Doing Business in the USA is the essential conference for Founders, CEOs and C-level executives from around the world who are planning to enter or expand their business in North America. Set on the first day of SXSW Interactive, it provides a comprehensive view of industry trends, investment, legal, tax and regional opportunities with a mix of expert speakers, case studies and candid Q&As. For more information on the Doing Business in the USA event including the full speaker line-up check out: http://chinwag.com/events/2013/03/sxsw-chinwag-present-doing-business-usa

1. Welcome to
Doing Business in the USA
@ SXSW 2013
Lunch & refreshments
courtesy of #doingbiz

2. Doing Business in the USA
@ SXSW 2013
Introduction
Sam Michel – Chinwag – @toodlepip
Hugh Forrest – SXSW
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3. Doing Business in the USA
@ SXSW 2013
Welcome to Austin
Mayor Leffingwell, City of Austin
Stephen Kreher, Austin Chamber of Commerce
Lunch & refreshments courtesy of
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4. Doing Business in the USA
@ SXSW 2013
Geography Lessons:
Silicon Alley to Silicon Valley
Robert Scoble (@Scobleizer) Startup Liaison Officer, Rackspace
Hermione Way (@hermioneway)Newspepper / The Next Web
Harper Reed (@harper) Founder, Harper Rules LLC
ManoushZomorodi (@manoushz) New Tech City, WNYC Radio
Ben Metcalfe (@dotBen) Co-Founder, WP Engine
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5. • WNYC.org/tech
• Twitter @manoushz
• manoushz.com/blog
manoushz.com

6. • Digital companies that base at least 75% of their development in New York City and have at least 1,000 users or
monthly visitors are eligible.

7. NYC STATS
• Home to 29 multi-billion dollar media
companies, more than any other US
city, according to NYEDC.
• NYC is nation’s 2nd largest hub for tech
companies, says Center for Urban
Future.
• New York Tech MeetUp has grown to 30k
members.
• Venture funding to startups grew 34%
from 2007-2011, according to
Pricewaterhouse Coopers and National

8. Craig David article

9. The PROs
Proximity
Cool factor
Creative Minds
Design/Media/Fashion
Wall Street
International capital

10. CONS
Political uncertainty
Broadband
Talent
Real Estate
Sandy

12. • WNYC.org/tech
• Twitter @manoushz
• manoushz.com/blog
manoushz.com

13. Doing Business in the USA
@ SXSW 2013
Keeping Legal:
Setting up, starting up, paying up, keeping up
Allan Rooney (@ajprpc) Rooney, P.C
US Immigration for Digital Entrepreneurs
BarstMukamal&Kleiner LLP
Lunch & refreshments courtesy of
13 #doingbiz

14. Legal Aspects of Doing Business
in the United States
Allan J.P. Rooney Emre Ozgu
Rooney P.C. Barst Mukamal & Kleiner LLP
800 Third Avenue 2 Park Avenue
New York, NY 10022 New York, NY 10016
(212) 545-8022 (212) 686-3838
allan.rooney@rooneypc.com eozgu@bmkllp.com

15. Contents
Methods of doing business
• This presentation will set forth the
major considerations for foreign Subsidiary entities
companies that wish to expand
operations into the United States,
Employment
and establish United States
subsidiaries.
Contracts
• This presentation does not constitute
legal advice or counsel, and you Intellectual Property Protection
should consult a legal professional
about the matters contemplated Privacy
herein.
Immigration

16. Volunteers
SAM TOM

17. Methods of Doing Business
in the United States
Acquisition
Direct sales to US customers
Agency/Distributors/Resellers
Subsidiaries/Joint ventures

18. SubsidiaryEntity Formation
Corporate Choices
What type of entity should I establish?
• Sam, owner of XYZ UK Company, wants to expand her UK-
based business into the USA.
• She recalls her US friends chose LLCs when they started
their own businesses.
• Sam forms an LLC named XYZ US Company, with XYZ UK
Company being the sole owner.
• Tax time comes around and Sam’s US accountant tells her
that XYZ UK Company must file US income tax returns.
• Sam is surprised and asks why XYZ US Company is not the
entity filing the returns.

