Pros and cons of doing business in the USA: observations after a year of development of your company
Last year I spoke on Habré about how I received the O1 visa and moved to the USA to develop my own business. In the comments, readers asked questions about how it feels to work for themselves in America. And if then my experience was too scarce to answer, now after a year of active work there have been enough impressions. So today I’ll talk about the pros and cons of starting my own business in the United States.
Disclaimer: this article reflects only my personal experience and contains judgments that may not be completely true - so if you want to use the material as the basis for making any decisions, consider this fact.
To begin with, a little about myself: I am 29 years old, I have a family, I am a programmer by education, but for more than 8 years I have been engaged in journalism and IT marketing. Now in the United States I am developing my IT marketing agency - we help technology startups and private clients create materials for promoting products and services (an approximate essence of the activity can be understood from this harastrasti ), we also develop our own marketing automation tools (chat bots, etc. .)
Before that, in Russia I worked as a journalist in the publication “Zuckerberg will Call” (even before its rebranding), and also developed my own agency.
In fact, the specific area of activity in the context of this article is not very important, we will talk more about organizational issues. Another important nuance: we are in Miami, and before that, Moscow has always been the basis for me, so the whole experience of living in the USA and Russia is limited to these two cities.
Pros of doing business in the USA
To begin with, the process of doing business in the USA is good. There are many advantages, I like three main factors:
Doing business is facilitated by well-developed infrastructure. For example, in the USA, mail is a real engine of the economy. Documents, checks, goods, official documents are sent by regular mail. Everything works very quickly and almost without problems. In practice, bank checks, which are still very common in America and at first seem like a relic of a deep past, turn out to be quite a convenient thing.
For example, almost all communications with government agencies are carried out by mail. If you need to get some kind of document, then you usually need to download the corresponding file on the website of the necessary department, fill it out according to the instructions and send it to the required address, by enclosing a check with the amount prescribed for the pen to pay the fee.
In a couple of days the documents will reach, the check will be cashed, and soon the desired document will be received. Of all the movements - one trip to the post office.
Other business needs are very easily resolved. For example, it is easiest to rent an office in one of the many coworkings, many of which also provide a mailing address service. Related accounting services can be ordered from services like Quickbooks or found on Upwork by a licensed accountant who has a partnership agreement with such services - in the end you will get both software and a personal accountant. Moreover, for the money it comes out comparable or even cheaper than similar services in Russia.
Perhaps the point is the lack of experience at that time, but in the homeland it was necessary to spend more time and effort to solve such problems.
Country of opportunity
For several years in Russia, I was a co-owner of a business similar to my current project, albeit somewhat less technologically advanced. One of the main memories of this period is the constant struggle with customers, circumstances, requirements of state bodies, etc. In the USA, doing practically the same thing, I noticed that the company is developing more actively, with much less effort and resources.
In my opinion, the reason is the difference in mentality and attitude towards business. In Russia, clients are usually much more demanding; they do not spare time on constant calls, meetings and coordination of contracts. The process from the first contact to the conclusion of the transaction and receipt of the first payment could stretch for months.
In the United States, everything happens much faster, even when interacting with fellow compatriots who have just moved. People here literally value their and other people's time - in Russia, customers would simply not understand if we would ask for money for answers to questions about marketing, working with the media and blogging. In the USA, the concept of paid consultations is familiar to everyone.
In Russia, I was constantly thinking about how to increase revenue, tested some hypotheses, etc. In general, this is a completely normal and correct business process, however, in the USA such opportunities appear as if from nowhere - including due to a powerful market, large population and openness of people.
For example, we recently launched a new service - we help to promote not only companies, but also private professionals who may need good blogs and media publications, for example, to develop a career or obtain work visas to other countries (the same USA). To start this service, we were advised by one of the customers, who immediately used it.
Everything is much simpler.
The first thing that catches your eye when starting a business in America is how easy it is to launch a new project. I’ll make a reservation that it’s about the start here (the activity itself is far from always so easy, as we will discuss below).
The approach to paper work here is much simpler than at home. For example, I registered the company while still in Russia, and for this I did not have to send any pieces of paper — just scans of signed documents or even a simple photo of them on an iPhone. Almost all documents (although not all) were signed in such electronic form and when applying for a visa. The only moment is that it will not work to open a bank account, for this you will have to go to the office and sign the papers yourself.
Getting started with a new client also looks very simple. For this, even a verbal agreement and an electronic invoice in which the paid work is indicated is sufficient. It is clear that in order to avoid problems and disagreements, it is better to sign an agreement that lists all the rights and obligations, but this is optional, but I managed to forget about such a thing as an “act of rendering services” for a year of work in the USA.
Life Strikes Back: Cons of US Business
Everything in life always doesn’t go smoothly, so in addition to the pluses, for a year of work I noticed some disadvantages of doing business in the States. So, here is my personal anti-top of such moments.
Everyone always wants money from you
If you want to feel on yourself what it means to live "under capitalism" - start a business in the USA. You will immediately turn into a wallet with legs for everyone around.
Are you looking for an accountant to prepare the first blank report because you did not have time to start the activity? They will be happy to help you, you just need to arrange a consultation for $ 250 (to answer the question "can you submit a report?").
Lawyers will advise you to seek additional consultations that increase the chances of a successful outcome (but do not guarantee anything) and are conducted based on an hourly rate of $ 300. Lawyers involved in the registration of the company will not fail to offer to issue a separate pool of shares, without which an innovative startup cannot live (“in the future you will be able to give options to employees from it” - very important for a small new business, and for only a couple of thousand dollars).
