Expanding to the US from Australia and the legal foundations to get right

An Australian business that has signed its first US customer, taken its first US-based hire, or started running ads to a US audience has already begun expanding into the United States. The legal questions that follow are less about whether you are "in" the US market and more about which US rules now reach you, and what you need to set up before those rules bite. The good news is that the foundations are knowable and the sequence is manageable. This guide sets out the decisions Australian businesses actually face, in the order they usually need to make them.

Which law applies to your US operations?

There is no single "US law" that governs a business the way the Corporations Act 2001 (Cth) or the Privacy Act 1988 (Cth) governs an Australian business. Federal US law sets baselines in areas like taxation, employment standards, trade marks and consumer protection, but many of the rules that affect how you run a business day to day are state law: corporations, contracts, employment, privacy, and much of consumer regulation.

Three things determine which rules reach you:

Where you operate: which states you have staff, customers, premises or ongoing activity in.
How you operate: your structure, your contracts and your people.
What you sell: some products and services carry their own federal and state rules, including licensing.

This is a genuine point of difference from Australia. Here, s 109 of the Constitution provides that where a state law is inconsistent with a Commonwealth law, the Commonwealth law prevails to the extent of the inconsistency. That gives Australian businesses a reasonably clear pecking order: federal first, state second.

The US works the other way around in practice. Federal law is supreme where it occupies a field, but huge areas of business regulation are left to the states, and states regularly impose requirements on top of the federal baseline. So "expanding to the US" usually really means "expanding into a particular state first", and your obligations change as your footprint in each state changes.

Start with one state, not "the US"

Because state law carries so much weight, the first planning decision is often which state you will operate in first, not which country you are entering.

Delaware is the most popular place to incorporate, and for good reason. The Delaware Division of Corporations reports more than 2.28 million entities formed there, including more than two-thirds of the Fortune 500. Its corporate law is well developed and predictable, and investors and US counsel are comfortable with it.

But incorporating in Delaware does not give you the right to operate everywhere else. Each state where you have employees, an office, or ongoing business activity can require its own registration, and the triggers can be surprisingly small. A single remote hire is the classic example. If you employ one person in California, California's Employment Development Department requires you to register as an employer within 15 days of paying more than USD 100 in wages in a calendar quarter. One employee, one state, and you have a state registration obligation you might never have thought to look for.

The practical takeaway is to pick one or two target states, get the structure and registrations right there, and treat every new state as a deliberate decision rather than an accident of where a customer or hire happens to be.

Subsidiary or branch: choosing your US structure

Most Australian businesses do not expand into the US by simply contracting through the Australian entity, although that is possible for early-stage or low-risk activity. The two structural routes are:

A US subsidiary: you form a US entity, usually a Delaware corporation or LLC, wholly owned by your Australian company. The US entity signs US client contracts, invoices US customers and employs or engages US-based people.
A branch: the Australian company operates in the US directly, with no separate US entity, registering as a foreign corporation in each state where it does business.

The subsidiary is the more common default, and the reasons are practical as much as legal. It creates a clear boundary between the Australian business and the US operations, which helps contain liability, keeps US contracting and onboarding straightforward, and gives US customers and partners a US entity to contract with. A branch can be simpler on paper, but it leaves the Australian company directly exposed to US liability, and it still requires foreign registration in the states where it operates.

The right choice depends on your risk profile, how you will deliver services, whether you plan to hire in the US, and how you expect to raise capital or exit. It also carries tax consequences in both the US and Australia, which is why the structure decision is one of those "decide once, decide well" steps that deserves coordinated advice from Australian and US advisers before you commit.

What forming a US entity actually involves

If you form a US subsidiary, the work involved usually looks like this:

Choose the entity type: Most Australian founders land on either a corporation (typically a C-corporation) or an LLC. Both work, but they differ in governance, administration and how US tax treats them. A corporation has directors, officers and shares, and is the usual choice if you expect US investors. An LLC is more flexible but has its own filing and tax-pass-through features that need checking against your circumstances.
File the formation documents: A corporation files a certificate of incorporation, and an LLC files articles of organisation, with the state, along with a registered agent in that state.
Put the internal documents in place: That means bylaws for a corporation or an operating agreement for an LLC, covering who makes decisions and how ownership works.
Get a US tax ID number: An Employer Identification Number (EIN) from the IRS is a nine-digit identifier for the entity. It is free to apply for directly from the IRS, usually online, and you will need it to open a bank account, hire staff and file returns.
Set up banking and invoicing: US banks generally want the formation documents and EIN before opening an account, so it pays to have the entity fully formed before US customers start asking who they are contracting with.
Paper the parent-subsidiary relationship: If the Australian company owns the US entity, the ownership needs to be documented, and you need to decide which entity owns your IP and on what terms the other uses it. This matters even for service businesses where the value sits in proprietary methods, templates and know-how.

