Labor law in the USA

American labour law: what you need to know

You want to set up your company in the USA, but don’t know how to deal with American laws. Contracts, minimum wage, working hours, paid holidays, social protections… But what rules apply in the United States?

3 key things to know about US labour law

Oral employment contracts

In the United States, there is a very common practice in employment contracts: oral employment contracts. These, also called “at will” employment contracts, are exclusively verbal (in France, for example, we use written employment contracts).

Thus, even if the contract is the result of a verbal agreement, the contract is deemed to exist between the employer and the employee.

Unlike the employment contracts we are used to, these types of contracts can be terminated at any time, at the initiative of either the employer or the employee, without justification, without reasons and without notice. The big difference here is that the contract can be terminated without notice.

However, in the law there are grounds for illegal dismissals in the case of discrimination, violation of public interest, retaliation for reporting, etc.

In practice, however, both parties usually give two weeks’ notice before an employee leaves the company for good.

Nevertheless, it is noticeable that more and more employers in the USA are using the written contract. This is the case when the company in the USA hires a highly qualified employee, it allows them to protect themselves from any type of legal action from the employees.

If the employer decides to draw up an employment contract, it will usually contain the following elements

  • The date of validity of the employment contract if it is a fixed-term contract
  • Details of the clauses agreed by both parties

This employment relationship, governed by a written contract, is called a “Contract Employee”.

Wages, hours, holidays: American working conditions very different from those in France

Salary

In the United States, the federal gross hourly minimum wage has only been set at $7.25/hour since 2010. This minimum hourly rate is guaranteed to all employees; it is also called the subminimum. However, each state is free to set its own value for this hourly rate: for example, it is $10 in California or Massachusetts, $9 in New York, $8.05 in Florida, or $5.15 in Georgia. The proposed minimum wage for each state can be found online: https://www.dol.gov/

It should be noted, however, that in the event of a dispute, the law most advantageous to the employee applies.

In terms of employee payment, it is possible to pay an employee by the hour (Hourly Position) but also by the flat rate (Salary Position).

Working time

As far as working hours are concerned, it should be noted that there is no limit to the number of working hours per week. It should be noted, however, that the usual working time is an average of 40 hours per week. Beyond that, overtime is paid at 1.5 times the basic hourly wage, but this is not a legal rule.

Annual leave

Comme pour le temps de travail, il n’existe pas de règlementation pour encadrer les congés payés. C’est au bon vouloir de l’employeur d’accorder  des congés payés à ses employés. Cependant, on recense environ 90% des employés qui bénéficient de congés payés ou non-payés.

On s’aperçoit qu’en pratique, 2 semaines de congés payés par an sont octroyées à l’employé (après la première année de travail).

Leave for medical reasons

In the USA it is possible for an employee to take up to 12 weeks leave per year. This leave may be for specific medical reasons or for family reasons. These 12 weeks will of course be considered unpaid, but it ensures that the employee remains in their job until they return.

The cases in which leave can be taken are

  • Birth of a child (up to the age of one)
  • Serious illness of spouse, child or parent
  • Serious illness directly related to the employee

 Social security charges in the US

Social charges in the US are known to be lower than in France, for example. In the USA, they amount to approximately 7.65% for employee charges and 15.55% for employer charges.

The latter are intended to finance the unemployment insurance scheme and the disability scheme (occupational illness/workplace accidents). There is also about 1.45% dedicated to the financing of Medicare (hospitalization).

Since 2015, the legislator has required companies with more than 50 employees to take out private health insurance for their employees who work more than 30 hours a week. For employees of companies with less than 50 employees, the financing of the health insurance remains at their expense. It is therefore strongly recommended that you take out health insurance in case of health problems, as medical costs in the USA are high.

 

American labour law is quite different from French or European labour law. It can be described as a labour law without any real framework or regulation. It is therefore essential that you become familiar with the regulations in force before starting your job search or before recruiting a new member to your team.

For more information, contact our Orlando office at: support@merritt.group .

Choose Florida to start your business

Choose Florida to start your business

Choose Florida

More and more entrepreneurs choose Florida and more particularly Orlando to develop their business.

Setting up a business in the United States is not something you can improvise, you have to weigh the pros and cons and take an interest in the potential tax optimization that could result from it.

Fact! The decision to set up in America has been made, you are now hesitating as to the choice of the state in which you will set up your company.

As many choices as there are states!

Your choice is between two states: Florida or Delaware.

In both cases, Florida and Delaware offer zero income tax.