19. Subsidiary Entity/US Branch
Subsidiary Subsidiary
corporation LLC
Subsidiary
US Branch
partnership entity

20. Subsidiary Entity:
Corporations and LLCs
Similarities/Differences
• Liability
• Taxation
• Tax Return Filing
Corporate Governance
• Piercing the corporate veil
Immigration Visa Purposes
• Ownership percentage affects visa eligibility

21. Subsidiary Corporations
Shareholders, directors & officers
Taxes
Personal liability of owners & officers

22. Shareholders, Directors and Officers
Shareholders
• Owners
Directors
• Appointed and removed by shareholders
• Responsible for overall management
• Do not need to be US citizens or residents 
Officers
• President/CEO, VP/COO, Secretary, Treasurer/CFO, CTO, CIO, etc.
• Appointed and removed by directors
• Responsible for day-to-day management
• President/VP typically sign contracts (but other officers may do so)
• Do not need to be US citizens or residents 

23. Taxes (New York example)
•15% on the first $50,000
•25% on the next $25,000
•34% on the next $25,000
Federal Corporate •39% on the next $235,000
Taxes •34% on the next $9,665,000
•35% on the next $5,000,000
•38% on the next $3,333,333
•35% thereafter
New York State •Generally 7.1%
Taxes
New York City •Generally 8.85%
Taxes
• Company must withhold income taxes from employees’ paychecks
• Company must pay federal unemployment tax (FUTA) (6.0% of the
first $7,000 or less based on experience)
• Must pay employer’s share of the Social Security tax and the Medicare
Payroll Taxes tax and withhold employee’s share (each: 7.65% on the first $113,700
(for Social Security and Medicare), 1.45% on the excess (for Medicare
only))
• Must withhold employee’s federal, state, and local income taxes

24. Personal Liability:
Shareholders
 Generally, shareholders are not personally liable for a
corporation’s obligations.
 Potential exceptions:
 Sales tax obligations
 10 largest shareholders of a NY corporation can be held
personally liable for the wages of the company’s
employees
 A creditor may hold shareholders liable for the acts of the
corporation (“piercing the corporate veil”) if:
 The company has been used to commit fraud, or
 The company is the mere instrumentality or alter ego
or agent of its owners

25. Personal Liability:
Directors and Officers
• Generally, directors and officers owe fiduciary duties to only
shareholders, not creditors, of a company.
• Personal liability to the company or its stockholders for breach
of fiduciary duty can be eliminated in the Certificate of
Incorporation with certain exceptions (breach of duty of
loyalty, intentional misconduct, bad faith, knowing violation of
law).
• If the company becomes insolvent, directors and officers have
a fiduciary duty to protect the interests of the company as a
whole, including its creditors.

26. Subsidiary Limited Liability Companies
Members and managers
Taxes

27. Members and Managers
• Members (Owners)
– Can manage the LLC (a “member-managed LLC”) or be
passive investors (a “manager-managed LLC”)
– Have limited liability, unless the “corporate veil” is
pierced
• Managers
– Can be the same as or different from the members
– Appointed and removed by members
– Do not need to be US citizens or residents 

28. Taxes (New York example)
• LLCs with multiple members are taxed as
partnerships by default (single-member
LLCs are ignored here for tax purposes).
• A partnership is a pass-through entity;
General partners (members), not the
Information partnership, are subject to taxation.
• In New York, each LLC member will file
federal, state, and city income tax returns
reflecting its respective share of the LLC
income.
• Even though an LLC does not bear any
New York federal or state “entity” taxes, it may be
City Taxes subject to City unincorporated business
tax (in NYC, it’s 4%).

29. Subsidiary Entity Formation
State Your Business
In what state will the company be formed/doing
business?
• Tom, owner of ABC UK Company, wants to expand the business into the
USA.
• Having heard that the State of Delaware is “where companies want to
be,” Tom sets up a subsidiary company, ABC US Company, in Delaware.
• ABC US Company establishes its office and operations in New York City.
• Business is going well, but one day ABC US Company is forced to sue a
client who has not paid.
• During the litigation, the nonpaying client argues that ABC US Company
should not be permitted to litigate in a NY court because it is not a NY
company and it has not obtained authorization to do business in NYS.

