Web Design London

US Expansion FAQ’s

Why the US?

Why the US?

More and more UK recruitment companies are expanding to the US. There’s a good reason for this. The UK recruitment sector is saturated. In 2021 there were over 33,000 staffing companies in the UK compared to just 27,000 in the entire US! (Staffing Industry Analysts 2022)

Another strong incentive is the lucrative margins in the US (typically 25-35%). The US has a talented workforce, a flexible employment regime and a strong research and development base. Expanding to the US is a huge opportunity for UK agencies however it is essential that UK recruiters understand not only the difference in culture, but how workers are engaged in the US.

Looking to expand into the US job market? Discover the most frequently asked questions:

The obvious answer is to focus on those states where your clients are located or where you will find talent in your niche sector. However, there are certain states that can be identified as being particularly business friendly notably Florida, North Carolina and Texas. Other states are known for their business and tax-friendly regime for incorporation (Delaware) and finally some states are world class in a particular sector (California- Silicon Valley).

There are no specific regulations similar to the EAA/Conduct Regulations in the UK governing how recruitment companies must operate. However, UK recruiters need to be aware of federal and state anti-discrimination laws (including “Ban the Box” and “Fair Chance” laws), data privacy laws (which vary from state to state- the most robust is the California Consumer Privacy Act) and specific legislation even at the city level (New York City prohibits asking a candidate about his current salary).

W-2 workers are similar to PAYE workers in the UK, and they can be engaged by recruiters through an employer of record (“EOR”) (similar to an umbrella company) who will payroll them and engage them on employment contracts.

Independent contractors (“ICs”) are classified as “1099” workers for tax classification purposes. They can either be incorporated independent contractors (“corp to corp”) or 1099 sole traders. An agent of record (“AOR”) can be used to classify and payroll the IC.

Yes. And there are similar tests used to determine if the independent contractor is genuinely self-employed. These tests vary from state to state (ABC or Right to Control Test etc) but the “pillars” used are very similar to those used to determine if a contractor is working Outside IR35 (supervision, direction, control, financial risk etc.). Most independent contractors work on a fixed price basis under a Statement of Work (“SOW”). Your AOR can assist you with the classification process to mitigate the risk of engaging independent contractors.

Sending a US client your standard UK terms will likely cause confusion and result in protracted negotiations. For example, the terminology will be confusing  (what is a CV?) and legislation aimed at UK employment businesses will not apply (what is AWR, Off Payroll and/or TUPE?) and most importantly you may fall foul of specific US requirements which may affect the enforceability of your contract (have you ever wondered why the liabilities/indemnities clauses are always in bold letters in US contracts?)  The quality of your standard terms may be your first opportunity to demonstrate to your client that you have a basic understanding of the idiosyncrasies between the two countries and how engagements in the US work (whether you are engaging a W-2 ,1099 or corp-to corp). The importance of bespoke US terms should not be underestimated- for example, if there was a dispute between the parties and the jurisdiction is specified as England & Wales, would a judgment granted by an English court be enforceable in the US? Taking a short-cut and using your UK terms with your fingers crossed that nothing goes wrong may be less risky for perm than temp, but nevertheless it will undoubtedly affect the client’s impression of your understanding of the market and culture.

No. A generic “vanilla” set of terms referencing an obligation to comply with all applicable and local laws will generally suffice. However, there are certain differences between the states which you need to be mindful of as indicated above.

Commercially, the terms will be broadly similar to your UK terms (although the margins may be much more attractive) – there will be provisions for transfer fees (“Conversion Fees”), volume discounts, replacement candidates and refunds. Perm is an easier transition to make- with temp placements there are specific rules relating to overtime entitlement, the right to healthcare or 401k contributions and termination provisions which could land you in trouble if you don’t understand the legislation and/or culture. This risk can be greatly mitigated by engaging with an EOR/AOR who will deal with all of your compliance issues, whether you decide to deal only with W-2s or will be engaging independent contractors.

If you are just “dipping your toe in the water” (which is advisable before incurring the costs associated with opening an office/Visa requirements etc.) you can initially use your UK entity to engage with your US clients. Once you’ve established yourself and understand the market and culture you may be ready to take the next step and open a subsidiary office, setting up an LLP (rarely recommended), C-Corp or S-Corp (only if resident in the US). It should be an entirely separate company, at commercial ”arm’s length” fully entitled to its own profits, responsible for its own operations, debts liabilities; and paying attention to all corporate or LLC formalities.

Generally you will be able to obtain an endorsement from your UK insurers to include cover for your US activities however you must ensure that you have worldwide jurisdiction and worldwide territory as many policies expressly exclude the US.


How can WTT Legal assist?

How can WTT Legal assist?

