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Recent data shows that most regions are lagging far behind the United States, mainly owing to the lack of ​​governmental involvement in business practices. This caused the number of startups to decrease, causing the gap between other parts of the world and the United States to widen. As more and more businesses find the onerous constraints in other nations, many are opting for the United States, either for better alignment with venture capital or just to prosper under the more lax corporate standards. This article discusses the growing trend of foreign business creation in the United States, its reasons, and how you may get started if interested.

Why more businesses are choosing the US

In the last few decades, the number of companies interested in establishing their business in the US has increased considerably. There are a few key reasons behind this shift which are illustrated below.

The favourable economic environment

Foreign investors can buy assets in the United States, particularly real estate, at lower prices than they can in their own country. Furthermore, the United States has the largest consumer market globally, with over 320 million inhabitants, many of whom like shopping. There is a wide range of income and interest levels in the United States, so no matter what type of company you may have, it is safe to say the US market has a decent consumer base. 

Flexible residency requirements

Most European countries require a residency permit in the country where you intend to establish your business. But in the US, owners are allowed to live and operate their businesses from anywhere in the country and do not require any special permit. Additionally, in the United States, all foreign or locally held companies are treated equally. This ensures a level playing field between competitors, and no one can seek unfair advantages

Federal, state, and municipal governments all provide incentives

Many states in the US provide financial incentives to foreign investors who set up shop in a particular region. Some tax benefits are also available and have lately reduced commercial real estate taxes for foreign investors. Furthermore, the United States government provides a wide range of services to American enterprises, which you will be able to take advantage of when you establish your company in the United States.

How to form an LLC as a foreigner

Now that we have seen the advantages of expanding business in the United States let us discuss the process to expand a business as a foreigner.

Choose a business structure

C corporations, S corporations, and LLCs are the three structures available to companies when looking to extend their operations in the United States. While each has advantages and disadvantages, most organisations will benefit from LLCs since they offer various advantages, including no restrictions on where you live and some tax exemptions

Choosing the right state

The next stage is for the business owner to decide where they want to set up their company. Delaware and  Nevada are some of the most strongly recommended states for enterprises due to their business-friendly taxation rates, maintenance costs, and corporate regulations. But for many businesses, other states can be just as lucrative, especially if they can benefit from a large population or the many commercial hubs that are set up. Some popular states with large consumer markets include New York, California, Florida, and Texas. 

Fill in the paperwork

Each state's LLC  registration requirements differ slightly, but they all follow the same basic pattern. To summarise, companies must choose a distinctive name, select a registered agent and complete a certification of incorporation. After incorporation, the company must file a report and pay a franchise tax every year.

Get an EIN

For companies, an Employer Identification Number (EIN) is the equivalent of a social security number. It enables them to recruit staff and create bank accounts for their businesses. An EIN may be obtained for free straight from the IRS.

Bottomline

Due to the various advantages, small companies operating in different parts of the world increasingly choose to incorporate their business in the United States. This gives them access to a broader audience as well as international exposure to make it global. 

While the LLC application procedure is free, it may be rather complicated and time-consuming for people who are not fluent in this field. For a small cost, several organisations offer an LLC creation service online, which will significantly lessen the stress and chance of a glitch when compared to the 'DIY' approach. 

Thankfully, improving your team’s efficiency and productivity doesn’t need to be difficult. There are many ways that you can give your team a productivity boost, and in this article, you will find out what they are.

Productivity Monitoring

Implementing productivity monitoring software is an effective way of improving your team’s overall productivity. The reason for this, by tracking employees and monitoring their productivity, you put them under a magnifying glass. This puts pressure on them to work harder because they know you are watching. Ultimately, the added pressure will improve their productivity and increase the amount of work that they do during the working day. When they know that their job is on the line and you can see everything that they’re doing, your team will be less likely to slack off and be lazy at work.

Proper Communication

Properly communicating with your staff is crucial if you want them to increase their overall productivity. Unfortunately, poor communication is common in many businesses. You need to ensure that your team managers communicate effectively, which you can do by having them participate in training courses and monitoring their communication. You should try to create a culture of openness in your company, so when staff aren’t communicating effectively, team members feel comfortable approaching you and bringing this up. When your staff know exactly what they are doing and overall communication is strong, they will work harder. Make sure you communicate effectively to managerial staff also, so that they know what tasks they are meant to delegate.

Strengths And Weaknesses

You need to take the time to identify your team member’s strengths and weaknesses. If you don’t know who’s good at what you won’t be able to effectively distribute work. You can identify your team members by having them participate in training courses and completing tests. You can also sit down with them and get them to tell you what they think they are good at. If you don’t have the time to individually interview your staff, then you could consider sending a survey around for your staff to complete.

