operating in California or other regulated states.
Protect your intellectual property – US-specific trademarks, copyrights, and patents may be necessary.
How Jamieson Law can help
Navigating US expansion requires a solid legal strategy. At Jamieson Law, we help scaling businesses ensure they are compliant, protected, and positioned for success when entering the US market. Whether you need support with contracts, employment law, regulatory compliance, or IP protection, we’re here to guide you every step of the way.
Book a free discovery call to discuss your US expansion plans today.