30. Formation/Qualifying to do Business
 Selecting jurisdiction (State of formation)
 Laws of the State govern the corporate aspects of the company.
 Laws of the State in which the company “does business” govern state
taxation.
 Domestic Registration/Formation
 File “Certificate of Incorporation” or “Articles of Organization” in the
jurisdiction.
 Foreign Qualification
 State laws vary on when you must apply for authority to do business in
the State.
 The qualifying process is comparable to the process of forming a US
company in terms of time and cost.
 Branches should also qualify.

31. Employment
Arrangements
Protecting Assets: Restrictive covenants
Discrimination

32. Employment
Choosing to be Independent—Control!
What issues should my company consider when we’re
hiring workers?
• Remember Tom?
• Tom’s company is now fully operational and has a number of full-time
employees.
• In the third month, a big project comes in that requires additional
staffing. Tom hires a worker as an independent contractor to work on
the one project. The worker is permitted to work remotely using her
own computer, but is asked to work during normal business hours to
facilitate communications with team members.
• The project ends and the worker has been fully paid for her services.
• A few weeks later, Tom receives a notice from the State indicating that
the worker filed a claim for unemployment insurance benefits and
named Tom’s company as her most recent employer.

33. Employment
 At-will arrangement
 Independent Contractor (or Employee)?
 It’s all about CONTROL!
 (time, place, manner)
 Fact-specific determination, various factors
 Test varies across States and agencies
 Misclassification can lead to significant exposure and liability
 Back taxes, interest, penalties
 Unpaid overtime claims
 Minimum wage
 Benefits
 Unemployment
 Etc.

34. Employment
It’s a Sign When Your Assignment Agreements Don’t Assign
Have non-employees (e.g., ICs) developed software
under a “work-for-hire” agreement?
• Tom’s company is working with a US software developer and
enters into a work-for-hire agreement that purports to transfer
all rights in the developed software to Tom’s company.
• During its due diligence, counsel for a VC investor expresses
concern that Tom’s company actually doesn’t own the
developed software because the software was not expressly
assigned by the developer.

35. Employment
Protecting Your Assets
Have employees entered into confidentiality and
invention assignment agreements?
• One of Tom’s first employees helped to develop the core
software products sold by Tom’s company. The employee
never signed an agreement assigning her IP rights to the
company.
• The employee has left Tom’s company to work for a
competitor.
• The competitor begins marketing similar software.

36. Employment
 Contracts/Equity Compensation Documents
 Confidentiality
 Restrictive covenants
 Equity awards
 General Employer Requirements/Concerns
 Myriad of technical rules—state-specific
 Discrimination
 Wages, health insurance, benefits, tax withholding
 Payroll company
 Benefits vendors

37. Restrictive covenants
• Subject to law of State of employment
• Generally must be reasonable in scope, geography and
duration; cannot overreach
• Facts and circumstances
• Types:
– Non-compete
• Prohibits joining/establishing competing business
• Very restrictive
 Non-solicitation
 Prohibits soliciting customers/employees of company
 May be enforceable, depending on facts and circumstances
 Non-service
• Prohibits providing services to customers of former employer, even if “they
call you”
• Compare to active solicitation

38. Discrimination
• In accordance with federal, state, and local
statutes, an employer cannot discriminate on the
basis of:
– Age
– Gender
– Disability
– Race
– Religion
– Sexual Orientation (e.g., NY)
• EEOC responsible for enforcing federal anti-
discrimination laws

39. Contracts
Contracts for sale of goods/services
Reseller agreements
Licensing/Development agreements
Commercial leases

40. Selling via the Internet
Click-Wrap agreements
Sales tax concerns
Privacy

41. Click-Wrap Agreements
IACCEPT?

42. Sales Tax
Collection is Not Optional
Should my company be collecting sales taxes?
• Sam’s company is selling software over the Internet.
• Customers can buy CD versions or download the file.
• Sam does not collect sales tax from her customers.

43. Privacy
New Federal Trade Commission (FTC) Recommendation
 App developers should:
 Have a privacy policy and ensure that it is easily accessible
through the app stores.
 Provide just-in-time disclosures and obtain affirmative
express consent before collecting and sharing sensitive
content, such as geo-location information (unless already
provided and obtained by the platform provider).

44. Privacy
New FTC Recommendation (cont’d)
 App developers should:
 Improve coordination and communication with ad
networks and other third party service providers, such as
analytics companies, to better understand the software
they use and, as a result, be able to provide accurate
disclosures to consumers.
 Consider participating in self-regulatory programs, trade
associations, and industry organizations, which can guide
them in preparing uniform, short-form privacy disclosures.

