If you are planning to set up a business in the US, choosing a business location is perhaps the most critical decision you will make. It involves looking at demographics, assessing your supply chain, scoping the competition, staying on budget, understanding state laws and taxes, and much more. Luckily, you do not have to incorporate your business in the same state in which it is physically located.
When a US resident plans to set up a new business, they will likely end up setting up where they live. The non-resident looking to come to the US to set up a business has the ability to set up a business in any state they desire. How to choose a state in which to start can be complicated.
When people refer to the United States of America, they mainly refer to the 50 States, plus the District of Columbia. For an entrepreneur or business coming to the US, it is best to think in terms of states, since to set up a business here you must choose a state in which to set up the business, and a state in which to incorporate the company. The states are quite a mix, ranging in size from tiny Rhode Island to massive Alaska, in population from California (highest, with almost 40,000,000) to Wyoming (smallest, with less than 600,000).
This selection should be one that fulfills business objectives in the most cost effective way, and as such is a trade off between cost and quality factors. At the outset, a company needs to identify which factors are the key drivers in the location choice – is it access to market? Availability of skilled labor? Transport infrastructure? Most likely it is a combination of all these, and others. By working through this issues, a set of quantitative and qualitative data points can be developed.
Typically, a non-resident-owned US company will benefit from:
#1: Easy access to international flights
#2: Healthy market for expansion (population, education levels, access to banking services and capital, infrastructure)
#3 Innovation and business birth rates are high while there is a lack of entrenched economic dominance
#3: Incorporation fees are low to moderate, fast set up time, minimal information requirements
#4: Administrative burdens on a company are relatively low
Furthermore, a non-resident-owned US company will want to avoid:
- Lack of or poorly-maintained infrastructure
- Excessive cost of living
- Bad environment
- Historical Baggage
- Anti-Immigrant prejudice
A robust corporate location process involves using a range of primary and secondary data sources, starting out with a “long list” of states or cities, and through robust and logical analysis identifying 2 – 3 cities that meet the criteria. At this point, a company should visit these locations, talk to similar companies, government officials, and even recruiters, to understand which city is the right “fit” for them.