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How the US Operates as 50 Little Countries with Christy Woskobojnik (We’re the Brits in America S1:E19)

Episode 19 Shownotes – Ask An Expert with Christy Woskobojnik

In the UK you’ve got four countries that make up the United Kingdom, governed by HMRC. In the US, you’ve got 50 little governments that reside under that umbrella. They each have autonomous authority to set their own rules, and that’s where we see people stumble the most.

Christy Woskobojnik is a tax advisor specializing in US-UK cross-border matters, and head of business development for DYUSA, a tax and accounting firm. This week’s Ask An Expert with Christy focuses on advice for business owners thinking of starting up in the US.

The three key takeaways from this episode:

  1. Understanding State Complexity: Each state has its own set of rules regarding taxation, employment, and business operations. Christy emphasizes the importance of understanding these nuances early on to avoid compliance issues and unnecessary penalties.
  2. Choosing the Right Business Structure: Many UK businesses mistakenly choose an LLC when expanding to the US, unaware of the potential tax implications. Christy advises that a C Corporation, owned by a UK Limited entity, is often the best structure. This setup allows businesses to efficiently navigate the tax systems of both countries, leveraging the US-UK tax treaty to avoid double taxation and maximize tax benefits.
  3. The Importance of Cross-Border Expertise: Seek advice from someone with specific cross-border experience. General advice from domestic accountants or incomplete research can lead businesses into complicated tax situations, costly penalties, and operational headaches. Early engagement with cross-border tax advisors can save businesses from these pitfalls and provide a smoother expansion process into the US market.

We’re The Brits In America is affiliated with Plan First Wealth LLC, an SEC registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth.

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas.

About Richard

Richard Taylor is a British expat, dual citizen (UK & US). Originally from Bolton, he now lives in Greenwich, CT, where Plan First Wealth has its head office.

As the firm’s leader, Richard launched Taylor & Taylor, now Plan First Wealth, and continues to fuel the firm’s growth. Richard is a Chartered Financial Planner (UK – CII) in addition to holding the IMC (CFA UK) and Series 65 (US – FINRA).

Connect with Richard on LinkedIn

About Christy

Christy Woskobojnik is a results driven professional with more than 25 years of accounting and management experience. She identifies issues and provides practical solutions across functional departments as they relate to the financial management of the company. She does this by applying her experience as a former controller to provide clients with a comprehensive perspective on their tax and operational matters.

Connect with Christy on LinkedIn

Transcript:

Christy Woskobojnik:
[00:00:05 – 00:00:24]
In the UK, you’ve got four different countries that make up the United Kingdom and you can move about freely. In the United States you have the big country, but then you’ve got 50 little governments that reside under that umbrella and they each have autonomous authority to set their own rules.

Richard Taylor:
[00:00:25 – 00:01:16]
Welcome to the we’re the Brits in America podcast, a plan first wealth podcast for Brits in America by Brits in America, dedicated to helping british expats thrive in America. I’m your host, Richard Taylorr, and Plan First wealth is the business I founded and run today and we work with successful british expatriates living across the US to make the most of their opportunity and avoid the expat landmines. However, while Plan First Wealth, LLC is an SEC registered investment advisor, the views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of plan first wealth. Information presented is for educational purposes only. Now, if you aren’t already receiving our weekly emails, please go to our website, www.planfirstwealth.com and sign up to wealth hub.

Richard Taylor:
[00:01:16 – 00:01:44]
It’s free and you’ll then be notified every time we drop a new episode and so much more. Alrighty, let’s get back to this week’s show. Welcome to our Ask an expert show where I invite a fellow professional in the US UK cross border space to come in and talk to me about the issues we think Brits and America needs to be aware of if they are going to thrive here. My guest today is Christy Wozcaboynik. Christy is a tax advisor and she heads up business development for Dyusa.

Richard Taylor:
[00:01:44 – 00:02:21]
Dy USA are a US UK cross border tax and accounting firm with offices in Cleveland, Ohio and good old Shrewsbury in the UK, which may sound a bit random to you, but make sense once you know their story. So we’ve tentatively dubbed this conversation as coming to America the business edition because we are going to talk about what ambitious companies need to know if they are looking to establish themselves in America. Christy has the business insights, I have some of the personal insights, and together we hope that we can shed some light on these issues and help companies founders and their employees avoid getting themselves into a pickle when they come over here. So without further ado, let’s do this. Hi Christy, welcome to the podcast.

Christy Woskobojnik:
[00:02:21 – 00:02:26]
Hi Richard. Thank you very much for having me as your first business guest.

