Budgeting for US Expansion
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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. As CFOs, you 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 estimated 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 company circumstances, timings, chosen state and city within the United States.
Watch GrowCFO’s “Budgeting for US Expansion” webinar recording to learn more.
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
*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)
- 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, as CFOs, you’re 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.
To further your understanding of budgeting for US expansion, we invite you to join our upcoming Masterclass titled “Budgeting for US Expansion” on September 26th at 4:00 pm BST. Register today by clicking here, and let’s explore the topic of budgeting for US expansion together.
As CEO at US Expansion Partners, David Rose leads a team that helps European technology companies navigate the complexities of launching, managing, and scaling operations in the United States.
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