Anyone sell a service to the United States?

[AllUpHere]

Thinking of offering my services to clients in the US. With Brexit looming I quite like the idea of a chunk of my income coming to me in USD.

Anyone think of anything I need to consider? Tax implications? How to accept payments? limitations of any kind? Any rules or regs I should be aware of?

As a bit of background, I'm currently a UK sole trader, registered for VAT, and expect to generate sales in the US of no more than a couple of hundred thousand USD per year.

Thoughts very gratefully received.

 

[The Byre]

It's a very different culture to the UK way of doing business. For example, if a US business asks for a specific thing, they expect to get EXACTLY that an not something almost as good. And if they state 'delivery by 2pm EST, at 2:05pm the delivery may easily be rejected. By 2:30pm it definitely will be rejected.

I don't do the financials here, so tax and payment questions are best answered by someone who knows!

 

[Peter Bowen]

I have clients in the US and in other countries. I accept credit card payments via Stripe (I've also accepted payments by PayPal and a few other payment processors in the past). The process is smooth, but, there is a limit to what can be charged on a card. I typically charge less than $1000 per transaction.

Stripe bills my clients in USD and transfers GBP to my UK account. In the past I tried to reconcile every transaction for the exact exchange rate on the day. That was close to impossible. My accountant suggested that I record just the GBP income as it arrived instead of trying to do the calcs. That's saved a load of trouble and still gets to the same answer at tax time.

I'm in a service business (Google Ads) so I haven't had experience with delivery that @The Byre refers to. My US clients are no more tricky or demanding than clients from other countries.

Happy to answer more specific questions.

 

[Deleted member 59730]

Golden rule. Payment in advance.

 

[NickGrogan]

Where in the US?

New York is very different from New Orleans.

 

[AllUpHere]

Where in the US?

New York is very different from New Orleans.

I'm just realising how relevant that question is. It would seem that rules and regs need to be considered on a state by state basis. The honest answer is, I don't know. Until today I hadn't even considered it as an option. Now, I haven't got much further than wondering if selling my services to a US market is a good idea.

 

[NickGrogan]

Banking

Rules and regulations for opening a bank account as a business in the US varies in each state, but you will be expected to file a SS-4 form to get a US tax ID number (EIN). A W8/W9 form is also required along with additional documentation. This is one of the more complicated aspects of expansion and is often taken care of by a US-based lawyer. It’s also worth discussing with your UK bank if they partner with an American bank.

Taxes

When you expand a business to the US, you’ll also be paying US taxes. Each state sets its own rate
of tax, so they will vary depending on where you set up as well as factors such as legal structure and earnings. This is a complicated area so always utilise a CPA or Tax Accountant to make sure that your business is compliant both in the US and your home country.

Contracts

Companies should be very careful when engaging in contracts with US clients: clauses and provisions that may appear like boilerplate around, for example, fee-shifting, venues and disputes, can contain hidden dangers and mistakes here can be costly. In the case of nonpayment, for example, while a fee you are attempting to recover may only be in the low tens of thousands, attorneys’ fees for collection could end up well in excess of that, rendering pursuit pointless. In New York, you don’t get your fees unless there’s a contractual or statutory basis for their collection.
Venue provisions are also important to note. In one case, a European client of ours agreed to the Middle District of Florida as a venue for legal recourse and ended up at a huge disadvantage against their adversary, which had employed a good percentage of the townspeople and were blessed at trial by a jury perhaps predictably unfavorable to the overseas client. Throw in the expense of local counsel and travel back and forth to Florida, and a provision that once seemed meaningless ends up being a story you wish wasn’t yours to tell.

"borrowed" from an RDLC USA Recruitment guide by Gary Goldsmith

You can get a copy here

https://landing.rdlcpirates.com/USA-ebook/nyc-form-download.html

A lot of the content applies to non recruitment companies too.

 

[Chris Ashdown]

Need to check you country of origin as China goods are subject to high import duties as of the 1st November on many items

 

[AllUpHere]

Need to check you country of origin as China goods are subject to high import duties as of the 1st November on many items

Thanks Chris but I will be selling a service, not a product so I'm safe there.

 

[TargetICT]

You shouldn't have much of an issue since it's services.
For Payments Stripe works well internationally, I've heard of Payoneer but haven't used that, Transferwise too.

 

[AllUpHere]

You shouldn't have much of an issue since it's services.
For Payments Stripe works well internationally, I've heard of Payoneer but haven't used that, Transferwise too.

Thanks. That's what I'm hoping.
Essentially, I will be offering a similar service to the one I offer over here (marketing consultancy etc).

I won't have a presence in the US, won't employ and US staff, and won't even need to visit. I'll just start to advertise my services over there. I'm hoping I could simply invoice clients, get them to transfer funds, and do the work.

 

[Stickershock]

I took notes of a lecture given by a Scottish lawyer at the University of Edinburgh Business School. He has worked in the States for years, and gave advice for anyone selling in the US. I can't post a link here (not enough posts) - but here is the address - twiglink dot com/sellusa

 

[Tihbtlrmvc]

I followed this path and it was a disaster.
I insisted on part payment up front to cover all expenses. I sometimes did all day flights and then went to the office some times, flew back to have to beg like a criminal to be let back in and go to bed, ended up with unpaid invoices and a legal tangle that is simply not tenable. On top of all that the money I did receive had huge stoppages in terms of charges from my bank for the currency change.
Don't get me wrong I love the US and the good stuff outweighs the bad big-time in terms of the people, but they have NO special relationships, in fact they laugh about it and they hate paying, just like everyone else. Also they are paid a lot more than us and live a hell of a lot better, think of a price and double it.

 

[AllUpHere]

I followed this path and it was a disaster.
I insisted on part payment up front to cover all expenses. I sometimes did all day flights and then went to the office some times, flew back to have to beg like a criminal to be let back in and go to bed, ended up with unpaid invoices and a legal tangle that is simply not tenable. On top of all that the money I did receive had huge stoppages in terms of charges from my bank for the currency change.
Don't get me wrong I love the US and the good stuff outweighs the bad big-time in terms of the people, but they have NO special relationships, in fact they laugh about it and they hate paying, just like everyone else. Also they are paid a lot more than us and live a hell of a lot better, think of a price and double it.

Thanks, although I think my plan to work from home and just sell a service to US clients will probably avoid a lot of those problems.

 

[Deleted member 59730]

I think my plan to work from home and just sell a service to US clients will probably avoid a lot of those problems.

Prepare for phone calls in the middle of the night. My experience is that many Americans have no idea that there are other time zones.

 

[AllUpHere]

Prepare for phone calls in the middle of the night. My experience is that many Americans have no idea that there are other time zones.

Thanks, but that's one benefit I am hoping to take advantage of. Working outside of normal UK hours is how I plan to give this a go without cutting back on my UK clients.