Richard Taylor:
[00:02:26 – 00:02:33]
Yeah, first ask an expert guest what an honor indeed. Will you tell everyone in your own words who you are and what you do?

Christy Woskobojnik:
[00:02:33 – 00:03:05]
Sure. I am a reformed CFO controller in industry that has been brought into a specialized accountancy firm that handles UK US cross border matters. And I can talk to people. My boss realized that and he put me in this role as business development. So what our firm does is we are UK US cross border niche practice where we help businesses that are set up in the UK that want to expand into the US.

Christy Woskobojnik:
[00:03:05 – 00:03:23]
And my role is to take them from answering simple questions to discovery about all things, usually tax and beyond, and then also bring them into our fold when they choose to engage with us and then we partner with them in their us expansion.

Richard Taylor:
[00:03:23 – 00:03:48]
A few things to unpack there. And let’s start actually with just how this business is Cleveland and Shrewsbury, because it is a random one. But before we do, personal observation. I’ve been in the US for nearly a decade now and you can tell me if this is right or wrong, but it seems to me in the last few years, there’s just been a surge in UK businesses coming here. There’s always been an appetite for it, because it’s just natural that once you’re successful in the UK, you look to this market because it’s so much bigger and it’s english speaking.

Richard Taylor:
[00:03:48 – 00:04:02]
But it stopped there, I think, for many years. I mean, obviously there have always been exceptions, but it just seems in recent years, going off conversations I’ve had and what I see on LinkedIn, there just seems to be more and more companies coming over here, which is great and can be challenging.

Christy Woskobojnik:
[00:04:02 – 00:04:44]
I 100% agree with you. I’ve been doing this for about ten years and one sector that is coming to the US in large amounts is the recruitment sector, executive search firms. And it’s simply because our market is so much bigger, our scale of economy is so much bigger than the UK and they’re finding great success. So that’s one group that’s coming over. But I also have had comments about Brexit, and that caused many companies to look to the US for expansion because they were having harder times because of Brexit dealing with the EU.

Christy Woskobojnik:
[00:04:44 – 00:05:04]
The other thing I have found is that many companies have already expanded into the EU, into Singapore, into Australia and countries like that before they’ve come to the US. So then they feel like they’re ready to take a bite of the elephant, as I say, which is this big country and economy.

Richard Taylor:
[00:05:04 – 00:05:06]
Why do you think recruitment is suddenly having a moment?

Christy Woskobojnik:
[00:05:07 – 00:05:49]
I don’t have the exact facts, but I will give you a scale as an example. So the UK is saturated. Let’s say there’s 35,000 executive search firms and a population of however many million. You come to the US and there are 45,000 executive search firms, but it’s far from saturation. And we have states that have economies that are bigger than the UK economy, for example, so that business in the UK can choose one area of the United States and grow a business beyond even what they’re able to do within the United Kingdom.

Richard Taylor:
[00:05:49 – 00:05:57]
Were those numbers accurate? 35,000 search firms in the UK and 65 or 70 million people versus 45,000 360 million.

Christy Woskobojnik:
[00:05:57 – 00:06:23]
They’re darn near close. I get my statistics from a company called PGC. They do quite a bit of market research and study and it’s something like that. There’s only a small percentage more of executive search firms in the US than there are in the UK. So it’s an unsaturated and sometimes very untapped market for them here in the US.

Christy Woskobojnik:
[00:06:23 – 00:06:36]
And to set up a services based business is far less complex. Even though the US is complex, the service based business is far less complex than manufacturing import export.

Richard Taylor:
[00:06:36 – 00:06:43]
Okay, we’ll get to some of the complexity later on, but let’s go back to what I said before. Tell us Cleveland and Shrewsbury. What’s the story?

Christy Woskobojnik:
[00:06:43 – 00:07:05]
It’s a great story. So, our managing partner grew up on a farm near Church Stretton, which is out in Shropshire, outside of Shrewsbury. He did his work experience with a firm there called Dyke Yexley. Then, as he was doing that and getting all of the certifications and qualifications, came to the US to visit a friend who had moved here. Well, and he met a girl.

Christy Woskobojnik:
[00:07:05 – 00:07:40]
So he stayed in the US. And over the years, he became dual qualified. So, fully chartered in the UK, got his master’s degree in the US and became a CPA and worked with a couple of regional firms here, became international partner in one of the firms, and in 2011, with the blessing of the UK firm and the blessing of the US firm, started this niche. So, why Cleveland and Shrewsbury? Two reasons is because this is where he lived in the US, and Shrewsbury is where he’s from in the UK.

