Expanding into the U.S. market is an exciting opportunity, but it can quickly become a costly misstep without a solid understanding of taxes, tariffs, and legal entity formation. In a recent episode of the Belly2Belly podcast, Sonia Kanjee, U.S. CPA and cross-border tax specialist from BRDG, offers invaluable guidance for international companies eyeing U.S. growth. Her insights cut through the confusion surrounding LLCs, C-Corps, and new tariff implications—just in time for a major regulatory change taking effect.
When and Why to Form a U.S. Entity
Sonia’s guidance on timing is both practical and strategic. She encourages non-U.S. companies to begin selling into the U.S. from abroad. But once revenue from the U.S. reaches around $500K—and certainly by $1M—forming a U.S. legal entity becomes critical.
As for what to form, the answer is clear for most non-U.S. founders: a Delaware C-Corporation. Despite the popularity of LLCs, Sonia warns that LLCs create unintended tax consequences for non-U.S. owners, including personal U.S. tax filings and multi-tier compliance. A C-Corp, by contrast, ring-fences U.S. operations and aligns with tax treaties, enabling smoother profit repatriation.
A Cautionary Tale: Asking the Wrong Advisors
Too often, founders make entity decisions based on advice from the wrong sources. Sonia tells of one founder who set up an LLC in Florida on the recommendation of a logistics provider—leading to three layers of tax filings and unnecessary costs.
Her message is simple and direct:
“Would you ask for medical advice from your nutritionist? Probably not. So if you’re thinking about setting up your structure, you should talk to a lawyer or a tax person instead of your third-party logistics provider.”
It’s a reminder that the right guidance from the right experts makes all the difference.
Tariffs, the End of De Minimis, and Margin Survival
One of the most urgent updates Sonia brings is about the end of the $800 de minimis tariff exemption on August 29. With this gone, even the smallest imports will be taxed—upending the economics of drop shipping.
Sonia outlines a smart workaround: establish a U.S. entity that imports at manufacturing or wholesale prices rather than retail. This change can dramatically reduce the tariff burden and help brands protect margins while remaining price competitive in the world’s largest consumer market.
Follow the Leaders: What IKEA, Adidas, and Stripe Have in Common
Sonia closes with a striking example: global leaders like IKEA, Spotify, Adidas, and Stripe all chose to form Delaware C-Corps when expanding into the U.S. With access to elite legal and tax counsel, these companies set the gold standard. If you’re going against that grain, Sonia suggests, you’d better have a very compelling reason.
Listen to the full interview with Sonia Kanjee on the Belly2Belly podcast to learn how to get your U.S. expansion strategy right—before it costs you.
Additional Resources
For more on this topic, we suggest reading Going Small to Grow Big: The Power of Focused Growth Strategies.
About
MEET helps international B2B & B2G companies gain traction and scale in the U.S. through trade shows, events, and strategic connections. Contact Bill Kenney for a no-obligation conversation: bill@meetroi.com or +1 (860) 573-4821.