Expanding into the United States?
:
TO
Prepare for a
Different Business Environment
By Simon Philp, CPA, FCMA
C
anadian companies are
increasingly developing new
export links with markets in Asia,
Europe, and throughout the rest of the
world. However, even with expansion
into new trade corridors, Canadian
companies do the most business
with the US, the world’s the largest
consumer market and economy. Thus,
a US export strategy is still essential for
most Canadian companies looking to
expand. For BC companies, California,
Oregon, and Washington represent
a rapidly growing and increasingly
diverse market that has a combined
population and economy that is much
larger than Canada’s.
U n d e r s t a n d i n g t h e d i f fe re n c e s
between US and Canadian business
environments can encourage
successful expansion. It is especially
impor tant to keep in mind the
differences that have most often
surprised Canadian finance teams in
the past.
Initial Considerations
Most Canadian companies begin the
expansion process by exporting goods
or services directly into the US. As a
company’s sales to America grow,
it often looks to establish physical
infrastructure in the United States
– such as an office, warehouse or
manufacturing facility – and to recruit
staff there. To achieve these goals, many
companies establish a US corporation
or limited liability company.
Before a company establishes an
operating entity in the United States,
the company’s external accountants
will need to review the Sales and Local
Taxes (SALT). This includes evaluating
the impact of Business & Occupation
(B&O) taxes and other sales taxes. SALT
rates and applicability can vary within a
state. With that in mind, the imprudent
selection of an office or manufacturing
location can be an expensive error.
For manufacturers incentives such as
Industrial Revenue Bonds can lower
FALL 2014
|
page 11