Christy Woskobojnik:
[00:07:40 – 00:08:01]
But also, the thought behind being able to provide excellent advisory and tax services without being a New York and London firm was important to Rob, who’s our managing partner, so you don’t have to go to the big cities to get excellent client care and advice. See?

Richard Taylor:
[00:08:01 – 00:08:22]
I said, it sounds random, but once you know the story, it makes total sense. And also, it is important, because historically, a consistent theme that we tell every expat and client we speak to is that you should have a tax advisor. You shouldn’t have any tax advisor, you should have a cross border tax advisor. Oh, and by the way, the best us UK expertise that I was aware of was all in London. And people balk at that.

Richard Taylor:
[00:08:22 – 00:08:35]
They think they want to run in the US. And I was like, the best expertise I was aware of are Brits dealing with Americans in London. And that’s why it’s in London. But with London expertise comes London prices, and it can be very, very expensive.

Christy Woskobojnik:
[00:08:35 – 00:09:11]
I agree. And we also found this niche because the larger firms are the firms that can handle cross border or other international matters, but they don’t necessarily care to work with the small startups, or if they do, it is just outrageously expensive, rightfully so, for what those firms do. So we have filled this niche of working with manager owned businesses. When they come to the US, they are very successful in the UK. When they come to the US, they’re considered a startup and a little small business.

Christy Woskobojnik:
[00:09:11 – 00:09:36]
And it’s frustrating for them to know where to turn to get the help that they need, because the big guys, it’s not who they work with. And they can find many firms that do the compliance work, but they really need advisory, they need someone to help explain along the way. How do things work in the US? How do I get a bank account? What is payroll like?

Christy Woskobojnik:
[00:09:36 – 00:09:49]
How do you guys handle healthcare in the US? It goes far beyond just your annual filings for them to feel comfortable about what they’re doing when they’re expanding to this big country.

Richard Taylor:
[00:09:49 – 00:10:19]
Yeah, this big, complicated, sometimes challenging country with masses of opportunity, but where the penalties for non compliance, even innocent non compliance, are horrifying compared to what we’re used to in the UK. I remember one seeing, oh, LinkedIn was aflame with people complaining about HMRC subjecting taxpayers to a hundred pound penalty for late filings. And I was just like, you guys have no idea. You know, if it’s 100 pound fine in the UK, it’ll be ten grand in the US. Just like, wait, what?

Christy Woskobojnik:
[00:10:19 – 00:10:57]
Well, to expand on your point about seeking the right advisors when you are coming to America, is it’s very important to find cross border advisors early so that all of this stuff is understood. And I know so many great domestic us accountants, they’re friends, I would refer business to them, but they don’t have the cross border experience. And with foreign ownership in the US comes foreign reporting. And that’s where the IR’s especially will mail you. You and I both know the form numbers of some of these forms that have to be completed.

Christy Woskobojnik:
[00:10:57 – 00:11:30]
That don’t affect taxation, they don’t affect what your tax bill could be. But if they’re not filed timely, extended timely, the one form is a $25,000 penalty for these businesses. So if they seek advice from a domestic advisor, that advisor is not purposely going to harm them or give them bad advice, but there’s nuances that they just may not understand. And then you’ve got to go back and fall on your sword to the IR’s and hope that they will give.

Richard Taylor:
[00:11:30 – 00:11:49]
You a one time abatement, plead mercy. Oh, and by the way, if you don’t file these forms, not only are you open to penalties, but the statute of limitations clock might never start running as well. So that’s a whole other issue. And this is why I say having a tax advisor is not enough. Having a tax advisor who has international experience isn’t enough.

Richard Taylor:
[00:11:49 – 00:12:09]
You need specific uk us, because, you know, there are tax advisors in the US who say they’re international experts, but if you went to them with a offshore bond, they don’t know what a UK offshore bond is or an onshore bond, or that you need someone who understands what that particular product is and how the US is going to treat that under the treaty. And that’s why you need specific UK us.

Christy Woskobojnik:
[00:12:09 – 00:12:30]
Absolutely. And our niche, we fill it pretty well, I’d say. Very well, because we have UK chartered, fully chartered, and we’ve got us cpas on both sides. Our team have done specialty training or they understand something like you just described. It’s not just straight up the typical tax work.

Christy Woskobojnik:
[00:12:30 – 00:12:52]
And if we can’t answer a question, one of the beautiful things I love about what I do in my role is that we have such a great family of referral partners with cross border experience. So if you come to me with a question that we can’t handle, we usually can find someone or we know someone that we trust. So it’s a great family to be a part of. All of us in our niche.