You are unlikely to receive mail in the United States - most often these are different accounts, especially when it comes to the corporate mailbox. And if half the letters turn out to be the demands of spammers, the second half is all the same various notifications from partners and government agencies, which cannot be ignored.
Interactions with authorities are not always logical
The US state apparatus is quite developed, there are many different departments whose functions are sometimes duplicated up to the point of absurdity. The administrative structure also adds to the headache, in which the US states have fairly broad opportunities to create various rules and laws, including those governing the conduct of business.
Sometimes this translates into seemingly amusing situations that nevertheless require separate efforts and costs. Example - we registered a corporation in Delaware, which is a fairly popular jurisdiction for international startups. However, in the USA, I live with my family in Florida, here we have an office, a corporate account in the local branch of Bank of America, and so on.
It turned out that despite the fact that I already seemingly registered a company in the USA, it needs to be registered again in Florida under the threat of serious fines. The wording is interesting - in Florida there are local corporations (domestic corporations) and foreign corporations (foreign corporations). And a corporation registered in the US state of Delaware will be considered foreign in the US state of Florida. And it must go through the registration procedure with the payment of the relevant fees, the provision of documents from Delaware (where these certificates are also ordered for money) and the obligation to provide annual reports on their activities.
An excerpt about the need to register in Florida from an article on the website of one of the companies registering corporations in Delaware - a clear explanation can only be found on such commercial sites, government resources are extremely uninformative
Another situation is not directly related to business, but it is very revealing. Since I am in the United States on an O1 visa, my wife received an O3 visa and is not entitled to work. Therefore, she is not entitled to a SSN tax number, but she needs it in order to file a joint tax return (US taxes - a topic for a separate article).
Purely theoretically, I could file a return alone, but then I would have to pay more, and families are entitled to various deductions, and in the end it may turn out that you even overpaid taxes and return the difference to you for a year (that's why tax returns are called tax return here ) Our accountant convinced us that his wife still needed to get some kind of taxpayer number. In the US there is a kind of SSN for those who are not entitled to work, it is called ITIN. And its design was a non-trivial quest.
First, it took me to call the Internal Revenue Service, which took a couple of days, then make an appointment during a call with an elderly lady operator who asked each word again two or three times, then, finally, we arrived at the reception for filing Applications for ITIN. And it was at that moment that it turned out that (watch your hands):
- to create a family income statement you need ITIN;
- to get it you need to prepare a declaration of income as if it had already been received (there is no mention of it on the site or elsewhere, even our licensed accountant did not know about it), just filling out the application is not enough, although it’s mandatory ;
- bring an application for ITIN with a printed declaration (despite the fact that usually everything is done online);
- this package of documents will be processed by the IRS and then it will transfer the excessively paid taxes to the bank account and sometime (“within 11 weeks”) the ITIN card itself will arrive in the mail.
To find out all this, I had to spend 2 hours of time, despite the fact that we came clearly to the time of recording - any Moscow MFC will seem like space after the IRS office in Miami.
You can't relax
The USA is the Mecca of capitalism, a real can with spiders and snakes. Almost all niches are characterized by strong competition, everyone is trying to earn their dollar. In general, this is good and moves many industries forward, but such a craving for profit may take not the most pleasant forms. If you relax excessively, it will immediately result in direct financial losses.
A simple example from personal experience - after I registered a company in Florida according to the scheme described above, our corporate mailbox began to fill up very quickly with letters. Apparently, one of the local departments "leaked" the base of recently registered companies to firms that provide them with certain services.
All would be fine, in the end they can offer something useful, but direct marketing in the USA does not look like Russian. If we are all used to picking out bright advertising booklets from the mailbox (and throw them away right away), then in America they are very rarely sent, realizing the inefficiency of such promotion. Instead, local marketers play on the ignorance and fears of potential buyers. To do this, for example, they disguise their advertisements as official communications from the authorities: they use official language, similar to official forms, various phrases like “Urgent! Notification requires an immediate response! ”Threatened with fines.
For example, here is a letter saying that we need to order some stickers / posters that should be placed next to the workplace of each employee:
Each sticker costs $ 84, it immediately kindly indicates that its absence is punishable by a fine of $ 17,000. It looks like a frightening letter from the authorities, but in fact, this is an intermediary company trying to get a new customer to get these stickers for him. At the time of receiving the letter, we had only one employee in Florida - I, he is the owner of the company, and I did not need to receive such a sticker at all.
And here is a letter about the vital necessity of obtaining a certificate confirming the existence of a company (certificate of good standing). There were no threats of fines, they simply listed when and why it might be needed, well, and did not forget to add an officially looking logo to the form:
Such advertising is sent not only to business owners, but also, for example, to car owners or parents. They sent us “demands” to extend the after-sales service of the car or medical insurance for the children of the company with whom we had never had any business. At first, such letters seriously embarrassed me, for example, I almost bought the same stickers for $ 84 - I thought well in time to consult our accountant, who explained to me how everything works here.
After weighing the pros and cons, I can say that I like doing business in the United States more than in Russia. When a country has a real cult of entrepreneurship, it is felt in everything. The United States is not without its drawbacks, sometimes quite significant, but making money here can be much more comfortable without being distracted by solving non-core tasks.
That's it for today, thanks for watching! If you have any specific questions about visas, business, life in Florida - write in the comments or in PM, I will try to answer.