However, these two states have many differences. To know:

1- If you choose Florida to locate your business then you will benefit from a physical address for your offices which will allow you to open a bank account locally much more easily and quickly

2- Having your company in Florida means benefiting from the notoriety of this state and its good image. Delaware suffers from the image of a tax haven that is associated with it. Read here: Why you should avoid Delaware.

3- It is true that the cost of creating a company in Florida is higher than a company in Delaware, but this difference is that of banking and fiscal tranquility!

Do not hesitate to contact us to validate that Florida is the right place for your business needs.

Your final choice is to start your business in Florida

            Why Florida, why Orlando

In the USA, Florida is known to be one of the favorite destinations for Europeans and Quebecers.

The main reason is the time difference. Indeed, there is only 6 hours time difference with Europe which is very advantageous to do business with European companies. One should also not neglect the daily flights between the USA and Europe.

If expatriates choose Florida, it is not by chance. Indeed, in general, the cost of living is much lower than in New York for example. Also, the economy as well as the tax rates are much more advantageous which offers more benefits for foreign entrepreneurs.

Finally, with rates of return much higher than other major U.S. cities, Florida is the ideal place to start a business.

            Studying the American market

Before starting a business in the U.S., make sure you have done a preliminary study to validate the viability of your business. Many companies close after only a few months because they did not know the market.

If you prepare your installation and if you do your market research correctly you could quickly start generating very large profits. Indeed, the state of Florida is known to host some of the biggest American companies: Burger King, Disneyland, etc.

This is why early research is more than essential to the success of your business.

            Choosing the LLC in Florida

Once the idea is found and studied, it is time to choose the legal structure and to start the administrative steps to incorporate your company. The most common legal form used by expatriates is the LLC. (See the article on LLC).

The LLC is the quickest and easiest form of incorporation in the US to create a company. This type of structure is the ideal choice for start-ups and medium-sized companies.

It should be noted that Florida has one of the lowest taxes in the United States, which makes it the ideal place to do business.

            Taxes in Florida

There is no state income tax in Florida. There is only a 5.5% sales tax.

If you are not resident in the USA and you have an LLC, this type of company is tax transparent (it is not the company that is taxed but its partners).

This is why this destination is favored by entrepreneurs but not only, retirees also come to enjoy the sun and the tax advantages of living in Florida.

            Florida, an excellent asset for your business

Florida has an excellent reputation in the business world. Although the income tax is zero and the rest of the taxes are low, the state of Florida is not on any of the OECD’s risk lists. It is therefore possible to manage your company from the USA or from abroad.

If you are ready to take the plunge, our firm offers its assistance for the creation and administrative follow-up of your company in the USA. We are registered as a Registered Agent and can therefore represent your company on American soil with the American authorities.

In the eyes of the law, we are your legal representative.

But not only that, in addition to this Registered Agent mandate, we can also take care of your company’s accounting in order to comply with American standards.

Contact our Orlando office at support@merritt.group .

Everything about the LLC in the US

Everything about the LLC in the US

What does this acronym refer to, which you must have come across dozens of times when talking about setting up a company in the USA?

Is it the best legal structure to consider, what are the advantages?

Let’s discover together the contours of this legal structure very appreciated by foreign entrepreneurs.

What is an LLC in the United States?

The acronym LLC stands for Limited Liability Company and is used for limited liability companies in the United States. Since the liability is limited, this means that the members of an LLC are by definition protected. They will not be held personally liable for the debts of the company.

Choosing an LLC is the easiest way to start your business in the United States. Indeed, the LLC is the lightest legal form to create a company there.

But not only that, the LLC offers many advantages for its owners in terms of taxes, profits and losses.

An LLC is a hybrid model between the corporationfor its limited liability, and the partnershipfor its flexible organization.

A little history

Originally, there were 3 types of legal structures to start a business in the United States: the sole proprietorship, the partnership and the corporation. It was not until 1977 that the LLC was invented in the state of Wyoming to meet a new economic and business need.

It was only after the Internal Revenue Service (IRS) gave its approval that all other states legalized the creation of LLCs in their states.

But for what purpose? There was a need to create a structure that could be managed and taxed as a partnership while protecting the members from potential liabilities and losses as if it were a corporation.

Also, the law initially stated that an LLC had to have at least two members. It is now possible for an LLC to be composed of only one member.

What are the advantages of an LLC?

If you choose the LLC to start your business, you must keep in mind the advantages of this type of legal structure.

Possibility of not being resident in the USA

  • Any foreigner can open an LLC in the USA without being a resident of the USA. You can open your LLC and live abroad.