Richard Taylor:
[00:12:52 – 00:12:58]
Yeah. One of the messages we all reinforce is not doing this when you come into us is a false economy.

Christy Woskobojnik:
[00:12:58 – 00:12:59]
Yes.

Richard Taylor:
[00:12:59 – 00:13:19]
Like, yeah, you might have to pay for some advice now, but what it’ll save you down the line is enormous. So I’m reminded of a conversation. I once recently met a guy who has a very successful business that he’s franchised in the UK and he’s just launched his first franchise in the US. And we had a conversation, he’s like, I wish I had knew about you 18 months ago. They came to the US thinking it was just gonna be like launching in the UK.

Richard Taylor:
[00:13:19 – 00:13:33]
And they have been completely disabused of this notion in terms of stress, liability, and of course, financially as well. So let’s talk about that. Let’s dispel some myths. I’m in the UK, I’ve got a successful business. I’m eyeing up the US.

Richard Taylor:
[00:13:33 – 00:13:35]
What do I need to know? How do I do this?

Christy Woskobojnik:
[00:13:35 – 00:14:18]
You need to know a lot, but let me clarify that. So the most important thing to understand is that the US is made up of 50 little countries. And this is how I describe it, how I described it on, I think, four discovery calls this week. In the UK, you’ve got four different countries that make up the United Kingdom, and you can move about freely through those four countries, but you’re still governed by HMRC and company’s house. In the United States, you have the big country that’s governed by the IR’s, but then you’ve got 50 little governments that reside under that umbrella, and they each have autonomous authority to set their own rules.

Christy Woskobojnik:
[00:14:18 – 00:14:22]
And that’s where we see people stumble the most.

Richard Taylor:
[00:14:23 – 00:14:43]
I literally had a conversation on teams with Martha in my firm last night, because she’s like, there’s four of us here and we’re in four different states, which, when I was blissfully ignorant, meant nothing to me. Now I run a business with four employees in four different states, two of which have got state tax and the other one’s got a franchise bought. God, no. It’s an absolute nightmare. And Martha was asking me, have you filed our franchise tax?

Richard Taylor:
[00:14:43 – 00:15:01]
I was like, does our accountant do it? I have no idea. And we’ve got to do this for Pennsylvania and Connecticut and Florida and Texas. And there’s taxes in some states and there’s franchise taxes in others, and there’s registrations in these states and there’s renewing these registrations. And I just said to her, like, we just cross our fingers every year and hope, and just one year we’re going to miss them.

Richard Taylor:
[00:15:01 – 00:15:15]
And Martha, I’ve got spreadsheet, I’m tracking it, and we get notifications from the different providers, but it’s completely overwhelming. I tell you, it annoys me every year. It feels completely unnecessary. And it also, do you know what particularly? It flies in the face of this notion, like, oh, America, we’re the land of the business.

Richard Taylor:
[00:15:15 – 00:15:18]
We make it easy. Like you don’t.

Christy Woskobojnik:
[00:15:18 – 00:15:37]
No. And it is complex. And you have to jump through more hoops to do business in the US than you do in the United Kingdom. But it can be done successfully, and it can be done successfully with the right advisors. I mean, you know, you and I talked about that previously, and part of the confusion is what you’ve just said.

Christy Woskobojnik:
[00:15:37 – 00:15:54]
It’s not called income tax or corporation tax in every state. Some call it excise tax, franchise tax, commercial activities tax. It all boils down to the same thing. But why can’t it be consistent? Why can’t we just say every state has got a corporation tax?

Christy Woskobojnik:
[00:15:54 – 00:16:01]
And that’s what they call. So that leads to even more confusion when you are in multiple states.

Richard Taylor:
[00:16:01 – 00:16:11]
I’ve got employees in multiple states. I’m submitting accounts in some states and not in others. I have to register in some states and not in others. I have to pay income tax in some states and not in others. So I have to then work out what are clients from each state.

Richard Taylor:
[00:16:11 – 00:16:20]
I have to, well, I say, I, Martha does all this, I have to pay a fixed fee in some states and not in others. It really overwhelms me. I find it really irritating.

Christy Woskobojnik:
[00:16:21 – 00:16:43]
I know. And I get questions in conversation that they say, well, can you give us a list of what is going on in this state? And I can’t. There’s no possible way, because even the same rule in one state gets interpreted a little bit different in another state. So we have to have clients come to us with the scenario that they’re thinking about before they do it.