WTT Legal has extensive experience in both the UK and US recruitment market. As an APSCO Trusted Partner, we are well placed to advise on transacting business in the US and using your UK entity to engage with US clients- if you are interested in discussing your US expansion plans, please contact us to arrange a free legal consultation.

US Business Insurance Terminology for UK Recruiters

US Business Insurance Terminology for UK Recruiters

US Insurance Insights – US Business Insurance Terminology for UK Recruiters Whilst expanding into the US job market, UK recruiters…
Read More
Misclassification – The Implications for UK Recruiters in the US

Misclassification – The Implications for UK Recruiters in the US

Exploring the Implications of Misclassification for UK Recruiters Expanding to the US When UK recruiters expand their operations to the…
Read More
Key Tax Considerations for UK Recruitment Agencies in the US

Key Tax Considerations for UK Recruitment Agencies in the US

Expanding to the US: Key Tax Considerations for UK Recruitment Agencies Expanding into the US market offers a wealth of…
Read More
Placing Perm vs. Temp Placements in the US

Placing Perm vs. Temp Placements in the US

Placing Perm vs. Temp Placements in the US – What Insurance Do I Need? Expanding your UK recruitment agency into…
Read More
The Importance of Due Diligence in US Expansion

The Importance of Due Diligence in US Expansion

The Importance of Due Diligence in US Expansion – Key Legal and Tax Considerations for UK Recruitment Companies Expansion to…
Read More
Is My Insurance Suitable for Working in the US?

Is My Insurance Suitable for Working in the US?

Expanding your UK recruitment business into the US is an exciting opportunity, but it also presents a series of considerations….
Read More
Understanding the Key Differences in UK vs. US Recruitment Laws

Understanding the Key Differences in UK vs. US Recruitment Laws

Are you a UK-based recruiter considering expanding operations across the Atlantic? It is vital to have a thorough understanding of…
Read More
Legal Pitfalls to Avoid When Scaling Your Agency to the US

Legal Pitfalls to Avoid When Scaling Your Agency to the US

For UK recruiters, scaling your agency to the US market holds immense potential for growth and expansion. However, navigating the…
Read More
What Are the Recruitment Laws in the US?

What Are the Recruitment Laws in the US?

An Overview of Key US Recruitment Laws for UK Recruiters As many UK recruiters begin to set their sights on…
Read More
Mapping UK Recruitment Success in the US

Mapping UK Recruitment Success in the US

The Role of Professional Legal Services for Successful US Expansion of UK Recruitment Agencies The US expansion journey of UK…
Read More
Navigating the US Recruitment Landscape for UK Agencies

Navigating the US Recruitment Landscape for UK Agencies

Watch our Webinar – Navigating the US Recruitment Landscape for UK Agencies Are you a UK recruiter considering you plans…
Read More
Workforce Flexibility: The Pros and Cons of a Contingent Workforce

Workforce Flexibility: The Pros and Cons of a Contingent Workforce

As businesses evolve to meet the demands of a dynamic marketplace, the concept of a contingent workforce has gained prominence….
Read More
US Expansion: Incorporation vs. Local EOR/AOR

US Expansion: Incorporation vs. Local EOR/AOR

UK Recruitment Agencies in the US: Incorporation vs. Local EOR/AOR Expanding operations to the United States is a strategic move…
Read More
Engaging W-2 and 1099 temporary workers in the US

Engaging W-2 and 1099 temporary workers in the US

A Guide for UK Recruiters Expanding recruitment operations from the UK to the US brings a whole new set of…
Read More
US Expansion: US vs. UK Employment Law

US Expansion: US vs. UK Employment Law

Expanding recruitment operations from the UK to the US is an exciting venture, but it comes with a complex set…
Read More
US Expansion: US vs. UK Terms of Business

US Expansion: US vs. UK Terms of Business

Exploring the Key Differences Between US and UK Terms of Business Expanding your UK recruiting business to the US is…
Read More
Placing Workers (Temp or Perm) in the US

Placing Workers (Temp or Perm) in the US

Placing Workers (Temp or Perm) in the US: What UK Recruiters Need to Know The global workforce is becoming increasingly…
Read More
UK Recruiters: Considering Expanding to the US?

UK Recruiters: Considering Expanding to the US?

The UK recruitment industry has long been recognised for its innovation and adaptability. Recruitment agencies have consistently demonstrated their ability…
Read More
{"slide_show":3,"slide_scroll":1,"dots":"true","arrows":"true","autoplay":"true","autoplay_interval":3000,"speed":600,"loop":"true","design":"design-2"}

Arrange a callback

We’d love to hear from you!
Whether you simply have a quick question, or were seeking a more formal conversation to discuss your tax needs, drop your details here and we will be in touch! Alternatively, you can contact us on +44 (0)20 3468 0000.