Our clients span the globe and their needs are vast, as are our services. Below are just some of our clients both domestic and across the ocean…
Domestic Companies
Many U.S. based companies have long realized that globalization is not just the means of business expansion but a new reality in which businesses will exist. Whether buying from overseas or selling to foreign customers, cross-border business planning has already become part of the legal and financial planning routine for companies of any size.
NBAC has developed expertise in the following areas of business and tax planning for doing business abroad:
- U.S. taxation of overseas operations
- Understanding of source rules for income and deductions
- Tax Treaties and foreign tax credit
- Unique foreign taxable entities
- Payroll for employees working abroad
- Accounting principals and methods
Foreign Companies
The United States has a long history of welcoming investment from abroad. The US industries that have attracted most attention from foreign investors are manufacturing, information technologies, mining, utilities, and construction. Below are some valuable points for foreign entrepreneurs coming to do business in the United States to consider.
The United States has a long history of welcoming investment from abroad
A non-U.S. person can usually establish a U.S. subsidiary or branch without substantial control or review by any federal, state or local governmental authority in the U.S. There are only a few exceptions in certain sensitive areas and highly regulated businesses.
Foreign investors in the U.S. enjoy the same flexibility in financial arrangements as U.S. nationals.
There is no need to obtain formal approval from financial authorities to set up a company in the U.S.
Foreign exchange controls are generally absent.
The non-U.S. investor is generally free to make any desired arrangements for financing the U.S. enterprise. There are no requirements to register the investment of foreign equity capital or loans.
Interest and royalty rates charged to the U.S. company may be freely established, although they will be scrutinized by U.S. tax authorities. There are no registration requirements as to transfer of technology agreements.
The foreign-owned U.S. enterprise may freely remit U.S. profits abroad, and its owners may freely repatriate their equity or debt capital investment. Dividends, interest, royalties and service fees may also be freely repatriated, although such payments may be subject to U.S. withholding tax of 30% or a lower treaty rate, if applicable.
Industries
Technology
Technology today is revolutionizing the way people conduct themselves socially and in business.
Smaller companies take full advantage of globalization, outsourcing and advances in technology. This leads to increasing role of tax planning and compliance in a business model of these companies.
Considering the size of the industry, it’s growth rate around the globe, and cross-border nature of the business, it becomes evident that proper accounting standards, valuation methods, transfer pricing considerations and corporate structuring represent a vital part of strategic business planning.
The U.S. is the world leader in information and communications technology (ICT) products and services, representing almost 30% of global spending. Over 60% of largest 100 software companies in the world are U.S.- based.
Greater Washington has become a hub for business, science and technological innovation and is the prime location for firms seeking to provide goods and services to the federal government. For 13 consecutive years, the Greater Washington region has the largest number of fastest-growing private companies in America, according to Inc. Magazine. This year, the region had 48 area companies on the 2012 Inc. 500 list. Over 1000 foreign-owned firms from over 50 countries found their home in the area.
Biotechnology
Today, biotechnology is used in four major industrial areas: crop production and agriculture, environmental uses, non-food use of plants (such as biofuels) and healthcare. The industry within the last 5 years has seen a significant influx of capital into their firms due to their cutting edge technologies, the mapping of the human genome and a wave of new biologic drug product approvals by the FDA.
For the young biotech just starting up, capital is acquired through seed money from venture capitalists and private investors. Once a firm has a promising new product candidate, it may team up with a major pharmaceutical or biotechnology company. The large company will provide capital in the form of up front fees, R&E funding, milestone payments after each phase of clinical trial, and royalties in return for receiving the marketing rights to the product once it is commercialized. The larger partner often provides needed production facilities and sales organizations as well for new product launches in return for the marketing rights under various licensing agreements. Many of the approved biotech products in the marketplace today have been developed through this process.
The industry uses standard U.S. accounting GAAP. Foreign Controlled Companies may use Organization of Economic Community Development guidelines for their transfer pricing policies. They may also follow International Accounting Standards (IAS), which has been gaining more recognition lately.
Import-Export
Export finance is an integral part of international business planning. If the U.S. government resources are properly utilized, a company could significantly increase sales, extend credit to international buyers, and obtain working capital.
Therefore, accountability, internal control, proper financial reporting and tax compliance are some of the most critical financial responsibilities of companies with ambition to grow their business worldwide. Small Business Administration (SBA), Ex-Im Bank, United States Trade & Development Agency are only some of the U.S. government agencies that could be detrimental to business expansion internationally. Ex-Im Bank, for example, supports purchases of U.S. capital goods and related services by guaranteeing or insuring loans to international buyers. In some cases, they also provide direct loans to buyers. Ex-Im Bank will support up to 85% of the contract amount (depending upon U.S. content) after a cash payment of at least 15%.
Nonprofit
Whether arranging international student exchanges, assisting victims of foreign disasters, or influencing policy between nations, international nonprofits based in the United States are expanding the interaction of Americans with people, places, and ideas from around the world.
The nonprofit sector generally refers to all formally organized U.S. tax-exempt organizations. Nonprofit status is a state law concept and may make an organization eligible for certain benefits, such as state sales, property, and income tax exemptions. Although most federal tax-exempt organizations are nonprofit organizations, organizing as a nonprofit organization at the state level does not automatically grant the organization exemption from federal income tax. To qualify as exempt from federal income taxes, an organization must meet requirements set forth in the Internal Revenue Code.
Loose and diverse definitions of international organizations, lack of a comprehensive and mandatory reporting system for international organizations, and rapid increase in number of organizations operating internationally contribute to the difficulty of administrative and financial management of such organizations.
Sports & Entertainment
The sports industry is one of the largest and fastest growing industries in the United States. A Street & Smith’s Sports Business Journal annual survey by the size of the industry estimated the sports business industry last year at 3 billion. It is far more than twice the size of the U.S. auto industry and seven times the size of the movie industry. Video gaming is only a small fraction of the size of the sports industry, yet its 28.4% annual growth in 2007 makes it a frontrunner of the entertainment industry. The Entertainment Software Association announced that total sales for 2007 were .85 billion, with .5 billion of that spent on games (both PC and console) and .35 billion on consoles.
Accounting, tax and financial reporting issues in these industries vary tremendously. Whether domestic or international, corporations or individuals, driven by high profits and fast revenue growth, all business entities require consistent financial work-out that help develop financial management discipline, significantly reduce taxes, and entrench winning payout arrangements.
