When planning on opening an office in the US, there are several things you should anticipate before making the move. Differences in corporate tax rates, paid leave for employees, and contractual obligations will affect how you adapt your business operations in this new setting.
If you are looking to set up a US business but currently reside in the UK, talk to a lawyer at Rooney Nimmo to ensure you know your rights and legal obligations. Please call our New York firm at (212) 545-8022 for further assistance.
Similarities and Differences Between US Businesses vs. UK Businesses
The basics of operating a business in the US and UK are largely the same. However, there are several nuanced differences to be aware of as you find your footing as a US employer.
At a business in the UK, workers operate on an employment contract either provided in writing or verbally agreed. While terms of the contract are not always explicitly written into the agreement, they are provided either in the official offer letter from the employer, an employee handbook, or required by law, such as being paid at or above the National Minimum Wage.
In the US however, workers are mainly employed on the basis of “at-will,” which means that both parties are free to terminate the working relationship at any point without notice.
This flexibility makes it easy for a worker to leave a business and equally simple for employers to let employees go. While requiring a notice period may benefit business owners, it works in the employer’s favor to terminate an employee at will.
Corporate Tax Rates
For the first time in many years, UK businesses and US businesses pay a similar corporate tax rate.
Federal corporate income taxes in the US were recently lowered to 21% (which doesn’t include various state corporate taxes that range from 0 to 11.5%).
The UK corporate tax rate is historically lower than the US’, at 19% as of 2021. However, the UK is set to raise its corporate tax rate to 25% in April 2023.
Businesses operating in the US typically pay less holiday leave to employees than those in the UK. In the US, it’s customary for most companies to offer two weeks of paid vacation time per calendar year.
With employees increasingly working from home, some US businesses are beginning to offer unlimited paid time off (PTO). Unlimited PTO means employees are entitled to take unlimited vacation days as long as the work gets done.
In the UK, businesses are required to offer workers a statutory minimum of roughly 5.6 weeks of paid holiday per annum. This usually encompasses bank and other public holidays.
When operating a business in the UK, employers must be prepared to offer workers a minimum of 26 weeks off for ordinary maternity leave, with a potential extra 26 weeks off for additional maternity leave. In the UK, employees on maternity leave receive Statutory Maternity Pay (SMP) for up to 39 weeks.
If you are setting up a business in the USA, you are only required to provide employees with 12 weeks of unpaid maternity leave if your company has 50 or more employees. Some employers may choose to provide benefits to their employees that include paid maternity leave.
Starting a Business in the US? Rooney Nimmo Can Assist You
If you are a UK business inbound to the United States, Rooney Nimmo’s attorneys can help simplify the process for you. With offices in New York, San Francisco, Edinburgh, and London, our corporate lawyers understand the nuances of establishing a new business in the US. As your trusted advisors, we can ensure you are fully compliant with all regulations and professionally acclimatize to your new work location. Contact our firm today for a consultation.