45. Privacy
Path (social networking mobile app) FTC settlement:
 $ 800,000 fine
 Requirement to create a comprehensive privacy program
and to obtain independent privacy assessments every
other year for the next 20 years for, among
others, collection of children’s personal information and
deceptive privacy policy.
 Policy claimed that Path automatically collected only
certain user information while in fact one version of the
app also collected information from users’ address book.

46. Privacy
New EU Data Protection Regulation (Enter into force in 2014)
 Fines of up to 2% of worldwide turnover for gross data protection
violations
 Requirement to appoint a data protection officer in companies
 “Privacy by design”
 Companies must consider privacy at the outset of designing
new technologies.
 “Right to be forgotten”
 Companies must, upon justifiable request, delete consumer
personal data completely.

47. Privacy
Mergers & Acquisitions
– Privacy due diligence now standard
– Keep privacy policies up-to-date and retain right
to disclose personal information to buyers

48. Litigation
Limited liability
Product liability
Insurance

49. Litigation
• Venue
• Fee-Shifting
SUED?

50. Intellectual property protection
Patent registration
Trademark registration
Copyright registration
Advantages of registering IP

51. IP
General Discussion
• Intellectual Property
– Patents—New and useful inventions
– Copyrights—Original works of authorship (e.g., software)
– Trade secrets—Confidential information, know-how and non-
patented inventions
– Trademarks—Brands and logos used to identify goods or
services
• Registration

52. IP
A Challenge to My Trademark
Has a US-based service provider conducted a US
trademark search for my company’s name and
other key brands?
• Remember Sam? Well, her company is fully operational and
has been selling products and services for several months.
• One day, Sam receives a cease and desist letter from a US
company that offers competing products and services using a
mark that is similar (but not identical) to the mark used by Sam.
• Sam asks how this could have happened. She had searched the
US Patent and Trademark Office trademark database to see if
the name was being used by another person and found no
matches.

53. IP
Owner of My Own Domain Name
Is my company identified in publicly available
domain name databases as the owner of record for
all its domain names?
• Tom’s company’s website operates under a domain name
that was obtained for Tom by the company that hosts the
website.
• During its due diligence, counsel for a VC investor asks
Tom to confirm that the company will continue to control
its domain name if the contract with the web-hosting
company terminates.

54. IP
Joined at the Profits
Does my company jointly own IP or technology
with any other individual or entity?
• Tom’s company and a US software developer entered into a
joint development agreement that says that all developments
will be jointly owned.
• Tom’s company begins commercializing some of the
developments that it was primarily responsible for creating.
• Six months later, the joint development partner demands half
of the proceeds of Tom’s company’s commercialization efforts.

55. IP
Partner Confidential
When do my company’s non-disclosure agreements
terminate?
• Tom’s company is considering a strategic partnership with a US
company.
• Before making any disclosures, Tom makes sure that the parties
enter an NDA with a one-year term limit.
• Tom then discloses to the potential partner some of his
company’s key proprietary processes and systems.
• As business would have it, the partnership never gets off the
ground.
• One year later, the potential partner uses those proprietary
processes and systems to compete with Tom’s company.

56. IP
Confidentiality Conundrum
Are the terms or existence of my company’s
contracts with partners or customers confidential?
• Tom’s company enters into a technology license agreement that
states that the terms of the agreement are confidential and
may not be disclosed to third parties.
• The parties end up not being on the best of terms, and the
counterparty is constantly looking for a way out.
• During its due diligence, counsel for a VC investor expresses
concern that Tom’s disclosure of the license agreement in the
diligence process constitutes a breach and that the other party
can now terminate the agreement.

57. IP
Indemnification
Has my company agreed to indemnify partners or
customers for IP infringement claims resulting from
their infringing actions?
• Tom licenses his company’s software in object code form to a
US licensee that intends to combine it with its own internally
developed software and market the combined product.
• In the license agreement, Tom’s company agrees to indemnify
the licensee for third-party infringement claims arising in
connection with the licensee’s use of Tom’s company’s
software.
• Years later the licensee is sued for infringement in connection
with its distribution of the combined product and looks to
Tom’s company for indemnification.