Legal protection against debts

  • Personal: with an LLC, your business debtors cannot affect you personally. Your assets are therefore protected;
  • Professional: this is the only type of corporation that prevents personal lawsuits and debtors from liquidating your business in response to a judgment.

Flexibility

  • Unlike other structures, the LLC is much more flexible and less expensive. This is a boon for Entrepreneurs.

Transparent taxation

  • The income and expenses of an LLC are distributed to its members (the term “member” is used in an LLC, not a partner or shareholder) and thus the members avoid double taxation at the corporate and member level.
    Taxation can be zero in the US if the company is considered as non-ETBUS (“Engaged in a Trade or Business in the US“). Don’t forget that it is  not the company but its members who are taxed in their country of residence. This only concerns the so-called active income.

No limit on the number of partners

  • It is possible to have as many partners as you want with an LLC in Florida, USA

More advantages to discover HERE.

How many partners for the LLC?

It is quite possible to create an LLC by being the only owner, just as it is possible to create a company with several members.

It should be noted that in order to benefit from zero taxation in the USA, it is strongly advised to have only one member (this simplifies the procedures for tax exemption in the USA). Thus, for federal tax purposes, you are considered a disregarded entity.

Members of an LLC can be individuals or corporations.

Is it possible for a foreigner to form an LLC in the US?

A foreigner can legitimately form an LLC in the United States. There are no restrictions on foreigners forming LLCs in the US.

A non-US resident is therefore free to form an LLC under the laws of the state in which he or she will form the business.

Create your company in the USA today

For your project, we strongly recommend you to choose the LLC in Florida. We do not propose the creation of company in Delaware, Nevada, New Mexico, Wyoming because it is usually impossible to open a bank account in the USA for companies registered in this state (more information on this article).
We therefore recommend Florida, which offers the same advantages while having a better image, and which especially allows to open a bank account on the spot.

For several years, we have been helping many entrepreneurs to create their LLC in the USA.

We invite you to contact us if you need more information about creating an LLC in the State of Florida in Orlando.

Our team can prepare a free, no-obligation quote that best suits your needs.

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Company seal in the USA

Everything you need to know about the company seal in the USA

Within your company, you may need to use a tampon.

How to use a company stamp correctly is one of the dilemmas you may face if your company has lots of documents to decide on.

  • What is a seal?

A corporate stamp is a way to confirm that a document is certified and accepted by all parties involved in the decision making. It is considered as the signature or official mark of the company. A company stamp will include:

– The name of the registered company

– The year of incorporation

– The state in which it was legally deposited

The company stamp should only be used with the permission of company officers. When the company stamp is affixed to a document, the signature of the Manager may also be required.

Traditionally, sealing wax has been used to imprint the stamp on company documents. More common today is the use of two metal plates engraved with the company stamp. The embossing leaves a clear mark on the paper when the plates are pressed firmly together. Alternatively, the stamp can be affixed using an ink pad and rubber stamp. It can also be digitized, this is called an “e-seal”.

 

  • When might you need a company stamp?

Important documents that might require a company stamp are:

– Employment contract

– Agreements with suppliers

– Sales contracts

– Minutes of meetings

– Leases

– Loan documents

– Government requests

– Legal documents

– Membership certificates

– Share certificates

 

  • Is a company stamp necessary today?

As many businesses change over time and transactions take place electronically, the company’s stamp is used less and less. Some states will now recognize the signature of an individual who has been authorized to act on behalf of the company rather than a company stamp. This is the case with Florida.

why choose to open his company in florida?

Why is it interesting to open a company in Florida?

The American LLC is very popular with entrepreneurs because of its simplicity as well as the low costs of creating and maintaining this type of structure.

However, setting up in the USA and more particularly in Orlando, Florida cannot be improvised! Our firm supports you in the process of opening a company and opening a bank account.

Why choose the state of Florida?

With only 6 hours of jet lag, daily flights to Europe, Florida is the favorite destination of Europeans.

If Florida attracts, it is because the state benefits from a tax system that could be described as advantageous and different from the 49 other states in America.

Visit this page to learn more about the benefits of Florida.

ECONOMIC AND POLITICAL

Economic growth in the state of Florida is still strong and expanding. The USA are recognized as being one of the richest countries in technological and commercial innovations.

The United States can boast of having an excellent image in the economic world. One of the advantages of Florida is that it is not considered a pseudo “tax haven” which gives credibility and clout to companies that decide to locate there.

