Why Some UK Entrepreneurs Target the U.S. Rather Than Europe

Despite the difference in business approach between the UK and U.S., many UK entrepreneurs prefer to target the U.S. rather than Europe. The United Kingdom comprises England, Northern Ireland, Scotland, and Wales and traded $410.9 billion worth of goods with its trading partners around the world in 2020.

The United States is the UK's top trading partner, accounting for 16.2% of goods exported in Q1 2020 and 14.7% in Q2.

Businesses Reaching out to the US

A growing number of UK businesses are reaching out to the U.S. for their next expansion moves. Businessmen who are doing this are willing to evolve their business to fit the specifics of the American market because they are finding more collaboration opportunities there than they do back in Europe.

Developing an idea and raising funds

Every business person knows that a big idea requires the necessary funding and development to get it off the ground. The U.S. is not only known for its pool of talented software developers but also offers more funding prospects for businesses coming into the country with good ideas. However, getting crowdfunding and VC investors is much easier if a UK business incorporates a U.S. parent company.

Brexit and Europe

The complexities of dealing with the European market have become more pronounced after Brexit. Imports and exports between the EU and the UK are now more complicated because of the rules about the origin of products. Other challenges include VAT issues, increased import taxes, and difficult customs clearances.

Since leaving the EU, the UK now negotiates trade deals directly with the U.S. Luckily, American consumers are happy to buy overseas products but demand better prices.

Trading rules are controlled by the United States Customs and Border Protection (CBP). They currently have a minimum threshold for import taxation of $800 for the UK. Any goods below that are not subject to duty, meaning that only businesses shipping very high-value items and volumes pay import tax.

This makes trade between the UK and USA very cost-effective for online shoppers based in the US buying goods from UK entrepreneurs.

Fewer language barriers

A simple example such as dealing with the press will show the scaled advantage of doing business in the U.S. compared to a highly fragmented EU which seeks to label it a "single digital" economy. One drawback to doing business with Europe is the language barrier. Information is translated into several languages to meet the requirements of all the member states.

For Americans and Brits alike, speaking the same language makes it easier to close business dealings. Their common language does not always prevent the occurrence of some amusing mishaps, but there is more equal ground business than what entrepreneurs are faced with in most European countries.

How to expand to the U.S.?

Expanding a business from the UK to the U.S. requires some good research into the market. A good investment into an advertising campaign is required, and attending trade shows can help get recognition for products. It is a far easier market to break into than the European market. Many UK businesses opt to form alliances or appoint distributors.

Benefits of incorporating a UK business in the US

Sometimes, it makes better sense for a UK business to set up a U.S. entity. This is especially true if the UK-based business needs to employ US-based employees, or the UK entity is generating revenues from the U.S. This is because the US and UK have different employment laws and taxation differences.

UK entities generating income from the U.S. usually need to find a structure to allocate funds to a U.S. entity to make the enterprise more tax efficient. Incorporating a business in the U.S. also means it is more protected from litigation risks.

Easy business incorporation

When starting a business in the U.S., LLC Incorporation Services ensures that you get the legal structure of your business right, whether you are a U.S.-based company or are setting up an American division for your entity.

LLC incorporation services make sure that you are aware of all the options available to you, and that you have all the correct paperwork in order.

Some of the most notable business formation services in the U.S. include ZenBusiness, IncFile, Northwest Registered Agent, and Legal Zoom. These offer far more than just affordable incorporation services, but also have additional packages to help you meet the annual, report requirements and compliance filing for the state you choose to incorporate in.

Both the UK and the U.S. offer businesses easy incorporation. This makes it easy for entrepreneurs coming from the UK to start a business or division of their business in the U.S. The UK is known as the friendliest country for international investors in Europe. In the U.S., documentation execution is more streamlined than in the UK, and the country is extremely founder-friendly.

One significant difference that ensures U.S. popularity is that private companies do not need to make their company information and financial information publicly available. In the UK, information about the board, shareholders, and finances must be made publicly available.

Conclusion

Brexit and other problems have left Brits feeling that there is not much goodwill in Europe to help them sell their goods. They have set their sights on the large U.S. markets across the Atlantic, one of the world leaders in innovation and entrepreneurship.