How to ensure your organisation is year-end compliant when doing business in the US

Follow these tips to make sure United States compliance matters are addressed in a correct and timely manner to avoid censure or fines.

As the world’s largest economy, the United States (US) has always attracted foreign investors thanks to its stable and business-friendly market. It is the world’s largest recipient of foreign direct investment (FDI), attracting around 20% of global FDI – almost double that of its nearest rival, the UK.

US compliance regulation is strict and regulators expect information to be provided in full and on time. Tax and compliance issues can be complex and play a significant role when doing business in the US, as do anti-money laundering regulations (AML). Here is a compliance checklist to follow so your business is year-end compliant when operating in the US.

1. Ensure you have complied with both IRS and state tax laws

The US tax system can be extremely complex, with several layers of deductions, exemptions and limitations added or modified every year. The federal tax system is administered by the Internal Revenue Service (IRS), while state income tax and sales taxes are administered by each state’s tax authority. This means that each state operates a separate tax system on top of nationwide federal levies. Some counties or municipalities also charge their own taxes. Know what jurisdiction your business operates in and how taxes need to be paid. Make sure these are paid fully and on time.

2. Be aware that your business may be subject to a number of different forms of taxation

In the US all companies are subject to both federal and state corporate tax. Dividends are taxed in different ways depending on the length of time shares have been held.

In terms of employer duties, US employers usually withhold income tax from an employee’s wages and send it to the IRS on their behalf. The US taxes its citizens and tax residents on worldwide income. Failure to comply with withholding tax rules can mean a business incurs significant penalties.

If your business is selling goods, it will be subject to state sales tax rules. Each state authorises and imposes its own sales tax on goods sold to residents. The federal government applies excise taxes to some goods and activities, such as air transportation, vehicle fuel, tobacco, alcohol, firearms and sporting goods.

All of these federal and state corporation tax liabilities need to be accounted for and paid by specific deadlines.

3. Keep up-to-date with anti-money laundering (AML) legislation

Incorporate AML risk assessment into every aspect of running your business and make it part of your due diligence. This is important and also applies when acquiring new assets and businesses. Being compliant with the latest AML regulation can prevent you from incurring reputational risk and even prosecution.

AML legislation in the United States and Europe is constantly evolving and it is important to be aware of any legislative changes in order to manage risk and reputation effectively. A local partner can advise you on the changes you may need to make to comply.

4. Review your marketing communications

Review your marketing literature to ensure it meets all the standards and disclosures required. This means you should review information on websites, social media and other avenues of distribution to make sure it is accurate and complies with regulations. You will need to keep copies of all direct and indirect marketing material.

5. Complete year-end compliance reporting obligations

In many cases, your business may be required to submit an annual report and disclose any changes to your business structure. Additionally, your business licence will need to be renewed periodically. Each US state has its own set of regulations that must be followed while doing business within it.

In addition, if you have opened a new office or hired staff in a new state you may need to register for taxes, obtain a certificate of authority or become licensed in new jurisdictions. Most states will require companies to hold an annual meeting with their shareholders.

How Intertrust Group can help in the United States

The support of a local partner is essential to navigate the maze of legal, tax, regulatory and administrative complexities of the US state and federal business compliance system. Contact us to see how we can help you run a compliant business in the US.

Why Intertrust Group?

• One of the largest administrators in the market, established for more than 30 years
• We provide corporate and fund services to domestic and international entities across all 50 states
• We can manage complex regulatory and reporting requirements at both the federal and state-level
• We can look after every aspect of your executive compensation plan and payroll administration to ensure your employees are paid correctly and on time