Expanding to the U.S.? Avoid These Costly Errors
For UK startups, expanding to the U.S. is a huge growth opportunity—but it’s also full of potential pitfalls. The U.S. market is bigger, faster, and more competitive, and many British businesses fail simply because they don’t adapt to the way business is done in America.
To help you avoid costly missteps, we’ve compiled the five biggest mistakes UK startups make when launching in the U.S.—and how to do it right.
Mistake #1: Choosing the Wrong Business Structure
One of the first (and biggest) mistakes UK founders make is setting up the wrong business entity in the U.S.
📌 Common errors:
❌ Registering as a UK company doing business in the U.S. → This can lead to double taxation and compliance issues.
❌ Choosing an LLC when you need outside investment. → LLCs are bad for fundraising because VCs prefer C-Corps.
❌ Not incorporating in Delaware if raising U.S. funding. → 90% of U.S. startups and VCs require a Delaware C-Corp.
✅ How to do it right:
✔ If you’re a venture-backed startup, set up a Delaware C-Corp for easy fundraising.
✔ If you’re a small business or agency, an LLC may be a better fit for tax efficiency.
✔ Work with a cross-border expert to ensure the right structure for your business.
Mistake #2: Underestimating U.S. Hiring & Payroll Costs
UK startups often fail to budget properly for U.S. hiring. Salaries, benefits, and employer costs are much higher than in the UK.
📌 Common errors:
❌ Assuming U.S. salaries are similar to the UK. → A £60K salary in London is often $120K+ in New York.
❌ Forgetting about health insurance & payroll taxes. → Employers pay ~20-30% more in payroll costs than just the salary.
❌ Not hiring fast enough → U.S. businesses move quickly, and slow hiring can mean losing top talent.
✅ How to do it right:
✔ Budget at least 30-50% more than UK salary expectations.
✔ Offer competitive benefits—health insurance, bonuses, and stock options matter.
✔ Use a PEO (Professional Employer Organization) if you’re not ready for a full U.S. entity.
💡 Best hiring solution for UK startups? Start with contractors or an Employer of Record (EOR) before committing to full-time U.S. employees.
Mistake #3: Failing to Adapt Sales & Marketing to the U.S. Market
Many UK startups assume their UK sales strategy will work in the U.S.—but the U.S. is a completely different game.
📌 Common errors:
❌ Using UK-style indirect sales. → U.S. buyers expect direct, fast sales conversations—get to the point!
❌ Not spending enough on marketing. → The U.S. is competitive, and scaling requires serious paid ads & outreach.
❌ Ignoring regional differences. → A strategy that works in New York may fail in Texas or California.
✅ How to do it right:
✔ Invest in direct sales—U.S. clients expect cold outreach & high-touch engagement.
✔ Use LinkedIn Sales Navigator + cold email + performance marketing for lead generation.
✔ Understand U.S. business culture—networking & referrals are everything.
💡 Pro Tip: Americans prefer confidence in sales pitches—don’t undersell your product!
Mistake #4: Not Understanding U.S. Taxes & Compliance
The U.S. tax and legal system is complex, and UK startups often get caught off guard.
📌 Common errors:
❌ Assuming U.S. taxes work like UK VAT → The U.S. has no national sales tax—each state has different rules.
❌ Not registering for state taxes in places where you operate.
❌ Forgetting about payroll taxes—which can add 20-30% in extra costs.
✅ How to do it right:
✔ Work with a U.S. accountant who understands UK-to-U.S. expansion.
✔ Choose the right state for tax efficiency (e.g., Delaware for incorporation, Texas for no state income tax).
✔ Set up automated payroll & tax systems early to avoid compliance issues.
💡 Pro Tip: Use U.S.-based bookkeeping tools like QuickBooks, Xero, or Pilot to keep things organized.
Mistake #5: Expanding Too Quickly (or Too Slowly)
UK startups often misjudge how fast to expand in the U.S.—either going too big too fast or moving too cautiously and losing momentum.
📌 Common errors:
❌ Opening a physical office too soon. → Many U.S. businesses run fully remote—avoid expensive leases until you have traction.
❌ Not having a U.S. team or presence. → U.S. clients expect local reps—if you don’t have any, you’ll struggle to build trust.
❌ Spreading too thin across multiple states. → Focus on one or two key regions before expanding nationwide.
✅ How to do it right:
✔ Start with a virtual office or coworking space (e.g., WeWork, Industrious) before committing to a lease.
✔ Build a lean, focused U.S. team—start with 1-2 key hires (sales & operations).
✔ Pick one key state or metro area (e.g., New York, Texas, California) and expand from there.
💡 Pro Tip: You don’t need a full-scale U.S. operation right away—start small, prove traction, and scale.
Final Thoughts: How to Succeed in the U.S. Market
Expanding your startup to the U.S. isn’t easy, but avoiding these common mistakes will save you time, money, and stress.
📌 Key Takeaways:
✅ Choose the right business structure (Delaware C-Corp for funding, LLC for small businesses).
✅ Budget for higher hiring costs—salaries & benefits are more expensive than in the UK.
✅ Adapt your sales approach—be more direct, invest in paid marketing, and network aggressively.
✅ Stay compliant with U.S. tax laws—each state has different rules.
✅ Expand strategically—don’t rush into offices or multiple states too soon.
💡 Need expert help expanding to the U.S.? Canyonstone Partners specializes in guiding UK startups through seamless U.S. expansion—covering incorporation, hiring, sales strategy, and logistics.