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Budgeting for US Expansion

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This blog was originally created for GrowCFO and accompanied by an online Masterclass for their members on this topic.

For European and UK tech companies eyeing growth across the Atlantic, navigating the complex financial landscape of expanding into the United States can be a daunting challenge. CFOs understand that meticulous budget planning is the cornerstone of a successful international expansion strategy. In this blog, we will break down the various cost components involved, offering a detailed analysis of one-time expenses, annual commitments, monthly overheads, and the often-overlooked but vital employee-related costs. Our goal is to equip you with the knowledge and tools necessary to make informed budgeting decisions and pave a path toward successful US market entry and growth trajectory.

Please note: The costs described in this blog post provide a general overview and are based on typical expenses for a startup company in secondary tech hubs like Research Triangle Park, North Carolina or Atlanta, Georgia. The actual expenses for your US expansion may vary significantly depending on your chosen state and city within the United States.

Below are the typical one-time, annual operating costs, monthly operating costs, and employee related costs that need to be considered when budgeting for US expansion:

One-Time Costs

Incorporation: $2000

State Filing Fees: $750

BE-13B Filing: $500

Transfer Pricing Study: $4000 - $8000

Estimated Total: $9250

Annual Operating Costs

Federal & State Tax Returns: $3500

Registered Agent: $250

Franchise Tax: $400

Certificate of Authority: $250

General Liability Insurance: $1500

Estimated Total: $5900

Monthly Operating Costs

Office: $259 - $5000 / month

US Phone Number: $15 / month

Bank Fees: $25 / month

Accounting Software: $27 / month

Estimated Total: $326

Employee Costs

Employee Salaries*

Salary Variable Total

Sales Executive $82,506 $73,312 $155,818

Customer Success $73,979 $22,030 $96,009

Sales Engineer $86,544 $59,382 $145,926

*3-5 years of experience, located in Atlanta, Georgia via Glassdoor

Compulsory Employee Costs

Federal Unemployment Tax (FUTA)

· 6% tax on the first $7000 in wages

Federal Insurance Contribution Act Tax (FICA)

· 7.64% tax on the first $147,000 in wages

State Unemployment Tax (SUI)

· Varies by state. For example, 1% on the first $28,000 in wages (North Carolina)

Workers Compensation Insurance

· Varies by state and job code. For example, .55% for a salesperson in North Carolina

To learn more about calculating employee costs in the US click here.

Health Insurance

National Health Saving Account (HSA) with a $3000 / $6000 plan deductible

Employee EE + Spouse EE + Child EE + Family

$679 / mo $1494 / mo $1359 / mo $2106 / mo

Employer Contribution Strategies

· 50% of Employee Only Premiums ($339.50)

· 100% of Employee Only Premiums ($679)

· 50% of All Plan Options

· 100% of All Plan Options

Additional Health Insurance Coverages

· Dental

· Vision

· Life

· Disability

401K Retirement Plan

$500 one-time implementation fee

$0 annual fee

Employee Contribution Matching Options

· No Match

· Basic Matching (50% employer match on first 6% of employee contributions)

· Dollar-for-Dollar Matching (employer matches employees’ contributions 1:1)

To learn more about 401K plans in the US click here.

Additional Budgeting Considerations

· Federal Income Taxes: 21% of Profits

· State Income Taxes: 2.5% - 11% of Profits

· Sales Tax: Varies

· Errors & Omission Insurance

· Directors & Officers Insurance

· Cyber & Privacy Insurance

· Employment Practices Insurance

· US Licenses & Agreements

To learn more about taxes in the US click here and to learn more about insurance in the US click here.

In summary, CFOs are well aware of the challenges that come with expanding your European or UK company into the United States. Navigating the intricacies of the US financial landscape can be a formidable task. In this blog, we've described the various cost components involved in US expansion, including an overview of one-time expenses, annual commitments, monthly overheads, and the often-overlooked but vital employee-related costs. Our aim has been to arm you with the knowledge and tools essential for making informed budgeting decisions, enabling you to chart a course toward successful US market entry and growth.

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