US Expansion
US subsidiary setup for non-US startups
On this page
- Overview
- Key takeaways
- When do non-US companies set up a US subsidiary?
- Why do non-US companies form the US subsidiary in Delaware?
- What do you need to set up a US subsidiary?
- How should US employee options work on a non-US parent?
- Checklist before the first US hire
- Comparing notes on US entity setup
- FAQ
- Sources
- Further reading
Part of US expansion for non-US founders. When the next step is US customers or US hires rather than a full change of parent company, founders often add a US subsidiary instead of a Delaware flip. A November 2026 VEN session described how operators typically assemble that foundation. This page shares that pattern. It is not legal or tax advice.
Key takeaways
Section titled “Key takeaways”- A Delaware subsidiary under the non-US parent is a common first entity for US hiring and contracting.
- The practitioner listed five foundation areas: legal, tax accounting and EIN, banking, business insurance, and payroll and benefits.
- Teams that mix HQ transplants with local US hires were described as the go-to-market shape that tends to work best.
- Options typically sit on the parent. For US optionees, an independent US 409A valuation is the usual way to set a strike price the IRS will accept as fair market value.
- The practitioner said the foundation can be stood up in a few weeks once advisers are engaged.
When do non-US companies set up a US subsidiary?
Section titled “When do non-US companies set up a US subsidiary?”Companies in the session were usually chasing US commercial expansion: customers on the ground and people who can sell and support them. The practitioner described moving some people from HQ together with local US hires who know market norms and networks, then putting both groups on a US payroll through a Delaware subsidiary of the existing parent.
If the pressure is a US-led seed or Series A rather than customers, read US fundraising for non-US founders first. A subsidiary and a flip solve different problems.
Why do non-US companies form the US subsidiary in Delaware?
Section titled “Why do non-US companies form the US subsidiary in Delaware?”Venture practice still concentrates US subsidiaries in Delaware even when employees sit in other states. Delaware’s Division of Corporations publishes current formation resources for creating a Delaware corporation. Once the entity exists, hiring can follow customers and talent across the US. State employment, tax registration and payroll rules still apply where people work.
What do you need to set up a US subsidiary?
Section titled “What do you need to set up a US subsidiary?”Those are the five areas, right? When you expand to the US, those are the five areas that you cover off: legal, tax accounting, banking, business insurance, and payroll and benefits.
And you can get all that done in a few weeks, and then you’ve got the foundation built to just get this bigger and bigger and bigger, and just hire wherever you want.
| Area | What usually gets set up |
|---|---|
| Legal | Delaware corporation subsidiary of the non-US parent; basic board and contracting authority; a Delaware registered agent, and registration to do business in each state where employees work. Delaware corporations file an annual report and pay franchise tax each year (Delaware Division of Corporations). |
| Tax accounting and EIN | US corporate tax filings with a US tax accountant, and an Employer Identification Number from the IRS. The online EIN tool needs a responsible party with an SSN or ITIN; without one, teams file Form SS-4 by fax or mail. A US subsidiary that is 25% or more foreign-owned also files Form 5472 with its return for transactions with the parent. |
| Banking | A US operating account for payroll and customer receipts |
| Business insurance | Coverage appropriate to the US activities and headcount |
| Payroll and benefits | US payroll, withholdings and benefits for employees on the ground |
How should US employee options work on a non-US parent?
Section titled “How should US employee options work on a non-US parent?”the options don’t come out of the sub. The value is in the parent company.
The session pattern kept the equity plan on the parent and set US strike prices from a US 409A valuation tied to the IRS fair-market-value standard, with little or no discount. Treasury regulations under section 409A frame why strike prices must meet a defensible fair-market value. Related playbooks: Options, pools, and advisor equity, 409A valuation, and 83(b) election when restricted stock is used instead of options.
Checklist before the first US hire
Section titled “Checklist before the first US hire”- Delaware subsidiary formed and parent ownership documented
- EIN obtained and US tax adviser engaged
- US bank account open
- Business insurance bound for the planned activities
- Payroll and benefits provider ready for the first state of hire
- Option or equity paperwork on the parent, with a current US 409A where options are granted
- Option plan has a US sub-plan or addendum on the parent so US grants meet US rules
- Intercompany agreement between parent and subsidiary (services, IP and cost sharing) reviewed with a tax adviser
- Immigration path reviewed for any HQ transplant (Founder immigration for founder visas; counsel for employee visas)
- Customer contracting path clear (and security reviews if enterprise buyers ask)
Comparing notes on US entity setup
Section titled “Comparing notes on US entity setup”This page comes from a members-only VEN session where founders brought their own US entity questions to a practitioner. Thousands of venture-backed leaders and hundreds of advisors are part of VEN. If you are about to make your first US hire, or choosing between a subsidiary and a flip, tell us what you are setting up or see upcoming sessions.
When does a non-US company need a US subsidiary?
Section titled “When does a non-US company need a US subsidiary?”Companies in the session added one when they planned to hire US employees, run US payroll and benefits, or contract with US customers through a US entity. Many keep the non-US parent and add a Delaware subsidiary rather than flipping the whole group. Some teams hire through an employer of record first; that path is not covered here.
Why do startups incorporate the US subsidiary in Delaware?
Section titled “Why do startups incorporate the US subsidiary in Delaware?”Delaware is the usual venture market default: investors and counsel know Delaware corporate law, and filing practice is familiar. You can still hire employees in other US states once the Delaware entity exists. Start with the Delaware Division of Corporations.
Do US employee options come from the subsidiary?
Section titled “Do US employee options come from the subsidiary?”In the session pattern, options sat on the parent where the value lives, with a US 409A valuation so strike prices meet the IRS fair-market-value standard. The practitioner warned that skipping a US-specific valuation can leave employees with substantial US tax risk.
Sources
Section titled “Sources”November 2026 VEN session on US expansion and fundraising. Practitioner attributed by role only. Primary references linked above: Delaware Division of Corporations; IRS EIN; Form 5472; Treasury regulations under section 409A. Related pages: Delaware flip, US fundraising for non-US founders, Options, pools, and advisor equity. See the session index and our sourcing policy.