Due to its geographic location, Florida is considered the gateway to the West Indies and all of Central and South America.

Orlando is a city in constant development: a new terminal opened in 2019 (South terminal), high speed train between Orlando and Miami in 2018 (Brightline express), more than 500,000 students live in Orlando, a new StarWars park at DisneyWorld in 2019, etc.

In addition, it is very important to note that unlike other states like Delaware or Nevada, Florida enjoys a good image internationally.

TAXATION

The 3 types of taxes in Florida

The American system is based on triple taxation. In addition, with the tax reform of the Trump administration, general taxes are reduced. There are 3 types of taxes in Florida:

  • Federal tax: According to the Tax Foundation, the average sales tax rate in Florida is 7.05%, 23rd-highest in the country.
  • State Tax (Florida): The main advantage of registering a business in Florida is that the State of Florida does not levy personal income tax. This rule is provided for in the constitution of the state of Florida. As for companies, they are subject to a levy of around 5.5% on their net profit.
  • Local tax: this tax refers to the property tax which is approximately 2% of the purchase price of the property. It concerns all real estate of individuals and companies and this tax is tax deductible. Think of it as a tax that cuts your taxes!

In addition, if your activity does not require offices, employees in the USA, the tax on your company will be zero.

There is no exchange of tax information with foreign countries and the tax system is, as we have seen, flexible.

BANKS

The banking network in the USA is very efficient; we also work with the top banks in the USA to open your bank accounts.

You do not have to be a resident to be able to open a bank account in the USA with a bank card, but your presence is mandatory for the meeting with the banker.

The appointment is very quick since the opening of your account will be done in less than 1 hour. Following this meeting, you will immediately have access to internet banking which is very efficient in the USA.

In addition, the US does not participate in the Common Reporting Standard (CRS) which is also known as the Automatic Exchange of Information (AEOI) set up by the OECD. This means that there is no exchange of tax information between the US and other foreign tax administrations.

But, the US has announced that it does not accept being used by a foreign tax resident not to report income in another country.

LEGAL

To be able to incorporate your company you do not have to be physically present in the USA; everything can be done remotely.

As explained previously, the process of registering an LLC in the USA is very quick and easy.

The law applicable to LLCs in the USA is clear and has extensive case law.

A very important point when you create an LLC, your liability is limited so your personal liability will not be incurred in an LLC. This means that in the event of a dispute, your assets will not be involved.

To facilitate your entrepreneurial setup, we offer you the option of renting an office in our business center located 15 minutes from Orlando Airport and 20 minutes from the city’s main theme parks. In addition to the domiciliation of your company, our center offers a real co-working space for your teams and yourself.

We invite you to contact members of our office at support@merritt.group for more information on starting a company in Florida.

Towards a global corporate tax and the end of tax havens

International Tax Reform: Towards a global corporate tax and the end of tax havens?

After more than a decade of talks, 130 out of the 139 countries that had entered into negotiations signed the new OECD reform concerning a harmonization of the new global tax treaty, this July 10 in Venice. These 130 jurisdictions alone represent 80% of GDP

The idea of ​​this reform tends to make multinationals pay a tax qualified as “fair” regardless of the country where they operate.

For years, a debate has animated the OECD: what international tax rules to impose on multinational companies?

The beginning of the month has been hectic. The member countries of the Organization for Economic Co-operation and Development, also called the OECD, have agreed on the full implementation of a global minimum tax.

This new international tax scheme puts in place a global minimum corporate levy of 15% to deter large corporations around the world from set up in tax havens with low tax rates.

Statutory corporate tax rates in OECD countries

Statutory corporate tax rates in OECD countries

In fact, in the current system the American government considers itself to be at a disadvantage with certain American multinationals.

How and why?

Some multinationals have their headquarters in the US and their actual activities in countries where they have real business and customers. The result is that American multinationals would pay less tax to their government and more to others. In addition, the overseas profits of these same companies are taxed much more.

From 2000 to 2018, American companies made half of all foreign profits in seven low-tax jurisdictions: Bermuda, the Cayman Islands, Ireland, Luxembourg, the Netherlands, Singapore and Switzerland.

This is why the new OECD agreement forecast for capping a minimum overall tax of at least 15%, which would have the consequence of making more taxes payable to multinationals that generate significant profits in jurisdictions with low taxation.

All the G20 countries such as the USA, the United Kingdom, China and France have supported the initiative.

But some countries preferred to keep their own tax rate, as it is below 15%.

