How much money can a business save by driving roughly three hours in an easterly direction? Given that Ottawa charges 13% in harmonized sales tax (HST), yet Burlington, Vermont, charges only 2.1%, the answer is quite a lot. Of course, there’s more to a pro-business climate than just taxes, and Canada has a lot going for it. Yet, countless business owners have looked jealously over the border, keen to harness some of the benefits gained from operation in the American business sphere – often cited as one of the most permissive, and liberal, anywhere on the planet. As with all business expansion plans, there are distinct risks associated with moving the operation. Arguably the most important step of all for Canadian businesses is ensuring that they tick every regulatory box.
One key facet of US business principles is a general bias towards domestic partners. According to the McGill Law Journal, the desire of US businesses to favour domestic supply chains is so pronounced that even Canadian businesses will find themselves being treated as second best in negotiations and tender – despite their favorable geographic location. As such, McGill rate it as a crucial step to set up a US-based subsidiary of the original business, in order to have a proper US presence.
This, of course, brings in the confusion and controversy often associated with tackling the corporate law of a new country, and setting up a business within those rules. The USA, thankfully, makes it relatively simple. An LLC is the most simple form of business, and will protect you from business losses. You can also choose between taxation patterns – LLC or corporation – to best benefit you and your enterprise. There are numerous businesses that are around for that exist business, from UpCounsel and LegalZoom LLC to Zen Business and Starfleet. An important note, however – as a Canadian, you may be required to register an additional Registered Agent depending on the pattern of your work. Ensure you comply with these measures; failing to can unending issues for a fledgling US business.
There are brilliant conditions for building a business in the US – but, because of that, there’s also fierce competition. Businesses can often find themselves squeezed out of the US market in record time because it’s so hard to cut out a slice of the pie – there are that many competing firms, and starting from an international standpoint can put you on the back foot right from the get go.
Looking to some experts in Canadian business can help to reveal the answer to that question. A recent profile in the Globe and Mail of one business that helps Canadian enterprises looking to move into the USA highlights a key principle – aggressiveness. Building market knowledge and then having the aggressiveness and tenacity to stick to a structured business plan is crucial. The market is unforgiving, and it’s better to attack it and find a niche, rather than being unsure and risking losing momentum.
While US enterprise standards are very, very high, there are problems in the world of business that will have a specific impact on Canadian businesses expanding out there. As with carving out a niche, you will be starting on the back foot as an international business entering the field – and so being aware of key risks in the current US scene is another crucial aspect of running an effective enterprise. Perhaps the defining issue in US markets right now is the supply chain.
The USA has dealt with significant supply chain issues that started with the pandemic but have persisted ever since. There are shortages in all areas of industry, from primary material supply through to resourcing. A Canadian business can actually massively benefit here; the Canadian supply chain, while impacted, has not been nearly as pressured as it has in the USA. Accordingly, you can bring that flexibility into the new market. It is telling, then, that experts writing for HSBC Canada feel that supply chain resilience is absolutely crucial in expanding your business. Do not take for granted the steps necessary to provide a resilient supply chain for your business – instead, secure them, build up partnerships in the B2B space, and construct a surplus to support you and your business.
The USA is the most sensible market to move in from Canada. Logistically and in transport terms, it’s very accessible – right there to be made the most of and to act as a new market in which to grow. That doesn’t mean the USA is simple, however, and the country can be very aggressive with new businesses who don’t tick the right boxes and tow the correct line. Be assertive and aggressive, but be prepared, too – the best businesses have shown this is the correct approach, and have found the most success over the southern border.
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