Setting Up a Business in USA? Be Ready to Face Challenges
Though the different American states are very business friendly. Especially they facilitate foreign investors. But there might be a few challenges that you have to face when setting up a business in the United States.
In order to have a better understanding of these intricacies, we will examine two cities, Los Angeles and New York, as examples of the various difficulties that are encountered by companies:
1. Obtaining Electricity and Handling Issues Relating to Construction Permits
In New York City, the process of obtaining a construction permit can take up to 89 days on average, and there are 15 different steps that need to be taken.
Some of these steps include submitting the zoning schematics, getting permits to connect to the sewer, getting permits to occupy the space, and getting permits to do work from the department of transportation.
It takes an average of 68 days to get a construction permit in Los Angeles, which involves 17 different stages. This is a significantly faster process than in other cities. On the other hand, the costs that are linked with it can sometimes be rather substantial.
The fee for the review of the building plans and the permission is $48.646 USD. The process of getting the water connection can take up to 42 days and cost more than $3,000 USD, while the process of connecting the power can take up to 134 days.
2. Registering Property
The process of registering a property in New York City typically takes around a week and a half. The first two processes, which consist of getting a title report and conducting an environmental review, are carried out by private businesses.
In contrast, the final two procedures, which consist of recording the title and transferring the forms, are carried out by a governmental body.
The process of registering a property in Los Angeles takes a total of five steps and twenty days. The most time-consuming step, which can take up to two weeks to complete, involves hiring a third-party business to carry out a number of environmental assessments before the title insurance policies can be issued.
USA Visa Problem?
Many would like to know if it is difficult to get a business visa for the United States. Well, it is not difficult to get a business visa for the USA as the different states have business laws to facilitate non-resident businesses.
According to the World Bank, it is not difficult to obtain credit in either of these cities, which tied for second place in this category. The capital market in the United States is the most developed and mature in the world.
It has stringent rules and regulations that safeguard the interests of both borrowers and lenders. Because of the regulations that surround collateral and bankruptcy, borrowers are now able to provide security against a loan in a setting in which the duties and responsibilities of all parties are clearly defined and safeguarded.
4. Providing Safety for Investors
The United States achieves a high ranking in investors’ protection with a robust regulatory environment, ranking on par with other OECD countries such as Germany and the United Kingdom.
Clear shareholder rights and several avenues for redress are guaranteed by the rules that govern corporate transparency, which also contribute to the reduction of the potential for abuse.
The aim of the Securities and Exchange Commission (SEC) is to safeguard investors and make investment more accessible by ensuring that markets are both competitive and subject to appropriate oversight.
5. Paying Taxes
The United States of America has a convoluted system of federal, state, and municipal taxes, and the Internal Revenue Service is notorious for strictly enforcing these regulations. As part of the tax overhaul that took place in 2018, new regulations have been issued for both corporations and individuals.
The new framework and the companies’ newly imposed obligations are still being evaluated by the companies and their counsel.
Among the reforms implemented were a reduction in the corporation tax rate from 35% to 21%, the adoption of a territorial taxation system, a reduction in the transition tax rate from 8-15%, and the imposition of a cap on the interest deduction that was equal to 30% of annual earnings.
The market is feeling the effects of all of these shifts, but we don’t yet know the full extent of those effects. Check out these best business ideas in India.
6. Business Across National Boundaries
The United States is ranked 36th in the ease of trade across borders, which is significantly lower than the average of 68.71 for the region. The United States has two trading partners on its borders, Canada and Mexico, and the regulations governing each border are distinct.
Recent negotiations resulted in the replacement of the North American Free Trade Agreement (NAFTA) with the United States-Mexico-Canada Agreement, abbreviated as USMCA.
During the renegotiation, one of the primary emphases was to assure the preservation of intellectual property as well as labor and environmental rights. Another primary focus was on striking a balance between the competing interests of the agricultural and automotive industries.
7. Putting Contracts Into Effect
According to research published by the World Bank in 2018, the United States is at number 16 for contract enforcement. This is due to the fact that it can take up to 370 days to file & serve (30 days), trial and the judgment (240 days), and enforce the judgment (100 days), whereas the worldwide best is 164 days.
Legal action, or the fear of legal action, is a typical approach used in the United States to resolve disagreements between companies or individuals. The United States market is known as a very litigious market.
The legal system in the USA is founded on English common law. This law is implemented both at the state and federal levels. The federal level is the more powerful of the two.
8. Resolving the Financial Impasse
According to the most recent assessment from the World Bank, the United States is ranked third in ease of resolving insolvency. Only one year is required to complete the procedure, which is much less time than the area average of 2.9 years.