For international startups considering venture capital opportunities in the United States, careful planning will help you make the most of your investment. Planning requires knowledge of federal, state, and local laws, which are highly complex and constantly evolving—making it difficult for international companies to make informed decisions about trading in the US.
As your trusted law firm, the business lawyers at Rooney Nimmo will use their knowledge of financial markets and international securities regulation to help you make the most of your investments. Learn more about how we can assist you in our blog.
How International Startups Can Navigate US Venture Capital Regulations
Before pursuing a venture capital investment opportunity in the United States, foreign businesses need to consider:
- The complicated federal, state, and local US tax codes
- Possible credits and incentives offered at state and local levels
- Geographic location
US Tax Code
In addition to federal tax provisions, a company may also be subject to state and local tax laws, which vary widely. For example:
- State and local income-based taxes exist in more than 40 states, the District of Columbia, and local entities such as cities and counties.
- Franchise taxes on net income, net worth, and gross receipts occur in multiple states.
- Transaction-based taxes exist in more than 45 states, the District of Columbia, and most localities. This is in addition to sales and use taxes.
- Each locality has its own system of property taxes for businesses with a physical presence in that locality.
- States and localities often tax gross receipts.
A business must meet a nexus threshold, or minimum amount of business that must be conducted before the federal, state, or local tax authorities can impose a tax on the company. This nexus threshold varies by state and locality.
Not only are these taxes complicated on a surface level, but they also change constantly.
Tax Credits and Incentives
To spur new business development in their communities, states and localities offer various credits and incentives to offset some of those tax obligations in return for job growth or retention, capital investment in the area, or new technological development.
These incentives come in many forms, including:
- Cash gifts
- Property tax abatements
- Sales tax exemptions
- Utility tax reduction
- Low-cost or interest-free financing
- Expedited permits
- Infrastructure grants
- Fee waivers
- Building reuse or redevelopment grants
- State income tax credits
Regardless of form, these incentives require an application process and documentation. In most cases, the pursuit of these incentives must be initiated before the company’s project in the area begins. Benefits can continue for years or be one-time offers.
Before committing to any of these programs, inbound venture capital investment companies must ensure they can use the benefits they are pursuing. Otherwise, the paperwork involved in the application and documentation process is an unnecessary hassle.
Many states and localities offer additional rewards for physical locations in specific areas. These locales are usually in need of economic development.
Rooney Nimmo Can Assist with Venture Capital Decisions
Rooney Nimmo can help you make the most efficient and intelligent choices for your venture capital investment regardless of your needs. Even if you don’t require our legal advice at this time, we pride ourselves on the quality connections and referrals we can make to guide you through this challenging process. Contact our firm or call (212) 545-8022 today to learn more.