None of this is about over-engineering. It is about choosing a structure that matches how you will actually operate, so you are not forced into a painful restructure after you already have clients, hires and momentum.

Registering in the states where you actually do business

Even after you have a US entity, you may need to register in individual states where the entity "does business". This is called foreign qualification, and it is a state-by-state question rather than a single national rule.

Delaware is a good example of the pattern. Delaware law requires any corporation formed outside Delaware that does business in the state to file a foreign qualification, and most other states work the same way. What counts as "doing business" varies, but it is commonly triggered by having employees or contractors in the state, having a physical presence, or carrying on business activities there on an ongoing basis. Merely selling to customers across state lines can fall below the threshold in some states, which is why this is not something to guess at.

If you miss a registration, the consequences vary by state but can include fines, backdated fees and penalties, and practical problems when you need to enforce a contract, open a bank account or onboard a major partner. None of these are catastrophic on their own, but they are exactly the kind of admin friction that slows down a young US operation.

The staged approach works here too: start with the states where your people and your physical presence actually are, get those right, and revisit the question each time your footprint grows.

Contracts that work in a US context

Getting your US-facing contracts right is one of the fastest ways to reduce risk, and one of the most common places where Australian businesses accidentally import Australian assumptions into the US market.

US contracts can look familiar, but the way risk is allocated can be very different. If you are providing services or selling to US customers, the agreements you need should deal clearly with:

Scope and deliverables: what you are providing, and what you are not.
Payment terms: amounts, timing, taxes and late payment.
Intellectual property: who owns what is created, and any licence back to the customer.
Warranties and disclaimers: what you promise about the services, and how you limit what you promise.
Limitation of liability: caps on liability, exclusions and indemnities, which US counterparties will expect to be negotiated in US terms.
Dispute resolution: which state's law governs the contract, and where disputes are heard. US parties routinely expect their home state's courts, so this is a real negotiation point, not boilerplate.

Australian templates often do not translate cleanly. They may not deal with US-style expectations around disclaimers, indemnities and liability caps, and they can leave gaps that only show up when a deal goes sideways.

Your website terms, privacy policy and onboarding documents are part of the same picture. They are often the first "contract" a US customer sees, and one of the first things examined if there is ever a dispute, so they should be drafted for US users rather than copied from your Australian site.

Brand and IP: what does not carry over from Australia

Your Australian IP registrations do not extend to the US. IP Australia is explicit that rights registered in Australia only apply in Australia and do not apply in overseas markets. For trade marks, that means a separate US registration is required, and there is a specific US wrinkle: the USPTO requires applicants who are domiciled outside the US to be represented by a US-licensed attorney in trade mark matters.

Trade marks are the highest-stakes part of this. A brand name that is clear in Australia may already be registered or in use in the US, and US trade mark rights can arise from use as well as registration. If you launch first and search later, you can end up paying for an expensive rebrand exactly when you are trying to build traction. It is worth clearing the mark in the US before you commit to launch assets, packaging and ad spend.

IP ownership needs to be nailed down in writing, and the US rules are stricter than many Australian founders assume. Under US copyright law, a "work made for hire" is a work prepared by an employee within the scope of employment, or a commissioned work in specific categories where the parties have expressly agreed in writing. Paying a contractor does not, by itself, transfer ownership of what they create. If your contractor and consulting agreements do not clearly assign IP and deal with confidentiality, you can end up in a "ghost ownership" situation where the business assumes it owns the work but legally it does not. Every US-facing contractor agreement should include an express IP assignment.

If you are operating through a US subsidiary, you also need clarity on which entity owns the IP and whether the other entity uses it under a licence, so the value sits where you intend it to.

Hiring in the US: classification is the trap

Hiring in the US, whether employees or contractors, is often the moment legal obligations ramp up sharply, and worker classification is the part that catches founders out.

