legal advice for setting up your business in the United States
(Partner Article) You know it, and not just because we often tell you on French Morning: conquering America is getting ready. A solid strategy, a suitable team and the following funding are key. But there is one element that the majority of French entrepreneurs underestimate: legal preparation.
How many American dreams have ended in distaff with a return ticket for only perspective? A French lawyer based in New York, member of the New York and Paris bars, Pascale Longuet is used to supporting French companies in the United States. From this 25 years of experience, she drew these 5 basic tips to guide a successful establishment in the United States.
1. Choose the right legal form
Usually the choice is between the "Corporation", a limited liability company, and the "Limited Liability Company" or "LLC". The LLC is a hybrid form of entity that combines the limited liability of its members with the tax transparency of "partnerships". There is no taxation at the LLC level, but at the member level. The choice of structure must be made according to the envisaged project and the particular situations of its partners, and in full knowledge of the necessary procedures and costs. The creation of an LLC must in some states, including New York, be the subject of a publication, which considerably increases its cost. In addition, it is often appropriate in the presence of an LLC to establish a contract between its members, or "operating agreement" which combines both the contents of the articles of association, and the elements found in shareholders' agreements. in "corporations" (administration of the company, provisions applicable in the event of transfer of interest shares). Establishing this contract can be costly.
2. A Delaware corp, or not ...
The reputation of the small east coast state has long crossed the Atlantic, to the point where many newcomers arrive convinced that the only smart solution is to open a business in Delaware. However, notes Pascale Longuet, “while this is hardly debatable for large companies, for tax reasons in particular, it is not necessarily the case for small investors. If your business is going to be based mainly or only in New York, opening in Delaware is of little interest, for example ”. Here again, the key is to have a clear idea of the short and medium term goals and to take the advice of a specialist.
3. Become contract obsessed
The French, used to collapsing under laws and regulations, sometimes tend to imagine that they can do business in the United States without constraint. "However, notes Pascale Longuet, it is essential to understand that the counterpart to this relative absence of the State is the omnipresence of contract law - and of litigation." In short, there is no business in the United States without the need to draw up a contract very quickly. “Too often I hear: you just have to find a model on the internet. This is the recipe for almost certain disaster! " This is the reason why the lawyer is the essential companion in the business life. “By taking care in drafting contracts, we anticipate, we foresee”. And so we avoid as much as possible litigation, its uncertainty, but also often very high fees.
4. Choose the right American partners
Again, only advanced strategic thinking will allow you to come up with the right answer. With the help of a lawyer, you will need to understand all the legal requirements and the differences between, for example, a "distributor" and a "sales agent". You will also have to decide on a possible exclusivity, the number: for example, a single distributor for the whole country is not always wise; rules will need to be established to resolve potential conflicts between multiple distributors or agents. Here again, beware of received ideas and even of the responses of those who have gone ahead: the solution is necessarily tailor-made. There is, in the United States even less than elsewhere, no magic formula that would apply in all cases.
5. Don't neglect intellectual property
This must be one of the priorities of the company setting up in the United States: the filing of trademarks, patents and other rights. This doesn't just hold true for tech companies and other innovators. Trademarks, slogans, logos must also be protected. If, for example, you start to exploit a trademark and it turns out to be already "copyrighted", you will have no choice but to start from scratch. Your marketing expenses will have been wasted.
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