Team Building

Colleagues sat talking on benchTeam building exercises are a great way of improving your team’s overall productivity. When your team works together well, they can get more done and will be more productive. Encouraging communication, friendship, and professionalism in your team are very important. If they do not get along and don’t communicate well, they will not be able to perform well. Team building exercises in addition to out of work get-togethers (Christmas dinners, etc), can be very effective in boosting overall efficiency and productivity. You can also hold training courses online through platforms like Zoom.

Culture Of Friendliness

Creating a culture of friendliness in your company is crucial if you want your team to work well together. As mentioned in the previous point, a team that gets along well will work harder, better, and will be more productive. Creating a culture of friendliness isn’t easy but is important. You can do this by following our previous steps, as well as creating a cafeteria inside your office so that your staff can eat together. Team building exercises, as suggested earlier, can also encourage your staff to get along and work together.

Incentivise Hard Work

Some bosses find that incentivising hard work by offering bonuses is a good way to boost productivity. This is especially true if you are offering wage bonuses during the Christmas period, as well as extra time off. Some companies even offer their staff physical prizes, like iPads and computers, to team members who work the hardest. Incentivising hard work is a great way to encourage your staff to work harder, although it can be an expensive method. You could also introduce an employee of the month system and offer prizes to staff members who achieve employee of the month several months in a row.

Make Work Convenient

Due to the pandemic, many staff are now accustomed to working from home. If you want your staff to work harder and be more productive then you will definitely benefit from making your team’s lives easier, by allowing them to work from home. In addition, make sure to give your staff the latest technology and software, so they can complete their jobs more efficiently.

Boosting your team’s productivity doesn’t need to be difficult. In fact, by following this article’s guidance, your team will be more productive than ever.

Despite the Confederation of British Industry (CBI) announcing a “welcome lift in business confidence” at the start of 2020, the Government can’t afford to neglect the needs of SME businesses, the backbone of the UK economy.  

We hear from Richard Godmon, tax partner at accountancy firm Menzies LLP.

With many UK businesses trading internationally, certainty surrounding future trading arrangements with the EU and the rest of the world is urgently required. However, if this can’t be delivered in the short-term, then the Chancellor must step up to the plate and provide support in the form of clear fiscal incentives and allowances, to help businesses to improve their cash position and facilitate investment.

R&D relief

Among the Budget announcements, tax specialists at the firm are urging the Chancellor to confirm that the rate of R&D relief that large companies can claim under the Research and Development Expenditure Credit (RDEC) scheme will be increased by one % (from 12 to 13 %). The Chancellor should also take the opportunity to extend the scope of the scheme to include costs for investment in cloud computing and big data analytics.

Annual Investment Allowance

Further certainty is needed surrounding the Annual Investment Allowance, which is currently set at £1 million but is expected to revert to £200,000 from 1 January 2021.

Investment requires confidence, and this can’t happen in a climate of uncertainty. Businesses need to know what is happening to the AIA so they can understand the cost of new plant and machinery and invest in their growth plans. The Chancellor could address this by either increasing the allowance or extending the current limit until at least the end of 2022.

Alternatively, if a blanket increase in the AIA limit is considered too costly, the Chancellor could select specific areas of capital expenditure, which might qualify for enhanced tax relief (say, of up to 110 % of cost) – for example, investments in robotics, AI systems, data integration, 3D printers and other value-driving tech.

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Entrepreneurs’ Relief

This Budget may see the end of Entrepreneurs’ Relief (ER), which is intended to encourage business investment by providing a favourable rate of Capital Gains Tax (CGT) to business owners on the disposal of all or part of their business. The relief, which saves business owners an estimated £2.2bn per year, may be under threat following publication of a report suggesting that it may not be boosting entrepreneurialism as intended.

This Budget may see the end of Entrepreneurs’ Relief (ER), which is intended to encourage business investment by providing a favourable rate of Capital Gains Tax (CGT) to business owners on the disposal of all or part of their business.

While it would be a big step for the Government to completely remove the idea of rewarding owners and investors for risking their capital, we may see reform of the relief, designed to reduce the tax cost. This might involve reducing the £10m lifetime allowance, or limiting access to new businesses, or those who reinvest their sale proceeds within a limited window.

We hope that any restrictions to ER will be offset by measures to enhance incentives for start-ups and growth businesses. This would continue to communicate the message that Britain is open for business, helping organisations to plan their long-term investment strategy.

Digital Services Tax

The Government is also expected to deliver a final decision regarding the controversial UK Digital Services Tax, and there is still time to soften its impact or even defer it altogether. If it goes ahead, the tax could impact UK competitiveness significantly.

