Understanding how the United States is structured as a nation is a basic but imperative step toward successful business operations here. The United States is a federal republic comprised of 50 states and the District of Columbia (Washington, D.C.). The individual states exercise a high degree of autonomy and play an important role in business regulation.
The state governments legislate and administer civil and criminal laws within their jurisdictions and regulate activities such as education, utilities, insurance and state banking.
County and municipal governments, acting within state guidelines, operate public facilities and services such as law enforcement and public safety, clean water and wastewater systems, and local roads. Separate school districts have operational authority over publicly supported education at the local level.
Of particular significance for foreign entrepreneurs is the wide diversity of regulations, services and taxes at the state and local levels, and the competition among various jurisdictions to attract business and investment. Because each of the 50 states makes its own rules, including 50 different tax regimes, understanding the patchwork of state regulations can present challenges. State laws and regulations are transparent and evenly applied within each state. With few exceptions, local bureaucracies work in a cooperative and helpful manner with businesses.
Multitude of markets
Foreign investors often overlook the fact that the United States is really a multitude of local and regional markets, each with different requirements.
- States such as New York, Illinois, California and Texas are richer and larger in geography and population than many countries in the world.
- It may not be obvious to the occasional visitor, but the different regions of the United States have distinctive cultural and economic characteristics. Failure to recognize these can spell failure to the foreign business that assumes the various states and regions are all the same.
- Diverse ethnic populations represent large and distinct markets across the country.
- The overall geographic size of the country presents special logistical challenges in serving and supplying customers.
The regulatory environment
Compared to many countries, the United States is a country of limited regulation, free trade and equal treatment before the law. It is important to understand that the states, counties and municipalities enact many of the laws and regulations affecting business where the company is located or conducting business.
Business formation and direct investment are extremely easy in the United States. The types of common legal entities and the business formation process are described in the business organizations section of this guide.
Many traditional government functions or regulated monopolies, such as public transportation, energy and water supply, have been privatized or opened to competition. This action has led to a substantial growth in private investment, by both domestic and foreign business interests. In most cases, foreign individuals and enterprises are entitled to the same treatment and rights as U.S. citizens, although some state and federal regulations place restrictions on foreign persons and companies in areas relating to national security.
It is always prudent to determine the regulations that apply to your business before making investments or launching business activities.
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