58. IP
Escrow
For escrowed source code to which my company
has obtained a license, when does the license
become effective?
• Tom’s company licenses software from a US licensor and
requires the licensor to put the source code in escrow to ensure
access in case the licensor files for bankruptcy.
• The license agreement states that the license to use the source
code becomes effective only after the licensor’s bankruptcy.
• After bankruptcy filings are made, the debtor/licensor’s trustee
argues that the license is ineffective as an impermissible
transfer of rights from a bankrupt entity.

59. Immigration
ESTA Program (Visa Waiver)
Work Visas: L-1, E-1, E-2, H-1B
Permanent Residence (Green Cards)
Comprehensive Immigration Reform

60. Visa Waiver Program
ESTA Program (Visa Waiver)
– When
– How Long
– Restrictions
– Timing to change to a work visa

61. Work Visa:
L-1
L-1 Intra-Company Transferee Visa
 Organizations which qualify
 Employees who qualify
 New Office L-1s
 Process
 Duration
 Derivative Beneficiaries (Spouses/Children)
 Spousal Work Authorization

62. Work Visa:
E-1, E-2
E-1 Treaty Trader & E-2 Treaty Investor Visas
 Companies which qualify
 Employees who qualify
 Process
 Duration
 Derivative Beneficiaries (Spouses/Children)
 Spousal Work Authorization

63. Work Visa:
H-1B
H-1B Specialty/ Professional Occupation Visa
 Annual Quota
 Position requirements/Academic credentials
 Wage Requirements
 Process
 Duration
 Derivative Beneficiaries (Spouses/Children)
 Trends—Self Sponsorship

64. Permanent Residence
Permanent Residence (Green Card)
 Employment-based categories
 Current backlogs
 Tax Issues—Worldwide Income

65. Immigration Reform
Comprehensive Immigration Reform
 New Opportunities for Entrepreneurs

66. Any questions? Contact us.
Allan J.P. Rooney Emre Ozgu
Rooney P.C. Barst Mukamal & Kleiner LLP
800 Third Avenue 2 Park Avenue
New York, NY 10022 New York, NY 10016
(212) 545-8022 (212) 686-3838
allan.rooney@rooneypc.com eozgu@bmkllp.com
This presentation does not constitute legal advice or counsel, and you should consult a legal
professional about the matters contemplated herein. This presentation is for discussion purposes
only and in no way purports to constitute exhaustive legal advice on doing business in the United
States. There is no attorney-client relationship between the reader or his company and this law firm
unless expressly created and governed by a retainer agreement.
© Rooney P.C. P.C. 2013
© Rooney

67. Doing Business in the USA
@ SXSW 2013
Lunch!
Sorry, no food or drink in the
chamber, pretty please.
Lunch & refreshments
courtesy of our friends at
67 #doingbiz

68. Doing Business in the USA
@ SXSW 2013
Shifting Units & Making Noise:
Sales & Marketing in the US
Toby Daniels (@tobyd)CrowdCentric/ Social Media week
GemmaCraven (@gemsie) Executive Vice President, Ogilvy
SaidahNash Carter, Vice President, Thomson Reuters
Todd Greene (@Id8tion) VP Marketing, Media Temple
Lunch & refreshments courtesy of
68 #doingbiz

69. Doing Business in the USA
@ SXSW 2013
Show Me The Money:
VCs, Angels & Investment
Ned Hill (@NedHill) Managing Director, DFJ Mercury
Jason Seats (@seats) Managing Director, TechStars
Ben Metcalfe (@dotBen) Co-Founder, WP Engine
Lunch & refreshments courtesy of
69 #doingbiz

70. Doing Business in the USA
@ SXSW 2013
Tales from the Trenches: Case Studies
Jules Ehrhardt (@ezyjules) CEO, ustwo
DragosIlinca (@dragosilinca) Co-founder, UberVU
Jess Butcher (@jessbutcher) CMO & Founding Director, Blippar
Joe Braidwood (@joebraidwood) CMO, Swiftkey
Sam Michel (@toodlepip)Founder, Chinwag
Lunch & refreshments courtesy of
70 #doingbiz

71. Doing Business in the USA
@ SXSW 2013
Networking Drinks
Kindly supported by
Malaga Tapas & Bar, 440 West 2nd Street
Right around the corner
Lunch & refreshments courtesy of
71 #doingbiz