It’s important to bear in mind that the Digital Services Tax would operate solely within the UK, rather than being EU-wide. As such, the UK could find itself isolated and at odds with trading partners should other countries choose not to introduce a similar tax. This could leave the UK at a considerable disadvantage when it comes to attracting international orders and so could have a negative ripple effect on UK-based SMEs. Hopefully we will see this tax deferred for a year pending the outcome of the OECD work on taxation of the digital economy, which it is hoped will reach an agreement by the end of 2020.

Housing and Property

Finally, with Brexit uncertainty still negatively impacting property sales, the Government could do more to get the housing market, traditionally a key driver of economic growth, moving and improve housing supply.

After seven years of punitive tax changes, buy-to-let property investors are hoping for a period of relative stability and maybe even a fiscal ‘escape hatch’ too.

A temporary reduction in the rate of Capital Gains Tax (CGT) payable on gains from the sale of B2L properties, made unprofitable by recent tax changes, could help to release stock onto the market. The new 30-day payment rules for CGT also means the Treasury’s coffers would feel the financial benefit immediately.

Further housing changes could see the Stamp Duty Land Tax (SDLT) threshold raised to £500,000 for all buyers, the introduction of a 3 % SDLT surcharge for non-UK resident buyers of UK property, and the expected tightening of tax reliefs on the sale of individuals’ main residences.

Below, Dr Michael Thoene delves into his own recent research to explain why many tax breaks governments offer as incentives can amount to little or no benefit to the intended purpose.

Tax breaks are when the government give you a reduction in your taxes. It can come in a variety of forms, such as claiming deductions or excluding income from your tax return, the main examples are pension contributions, charity donations and if you’re self-employed. They are an important, broadly applicable and potentially efficient instruments for creating incentives for private activities and promoting policy objectives, for example: transport policy environmental policy and many sectoral or horizontal areas of policy, however, I was intrigued to see how effective these tax breaks are because, firstly, tax breaks are not included in government budgets and secondly, have tend to exist for a long time.

I conducted a large-scale evaluation with the University of Cologne of 33 German tax breaks that add up to 7.4 billion euros, focusing on the reductions and exemptions provided for energy and electricity duty, car tax and income tax. These benefits have diverse objectives, including climate protection, housing, worker participation and more. Of these 33 tax breaks, 10 measures got an overall rating of ‘weak’ because they fell short of their expected objectives. These 10 measures add up to a total of just under one million to well over one billion euros per year.

When examining the weak tax benefits, my study found that the objectives of these measures are no longer appropriate in view of the current subsidy policy. In fact, nearly all of the weak tax benefits had been around for a while and it seems that they were introduced and more likely developed, despite it not working, rather than being replaced with a more effective system. Furthermore, the design of the concessions were not all suitable. If the tax benefits had existed for a long time, without explicit intervention, there will have been social and economic changes meaning that from an economic perspective there is no longer evidence to justify the need for state intervention and that these measures either no longer achieve the objectives of the benefits or were not the most cost-effective method.

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The study also looked into the transparency of the tax reliefs and found that they were not accessible as they should be to the public. Transparency is needed to provide pressure to justify and control options in the systems, it is a way to provide politicians and the general public with a good basis of information so that politicians can make informed choices regarding policies. Without transparency, the benefits became ineffective as there is no way to keep them in check. In addition, the tax benefits were evaluated on sustainability. The ones that performed badly were the benefits that had no effect on the UN’s 17 Sustainable Development Goals. Climate change is a very important topic and now people are becoming more aware, they want governments to do something, which is why this new assessment weighs very heavily in the overall score of each benefit.

In sum, the study highlights that if not monitored correctly, most of the benefits miss their purpose or lead to deadweight effects. A singular recommendation on how to improve these tax benefits would be impossible, each concession has their positives or negatives but what can be said is that they need to be reformed or abolished urgently. In their current state, these tax benefits will be very detrimental, losing billions of euros that could be used elsewhere.

What is the enterprise investment scheme and could it be useful to you and your business? Below Tony Stott, Chief Executive of Midven, has the answers.

The Enterprise Investment Scheme, we believe, is one of the investment sector’s best-kept secrets. Despite helping 26,000 privately-owned small businesses to access £16bn worth of funding for growth over the past 25 years, and securing attractive tax-efficient returns for investors in the process, the scheme has a relatively low profile.

That is now changing, however, as savers seek out new opportunities to plan for their long-term financial needs in the face of increasing restrictions elsewhere.

Most obviously, the once-generous rules on contributions to private pension plans have been steadily curtailed. Today, most investors are limited to annual pension contributions of no more than £40,000; moreover, higher earners, with annual incomes of more than £150,000, get a smaller allowance – as little as £10,000 a year for those with incomes of more than £210,000. The lifetime allowance, which levies tax charges on pension funds worth more than £1.03m, is also a problem for increasing numbers of people.

