For Foreign Companies Expanding Into the U.S.
A U.S. subsidiary is often the cleaner path for a foreign company entering the U.S., but only if the setup is handled correctly. The entity choice, intercompany structure, bookkeeping, payroll, state registrations, and annual filings all need to be coordinated so the U.S. side is workable and the foreign parent does not create avoidable tax problems.
What Usually Gets Set Up
The setup phase commonly includes:
- U.S. entity formation and EIN support
- Ownership and intercompany structure review
- U.S. bookkeeping setup
- Payroll and contractor setup support
- State registration and compliance planning
- Initial tax and filing calendar buildout
This is where the distinction between a true U.S. subsidiary and a direct foreign branch matters. If the business is operating directly in the U.S. through the foreign corporation, Form 1120-F Filing Requirements for Foreign Corporations may need to be evaluated instead of or alongside subsidiary planning.
What Ongoing Support Usually Includes
After formation, the U.S. subsidiary usually needs:
- Monthly bookkeeping and close support
- Payroll support or payroll coordination
- U.S. corporate tax return support
- State filing support
- Intercompany transaction cleanup
- Ongoing international tax review where the parent and subsidiary interact
The key is keeping the U.S. entity clean enough that filings, owner reporting, and year-end tax work do not become a reconstruction project.
Common Mistakes
Common mistakes include treating the U.S. company like an extension of the foreign bank account, failing to document intercompany flows, setting up payroll late, mixing U.S. and parent-company expenses, and choosing a subsidiary when the actual legal and tax facts point to branch exposure instead.
Who This Is For
This page fits foreign parent companies opening U.S. operations, hiring in the U.S., launching a U.S. revenue stream, or deciding between a U.S. subsidiary and direct foreign-company operations in the U.S.