Christy Woskobojnik:
[00:16:43 – 00:17:10]
This is what we ask them to do so that we can check that state’s rules as regards to have they made a connection to that state? Do they need to legally register or do they just need to have a small tax registration? Does the corporation tax rule the same as the sales tax rule? So in each state, you have to get into the minutiae and the details in that tax code to understand it. So that’s what we feel.

Christy Woskobojnik:
[00:17:11 – 00:17:19]
And we’ve proven to bring that value because we take the time with our clients to do that because it’s a minefield.

Richard Taylor:
[00:17:19 – 00:17:42]
If a business is eyeing up the US and it’s thinking, oh, you know, we’ll set up in New York saying that we’ll take advantage of remote workers and got the whole of the US. Yeah, but you need to factor in if you have people in these different states, the level of complexity is going to go up dramatically. That’s what I’m faced with right now. I’m talking to someone in a different state and I’m really thinking twice about it because it’s just going to add to my administration tax and registration burden in a way that I just don’t really want to. And that’s a shame.

Christy Woskobojnik:
[00:17:42 – 00:18:16]
It is a shame, especially for a smaller business that can find talent in another state. That person can work remotely and really add to the team. It gets very discouraging for that. We and the other advisors that I would call our referral partners or that we refer to, that we work together with on projects, say, start small, pick a state, and try to focus on that state and pick the state where you can find your talent pool. And then once you get used to that, if you want to start thinking about expansion or, you know, hiring remotely.

Christy Woskobojnik:
[00:18:16 – 00:18:41]
But I tell them that from the very beginning that the first connection you make to a state is physical. So you can’t have your office in Texas and somebody working for you in California, you can, but you now are tied to California and all their rules. And that really blows the mind of people that I talk to. I watch eyes get very big in conversations that I have.

Richard Taylor:
[00:18:41 – 00:18:46]
Yeah, yeah, yeah, yeah. We all love California, but you don’t want to be connected to California if you can avoid it.

Christy Woskobojnik:
[00:18:46 – 00:19:03]
No. And then I also get asked, what’s the best state? And I say, I can’t give you the best state, but I can tell you the few that we would tell you to avoid because of harsh taxation. So New York is harsh. We still have clients sitting up there because that’s where they are going to be successful.

Christy Woskobojnik:
[00:19:04 – 00:19:28]
And they’re doing phenomenal and they’re successful, but they pay more tax, they pay more rent, they pay higher wages. So if they’re ready for that, then great. But if they think of New York just because of the glam and glitz, it’s New York City. And we can explain how you can go to another state, and this is how it’s going to affect you from a taxation perspective. They oftentimes will choose another state.

Christy Woskobojnik:
[00:19:28 – 00:19:38]
So, you know, there’s a few states that we do warn people or let them know that it’s going to be more complex than other states, which sometimes helps them when they’re making their choice.

Richard Taylor:
[00:19:39 – 00:19:54]
Yeah. And what about structuring the business? So, going back to the person I was mentioning before, I had a conversation, he’s still in the UK. UK resident, UK citizen, set this business up in the US 18 months later, had their own franchisee. I said, who’s doing your accounts?

Richard Taylor:
[00:19:54 – 00:20:02]
Who’s I advising you? He said, oh, just some tax advisers we found in Orlando. So, to our point earlier, no cross border experience. I said, oh, how are you structured? Said, LLC.

Richard Taylor:
[00:20:02 – 00:20:16]
So I said, okay, luckily you’ve had no revenue yet other than this year, but I think you need to cross border tax advisor. So I’ve hopefully set you up there. How do you advise these companies? That’s the first question, right? How do we structure ourselves Llc, C Corp, S Corp?

Christy Woskobojnik:
[00:20:16 – 00:20:40]
And this is one of the most important questions. And again, this goes back to having a cross border advisor. Us lawyers are not trying to give you bad advice, but they are going to give you advice based on us people and us taxpayers. So there’s nothing like an LLC in the UK. It is a us based entity designed for us taxpayers.

Christy Woskobojnik:
[00:20:41 – 00:21:17]
You have a flow through in the UK called an LLP, but the LLC can be a sole proprietor, it can be multi member, it can be a partnership, it can be many things. And it does flow through to your us tax return. And every us person has to file an annual tax filing, unlike the UK. So there’s a disconnect between the advisor and the person hearing the advice about the LLC. They hear flow through, they hear disregarded entity flowing up to their UK entity and they think, wow, this is going to be great.

