Do You Need a US Entity to Expand to America? (Spoiler: No)

Do You Need a US Entity to Expand to America? (Spoiler: No)

Here's a question we hear constantly from international companies: "Do we need to form a US entity before we can start doing business in America?"

The short answer? No.

The longer answer? It depends on your goals, timeline, and risk tolerance—but thanks to Employer of Record services, you have options that didn't exist a decade ago.

The Old Way: Entity Formation First

Traditionally, international companies entering the US market followed a rigid playbook:

1.      Form a US entity (LLC or corporation)

2.      Navigate state and federal compliance

3.      Set up banking relationships

4.      Establish payroll and HR infrastructure

5.      Finally, hire employees and start operations

This process takes months, costs tens of thousands of dollars, and requires significant legal and accounting expertise.

Worse? If the market doesn't work out, you're stuck with an entity that requires ongoing compliance, tax filings, and administrative overhead—even if you're not generating revenue.

The New Way: Employer of Record Services

Our Employer of Record (EOR) services flip the script entirely.

You can hire US employees and operate in the US without forming your own entity.

Here's how it works:

·         We become the legal employer of your US team

·         We handle all HR, payroll, benefits, and compliance

·         You direct the work and manage day-to-day operations

·         You test the market without massive upfront investment

It's the perfect solution for companies in early expansion stages or those testing market viability before committing to permanent infrastructure.

When EOR Makes Perfect Sense

✓ Market Testing: You want to validate US demand before making a major investment.

✓ Speed to Market: You need to be operational in weeks, not months.

✓ Limited Initial Team: You're hiring 1-5 employees to start.

✓ Multi-State Operations: Your employees are spread across different states (each with unique compliance requirements).

✓ Risk Mitigation: You want to minimize financial and legal exposure during early expansion.

✓ Focus on Core Business: You'd rather spend time selling and serving customers than managing HR compliance.

When You Might Want Your Own Entity

EOR isn't always the long-term solution. You might want to form your own US entity if:

·         You're scaling to 10+ employees

·         You need to own US assets (property, inventory, equipment)

·         You're establishing permanent US headquarters

·         You have significant US revenue and want to optimize tax structure

·         Your industry requires entity ownership for licensing or contracts

The good news? You can start with EOR and transition to your own entity later. Many of our clients begin with EOR services, validate the market, and then we help them form their own entity when the time is right.

Real-World Example: Steelbox

Italian furniture manufacturer Steelbox wanted to enter the US market but wasn't ready to commit to full entity formation. They needed local support for importer identification, installation management, and logistics—but didn't want the overhead of a US entity.

Using our operational support services (without entity formation), Steelbox:

·         Secured 3 US importers

·         Achieved 30% cost savings on logistics and installation

·         Tested the market without legal entity risk

·         Maintained flexibility to scale or pivot as needed

When they were ready to expand further, we helped them evaluate entity formation—but only after proving market demand.

The Bottom Line: You Have Options

The question isn't "Do we need a US entity?" The real question is: "What's the smartest, fastest, lowest-risk way to enter the US market?"

For many international companies, the answer is starting with Employer of Record services—then forming an entity when it makes strategic and financial sense.

Not sure which path is right for your company?

Schedule a free 60-minute consultation with Forwell. We'll assess your specific situation and recommend the approach that gets you operational fast while minimizing risk.

Book a Free Consultation