At the federal level, the IRS looks at the degree of control and independence in the relationship under common-law rules: if you have the right to control what will be done and how it will be done, the worker is likely an employee regardless of what the contract calls them.

Some states go further. California applies the "ABC test", under which a worker is presumed to be an employee unless the hiring entity can satisfy all three of these conditions: the worker is free from the control and direction of the hiring entity, the worker performs work outside the usual course of the hiring entity's business, and the worker is customarily engaged in an independently established trade or business of the same nature. California's official explainer of the ABC test is worth reading before you classify anyone there.

The consequences of getting this wrong are real. If a "contractor" is later found to be an employee, you can face unpaid payroll taxes, back wages and overtime under federal law, with misclassification treated as an enforcement priority by the US federal wage and hour regulator, plus state-level penalties. And the moment you have genuine employees, you take on an employer identity: an EIN, state payroll registration, workers compensation and state tax withholding, in every state where those employees work.

Some industries and professions also carry state-level licensing requirements, so it is worth checking whether the services you provide are regulated in the states where you plan to operate.

Privacy: California sets the baseline

If your business collects personal information from US customers or users, even basic website leads, US privacy law may apply to you. This is largely state-driven, and California has set the pace.

The California Consumer Privacy Act (CCPA), as amended by the California Privacy Rights Act, applies to for-profit businesses doing business in California that meet any of these thresholds:

Annual gross revenues above USD 26,625,000. That is the figure the California Privacy Protection Agency published effective 1 January 2025, indexed up from USD 25 million.
Buying, selling or sharing the personal information of 100,000 or more California consumers or households each year.
Deriving 50% or more of annual revenue from selling or sharing personal information.

The same source sets the enforcement stakes: administrative fines of up to USD 2,663 per violation, and up to USD 7,988 per intentional violation or for violations involving the personal information of consumers known to be under 16.

A growing list of other states has followed California's model, and the pattern is that your privacy obligations track where your users and customers are, not where your entity is formed. For a small Australian business with a few thousand US leads, the practical question is usually not whether the CCPA thresholds are met today, but whether your documents and practices match what you actually do. That means a privacy policy that reflects US users, an accurate picture of what data you collect and why, and service provider arrangements that support your obligations. If you run ads, collect leads, use analytics or offer subscriptions, it is especially important that your privacy disclosures line up with what is actually happening on your site.

Where a lawyer helps, and which one you need

There are parts of a US expansion that an Australian lawyer should not be drafting, and parts that a US lawyer will not know about. The sensible split usually looks like this:

US counsel: handles the US-specific mechanics, including entity formation and governance, foreign qualification in the states where you operate, employment and contractor classification, and USPTO filings.
Australian advisers: handle the Australian end, including the structure of the cross-border arrangement, Australian tax consequences, your existing IP portfolio, and the intercompany documents that connect the Australian parent to the US entity.
Both together: settle the questions that sit in between, especially which entity owns the IP, how the entities are licensed to each other, and how profits and costs flow across the border.

The judgement calls an article cannot make for you are the ones that turn on your facts: whether you are ready for a subsidiary or should start leaner, which states your activity genuinely touches, whether your contractor arrangements would survive an audit, and how to sequence the trade mark clearances against your launch date. That is where a lawyer who understands the Australian side of the expansion, and who can coordinate the US work, adds the most value.

The federal-state layer is what catches Australians out

If there is one structural idea to carry away from this, it is that the US is not one legal market, and the smallest footprint can trigger state-level obligations. A single remote hire in California creates a California employer registration within 15 days. A Delaware corporation that operates elsewhere needs foreign qualification in the states it touches. Australian registrations, contracts and IP protections do not follow you across the Pacific; each has a US counterpart that needs to be put in place deliberately. The expensive mistakes in US expansion are rarely the big, obvious legal issues. They are the small technical ones you did not know to look for, and they are all visible in advance if you work through the sequence.

To pull it together: decide which states you will operate in first, choose a structure that matches how you will actually operate, form the US entity and get its tax identity in place, register where you do business, put US-ready contracts in front of customers, clear and register your trade marks before launch, assign IP from contractors in writing, classify every US worker correctly, and make your privacy practices match your disclosures. Get those foundations in place and the expansion itself becomes the straightforward part.