By contrast, the EIS offers much more generous allowances, with investors able to put up to £1m a year into qualifying companies. For many savers, the scheme therefore represents an increasingly valuable opportunity as a complement to pension saving, particularly as it may also be a more flexible option. Investors must hold on to their EIS shares for only three years to retain their tax incentives; pensions, by contrast, can’t be accessed until age 55 at the earliest.

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Those tax incentives are certainly alluring, spread across income tax, capital gains tax and inheritance tax:

Understanding the investment opportunity

It’s important, however, not to let the tax tail wag the investment dog. After all, tax reliefs aren’t much use to investors who end up losing their starting investment.

It’s only fair to point out that the Government offers these tax breaks partly because it recognises the high risk of EIS qualifying companies, due to their illiquid nature. To be eligible for the scheme, companies must meet some restrictive tests: amongst other criteria, they must have assets of no more than £15m, fewer than 250 employees and be less than seven years’ old. These small, early-stage businesses are, by their nature, more likely to fail than larger more established companies.

That said, the best of these privately-owned companies also tend to deliver much more exciting returns than their larger counterparts trading on recognised stock exchanges. And investors can mitigate the risks of EIS investment through diversification. While would-be EIS investors do have the option of investing in individual companies with EIS-qualifying status – including many businesses on equity crowdfunding platforms – it is also possible to get exposure through a managed fund of such businesses run by a specialist asset manager. Such vehicles represent a potential way to spread your bets.

There are no sure things in investment, but the tax breaks on the EIS, allied with the opportunity to build a portfolio of shares in potentially high-growth companies, are an tempting mix for long-term savers. They are likely to be particularly attractive to those who are running out of pension allowance.

Indeed, the secret appears to be getting out there, with official figures suggesting EIS popularity has surged in recent years.

Figures from HM Revenue & Customs reveal that in the 2016-17 financial year, the most recent period for which data is available, some 3,470 companies raised a total of £1.8bn of funds under the EIS, though this was an initial estimate that HMRC expects to increase. In 2015-16, 3,545 companies raised £1.9bn of funds.

This won’t be a scheme for everyone. Investors will need to be prepared to accept the risk of partial or total losses, significant volatility over the short term, and to be patient. But for investors seeking out new opportunities to maximise the financial provision they are making for the long term, then EIS may be worth considering with your independent financial, legal and tax advisor.

From free gourmet food and bring in your pet day, to napping pods and haircuts on site; companies like Google offer a variety of incentives and benefits to employees. Unsurprisingly, they hold a rating of 4.4/5 on Glassdoor, with 92% of its employees stating that they would recommend the company to a friend.

Many organisations struggle with attracting and retaining suitable staff. With the nature of today’s competitive job market, companies have to pull out all the stops in order to attract the highest calibre candidates.

Reboot online marketing conducted a survey of 1,200 marketing professionals on the benefits they are being offered at work and what their top 3 work benefits would be, if they could choose:

A wide range of unconventional incentives are offered in companies, and companies aim to choose the most unconventional and adventurous benefits to excite employees:

Shai, Managing Director of Reboot Online comments: “I think it's important to offer incentives and benefits to employees to show them you appreciate their work. I like to keep my staff on their toes; maintaining the thirst to learn and achieve, while ensuring there is never a dull moment. I take my staff boxing training with an ex-European champion every Friday, even giving them the chance to “hit the boss”, which has proven popular! I recently organised a competition, with the prize being a flying lesson. I noticed the difference it made with motivation levels and when meeting targets almost immediately.”

Suzy - head of PR – London: “It may not be one of the most important factors when applying for jobs, but the benefits and incentives offered by one job can give it the pull over another one, which doesn’t offer benefits. For me, job progression in a company is important. I don’t want to work in the same role for years, without eventually receiving more responsibility.”

Respondents rated their top incentives:

Monetary benefits such as reimbursement for travel and bonuses were predictably popular, though not as popular as benefits to do with job flexibility, such as flexi-time, which was chosen by 58% of respondents, more annual leave allowance (55%) and early finishes (30%).

The benefits taking top position were related to job progress. For example, the provision of on-the-job related training, which was chosen by the majority of respondents (60%), receiving greater responsibility and involvement in side projects (35%) also featuring in the top 10.

Overall, it has become clear that benefits and incentives are increasingly offered, and it is a factor candidates use when searching for a job. However, benefits are not the only factor for retention. A competitive pay packet and the possibility of career progression are too of paramount importance to prospective employees.

(Source: Reboot Online)

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