Christy Woskobojnik:
[00:21:17 – 00:21:51]
But the issues with that are an individual who’s a member of a US LLC now gets pulled into the US tax system. Do they really want to do that? More fees, more hassle, more expensive? Or if it’s a disregarded entity flowing up to a uk entity. While HMRC has made several rulings that they do not view that LLC as transparent, they view it as opaque, which means there are far more tax consequences on the uk side.

Christy Woskobojnik:
[00:21:51 – 00:21:55]
So that question of how to set up your entity is vital.

Richard Taylor:
[00:21:55 – 00:22:04]
Chrissy, correct me if I’m wrong here, but the worst case scenario, UK person with an LLC, you’re looking at double taxation without relief, right?

Christy Woskobojnik:
[00:22:04 – 00:22:05]
Absolutely.

Richard Taylor:
[00:22:05 – 00:22:06]
Which is devastating.

Christy Woskobojnik:
[00:22:07 – 00:22:09]
Yeah. It takes the tax treaty and tears it up.

Richard Taylor:
[00:22:09 – 00:22:30]
Yeah. So what we’re talking about here is you get $1,000 worth of income. The US could tax it, let’s just say 30% to 40%, and then the UK might tax it at 30% to 40% without relief. So that means of your thousand dollars, we’re talking six to 800 gone in paying the UK and the US, because they both want to tax that full 1000 at the full rate. Like it’s really bad.

Christy Woskobojnik:
[00:22:30 – 00:23:01]
Absolutely. So the best structure is pretty simple. A US corporation, a C Corp that’s wholly owned by a UK limited entity, and that’s where the tax treaty comes into play. We can ethically legally strategize between the two countries, because now there’s no double taxation. And both HMRC and the IR’s recognize strategies so that tax can be paid efficiently and that the firm’s goals can be met on both sides of the pond.

Christy Woskobojnik:
[00:23:01 – 00:23:38]
I know there’s an R and D credit. I don’t know much about it in the UK, so we certainly don’t want to give tax advice that would harm that in the UK, if someone is looking to build a us business to sell, we have to think about what advice is given because the due diligence that comes with that is always dotting every I and crossing every t. So, yes, that corporate structure owned by a corporate entity. There’s so many other advantages that I haven’t brought up, but that is the way to use the treaty and the way to be successful.

Richard Taylor:
[00:23:38 – 00:23:40]
This is like step one, though.

Christy Woskobojnik:
[00:23:40 – 00:23:41]
It is.

Richard Taylor:
[00:23:41 – 00:24:02]
It’s so fundamentally important and it can have such dramatic consequences. And I’ve just put this one example from my recent past. We’re literally talking the last couple of weeks where 18 months in domestic us tax advisor or accountant, and this british person has got a US LLC. And I just. I mean, I’ve caught it, but what if I hadn’t caught it, you know?

Richard Taylor:
[00:24:02 – 00:24:19]
And it’s step one. So step one, you’ve helped the firm you’re speaking to understand that they need a C Corp, not an LLC. You’ve stopped them making a big mistake. Step two, you’ve helped them pick the right state for them and then kept them confined to that state to reduce the complications, at least in the short term, while they get established. What’s step three?

Christy Woskobojnik:
[00:24:19 – 00:25:01]
Step three is multifaceted and it depends on what their goals are. So we work with firms that are already in the immigration process, so they’re in their visa process. So if that’s the case, it’s getting their us bank account opened and now they can start showing that investment that they need to show for the visa process. With that also, the next spoke at the same time of doing that is we need to talk early about how they’re going to pay people, how do they get healthcare, how do you view pension in the US? So that’s a very important conversation I have very early, because they have to understand it’s just so different in the UK.

Richard Taylor:
[00:25:01 – 00:25:15]
Well, listen, the pension system in the US is 100 times better than it is in the UK. But I would love to be a fly in the war when you have the health insurance conversation. I remember my own baptism of fire landing in California and learning all about it and just my mind being blown.

Christy Woskobojnik:
[00:25:16 – 00:25:37]
It’s away. Very frustrating. And there’s three ways to payroll people in the US payroll bureau, PEO and EOR. And an EOR is an employer of record. And that cannot be used if you’re here on a visa, because you get to be paid by the company sponsoring your visa, but you can be paid through a PEO, which is a shared employment arrangement.

Christy Woskobojnik:
[00:25:38 – 00:25:45]
And through that PEO, you get to tap into all of their benefits without trying to get your own. As a small business.

Richard Taylor:
[00:25:45 – 00:25:46]
This is like ADP and stuff, right?