For example, we have Ireland with a corporate tax rate of 12.5% or Estonia which only applies a tax on distributed corporate profits.

These new rules call into question a century-old flawed international tax system that is not suited to the globalized economy of the 21st century.

US Treasury Secretary Janet Yellen said: “Today is a historic day for economic diplomacy.”

One reform, two pillars

Pillar 1 aims to redefine where multinationals pay their taxes and Pillar 2 sets the minimum tax rate.

  • Pillar 1: this pillar concerns multinationals and aims to make the distribution of tax payments fair. The aim is to reallocate taxing rights to the company’s country of origin and not let the countries where the companies operate, make their profits, control the tax payments. It was specified that multinationals making a profit of more than 100 billion dollars would be taxed in the country where the profit is made.
  • Pillar 2: this pillar concerns the global minimum tax. The new minimum tax rate of at least 15% would apply to companies with turnover above the 750 million euros ($ 889 million) threshold. It was the G20 countries that agreed to the 15%, while other countries are trying to get higher tax rates.

This historic agreement is supposed to come in support of the various governments who need these taxes to revitalize and revive their economies while investing in public services, infrastructure and all the measures necessary for post-Covid-19 reconstruction.

This deal could bring in more than $ 150 billion in tax revenue each year.

It has been implied that companies “in the initial phase of their internationalization” would be exempt from this minimum tax.

Certain sectors of activity would not be affected by these new laws – still under negotiation.

French Finance Minister Bruno Le Maire described it as “the most important international tax deal in a century” during a press conference.

US Treasury Secretary Janet Yellen spoke in stressing the US’s willingness to lower its corporate tax rate despite responses from other countries lowering their rates even further in return.

Multinationals tend to locate where tax rates are low, which represents a significant loss of revenue for governments in a race to the bottom for tax rates.

Within the European Union, for example, the average rate has fallen from 50% in 1985 to 22% today.

Evolution of the average corporate tax rate in the European Union

Evolution of the average corporate tax rate in the European Union

This agreement is finalized after years of discussion and ends the race for who will have the lowest tax rate.

The final and detailed plan is scheduled for October 2021.

The aim of this plan is to discourage multinationals from transferring their profits to jurisdictions with favorable taxation, regardless of the country where their activities are carried out.

The signing of this historic agreement marks the start of a “new world”. The intention behind this agreement is to prevent companies from seeking low and favorable tax rates. The goal is to get them to pay their fair share of tax regardless of where they conduct their business and where their head office is located.

The implementation process is likely to be long and is expected to come into force in 2023. Note that the last time the international tax rules were changed was in 1928.

transferwise - wise

From Transferwise to Wise.

The FinTech giant, Transferwise, has recently rebranded to Wise in February 2021, to reflect its expanded product offering beyond just international money transfers.

It has a new and fresh look, but maintains the same service focus: helping people manage their money across boarders more cheaply, quickly, and transparently.

“Our customers now need us for more than money transfers,” explains Kristo Käärmann, co-founder and CEO. “Sending, spending, and receiving money internationally is too expensive, slow, and inconvenient. We’re fixing that for people and businesses.” With this spirit, they have decided to go for this transition with a clear separation from its past identity.

Wise is a London based financial technology (FinTech) company launched in 2011 by Estonians Kristo Käärmann and Taavet Hinrikus, with the vision of making international money transfers cheap, fair, and simple. Today, their multi-currency accounts help over 10 million individuals and businesses manage their money across the world. Here’s how they got there.

  • Price – using Wise for international transactions is up to 8 times cheaper than using a traditional bank. Wise always uses the mid-market exchange rate and charges low, upfront fees.
  • Safety – Wise is regulated just like any bank by financial authorities in any country where they operate – like in USA for example.
  • Speed – over 30% of transfers with Wise arrive instantly. 53% of all transfers arrive within an hour and 81% of all transfers within a day.
  • Coverage of currencies and countries Wise allows customers to hold, spend and send money in over 50 different currencies. Yes, 50!

With Wise, the more money you transfer the more money you save. You have a great opportunity to capitalize on this high volume.

Wise can be used by anyone, from digital nomads and freelancers to financial investors and companies.

If you are being paid in different currencies from clients all of over the world, then Wise has made their multi-currency account for you!

It is simple. You get local banking details in countries like the US, Australia, Europe, and then receive those currencies like a local.

Wise saves you money by taking a small percentage of the transaction, rather than having you pay a credit card transaction fee or a large bank transfer fee.

Wise is the best tool for sending and receiving money internationally with low fees.