Two challenges that Irish companies sometimes experience when preparing to export to the United States for the first time involve banking and employment. The following pointers will help you to prepare.
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All US banks require an Employer Identification Number (EIN) confirmation letter, also known as Form SS4, before opening a business account in your company’s name.
How to apply for an Employer Identification Number
You can apply for an EIN online on the Internal Revenue Services website, if you already have a US social security number (SSN), or an individual taxpayer identification number (ITIN).
If you don’t have an SSN, you can apply for an EIN from the IRS by fax or have a lawyer act as a ‘third-party designee’ to prepare and process an EIN application on your behalf.
If you have an EIN
Some banks will accept a copy of a fax from the IRS assigning your business entity with an EIN. Others will need to see the EIN verification letter sent by the IRS, which can take weeks to arrive.
Most banks will also require a copy of the company’s formation documents – US business address and annual statement of officers and directors.
To comply with mandatory anti-money laundering legislation, US banks need to verify the identity of those opening business accounts under Know Your Customer (KYC) rules. There are several ways the requirement can be met:
- Get a visitor visa to travel to the US and personally open an account at your bank of choice
- Use third-party services to help you set up an account
- Some banks will set up an account without the relevant corporate officer being in the United States. If acting on a referral from a legal representative, the process can be completed via email.
Irish companies should carefully plan their approach to hiring personnel in the US as there are a number of potential pitfalls to be aware of. For example, if you hire someone as a consultant or independent contractor, it could later be determined that they are actually an employee under US law. Improper classification risks exposing a company to penalties and liabilities, including the withholding of taxes, benefits, and the possibility of being sued by the employee.
Laws governing US employment and benefits are complicated, which makes it vital for potential exporters to seek the advice of legal professionals.
As US benefits packages vary widely and differ significantly from those in Ireland, companies should seek advice on what employees in specific roles are likely to expect when considering a job offer.
For small companies using a lawyer or legal service provider for help with company formation and setting up, fixed fee packages in the range US$3,000 to US$5,000 are available. Packages usually include general counsel, registration fees, and the creation of incorporation, confidentiality agreements and stock issuance.
In general, you can expect to pay additional fees for operating and shareholder agreements, as they can be highly complex. While legal assistance with IP transfers can also be costly due to complexity, many Irish companies keep IP rights within the Irish parent, with the US entity established as a servicing company.
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