Christy Woskobojnik:
[00:25:46 – 00:25:49]
There’s so many. ADP is one, yes, but that’s what.

Richard Taylor:
[00:25:49 – 00:25:54]
We’Re talking about here. That a peo is an ADP or a gusto, is that another one?

Christy Woskobojnik:
[00:25:54 – 00:26:19]
Well, they offer those services, but ADP and gusto are also traditional payroll bureaus. And in a traditional payroll bureau, it’s up to you to go procure a group health plan, to set up a 401k plan for your employees. And the difficulty is, when you’re one, two, three employees, it’s so difficult. Healthcare in this country has become a privilege. Again, it’s not a right.

Christy Woskobojnik:
[00:26:19 – 00:27:01]
They do not make it easy for small startups and manager owned businesses to put these things in place. So the peo is a nice option, because as you’re getting started, you can work on your business, not in your business, and your people can have access to nice benefits. And the great thing is, I work with this amazing gentleman in New York City. He’s a health care broker and he’s got relationships with many peos. And he has been able to help our clients all around the country as they’re starting up with two employees where they wouldn’t have access to these things, or they would have to spend so much time that they can get started this way.

Richard Taylor:
[00:27:01 – 00:27:12]
Well, we might need to talk about this because this is something I haven’t really got my head around yet. We have a payroll provider and a 401K, but with this problem, we’re too small for the health insurance, so it’s a bit of a mess, honestly. So maybe we should have a conversation offline.

Christy Woskobojnik:
[00:27:12 – 00:27:24]
Absolutely. Well, and then there’s all the tax rules that go with health care. So when you talk about the steps, that’s a very important part of step three. You know, step three is bank account. Make sure immigration is working okay.

Christy Woskobojnik:
[00:27:24 – 00:28:01]
Now we gotta prepare for when your people get here. And then the next step is just helping them. And one of the things that we do as part of our onboarding is help them set up their processes they’ve got processes in place, they have a finance team, they’ve got well run companies. But the US processes are a little bit different. So we help them understand which nominal codes they should be using in their software, which ones to add that for us purposes, how do we handle recharges and intercompany loans and also tracking their sales by state.

Christy Woskobojnik:
[00:28:01 – 00:28:43]
They have to have a mechanism to track sales by state so that onboarding step with us is again, helping them understand how to use their software for us purposes, how to record things for us purposes, how to have a mechanism in place to track sales by state. And we have quarterly calls with our clients to make sure we’re reviewing accounts and looking at that sales by state so that we can advise them along the way and tell them, oh, you want to do that in Pennsylvania? It’s going to trigger this and this, it’s fine. But now you need to do these next three steps. So those are our steps in bringing a client on.

Richard Taylor:
[00:28:43 – 00:28:46]
It’s making me think it’s better to prepare than repair.

Christy Woskobojnik:
[00:28:46 – 00:28:46]
Yeah.

Richard Taylor:
[00:28:47 – 00:28:56]
These things are nothing you do about it. It exists, it’s a challenge, it’s a problem, it’s an issue. You can go into it knowing, or you can stumble into it and then we’ll have to rectify it on the back end.

Christy Woskobojnik:
[00:28:56 – 00:29:25]
Yes. And having to go back and peel the onion, you know, it’s layers of things that we have to go back and fix and it gets costly. I also early on tell people that to prepare to come to the US, if they’re forecasting, they cannot take their UK operating expenses and convert them to the United States and have a realistic p and L. It is expensive here. And the expenses come from the complexities.

Christy Woskobojnik:
[00:29:25 – 00:29:30]
Wages are more because we pay for our healthcare, we pay for our own pension.

Richard Taylor:
[00:29:30 – 00:29:35]
But just wages alone for any of that are way higher than the UK.

Christy Woskobojnik:
[00:29:35 – 00:30:09]
And even in your advisory fees, I tell them, I’m trying to prepare you that what you pay your UK accountant is not what you can pay your US accountant. And if you find a us accountant that is going to take the same rate that you’re paying your UK accountant, you don’t get the right advisor. These 50 states, this looking at the rules, this helping them to prepare and help them not to stumble. If they recognize that you’re going to pay more in advisory costs, but you’re going to get the right advisory services, as you said, you’re going to save money down the road.

Richard Taylor:
[00:30:09 – 00:30:14]
It’s an investment and not doing it is a false economy that you will regret and you will pay for in other ways.

Christy Woskobojnik:
[00:30:14 – 00:30:15]
Yeah, yeah.

Richard Taylor:
[00:30:15 – 00:30:31]
I’m thinking about the guy I keep referring to who just said, I wish I’d met you 18 months ago. He learned the hard way that the 18 months later and a lot more money than they’d budgeted for. But they’re here now and they’re going to do great for a great business. So I’m excited for them. But it’s been a learning curve, let’s put it that way.

Christy Woskobojnik:
[00:30:31 – 00:30:45]
Oh, absolutely. And if I was coming to the UK, let me flip the scenario. I don’t know what. I don’t know. So I would need someone to hold my hand and say, this is what you’ve got to do if you’re going to come reside in the UK and be a UK taxpayer.

Christy Woskobojnik:
[00:30:45 – 00:31:08]
And I would also need someone to tell me, this is what you need to do in the US. Just because you moved to England doesn’t mean that you don’t have responsibility still in the United States. So I would need the advisor if the roles were reversed. And the person that you are referring to, what it does sound like, he’s got his humility. And that is a huge factor in this.

Christy Woskobojnik:
[00:31:08 – 00:31:29]
And I’m saying this from experience. We’ve worked with clients who went full fledged in on their own because they researched and they ended up having to spend so much more. We would help them, but we’ve actually had clients then get upset with us because of what has to be done to fix it. But they didn’t come to us in the first place.

Richard Taylor:
[00:31:30 – 00:31:52]
I strongly agree on you this point, and this guy in particular has excited that humility and they’re looking to come over here. And that means that now they’re going to get this team in place and when they come over here, they won’t make some of the mistakes that individuals make, and then we have to unwind, which is great. But back to your point, though. I find that sort of person you’re describing, they’re resentful. They’re resentful of the system that has led to this issue.

Richard Taylor:
[00:31:52 – 00:32:01]
Then they’re resentful that they have to engage us or you to fix it because they feel they shouldn’t have to. Which, you know, I understand your frustration, but it isn’t my fault.

Christy Woskobojnik:
[00:32:01 – 00:32:17]
No. And in doing this for ten years, I’ve worked with so many different clients and it really boils down to a lack of humility is what will cause you to stumble in the US. And it’s because you don’t know what you don’t know. And it’s okay. That’s what the thing is.

Christy Woskobojnik:
[00:32:17 – 00:32:27]
It’s okay. You can’t come to the US knowing everything, so it’s not a bad thing. But. And when I talk to people, I can see the qualities.

Richard Taylor:
[00:32:27 – 00:32:51]
Kirsty, one of the reasons I’ve changed the direction of this podcast a little bit and made it more about speaking to people like you, and you and I having these conversations is because every single week I speak to people, we call them landmines. They’re sat on landmines that I spot immediately. I’ve been meeting this week, someone sat on multiple landmines that have been sat on for years. It’s gonna be costly to unwind, yada, yada, yada. But the thing is, I find there’s just a complete lack of awareness of these issues.

Richard Taylor:
[00:32:51 – 00:33:14]
And some of them are complex and idiosyncratic and unfair, and some of them are just like, you should know this. So one of the reasons I’ve changed the direction slightly to have more of these conversations is we’re gonna start getting this information out there. We’re gonna start bringing to people’s attention. Hopefully that means that those people who are affected by it can then take that opportunity to voluntarily fix it. I rather I have the opportunity to fix something than I get a letter through the door and then it’s thrust upon me.

Richard Taylor:
[00:33:14 – 00:33:22]
And also that we can help people head it off. Hopefully people in the UK will listen to this and they will take action, they will prepare rather than have to repair.

Christy Woskobojnik:
[00:33:23 – 00:33:59]
Yes, that’s really good. And I focus on the business aspect of things, but then there’s the individual side too. And the important thing is, if you’re going to go to another country, if you’re going to move anywhere, understand what is going to be required of you before you go. I’ve seen individuals here, they move over here and they just, again, maybe they were on the PAYE system in the UK where they didn’t have to file something separate. Well, not only does the US require everyone to file, but you have to report your worldwide income.

Christy Woskobojnik:
[00:33:59 – 00:34:19]
And if you have foreign bank accounts and pensions and isas and all of those things, you’ve got other foreign reporting that comes with, as you know, a nice big penalty if not done. So just the importance of doing your homework. But not on Google. Maybe get a start on Google. Find out what you need to understand, but talk to an advisor.

Richard Taylor:
[00:34:19 – 00:34:23]
Yeah. Reflecting back, if you give one piece of advice, what would it be?

Christy Woskobojnik:
[00:34:23 – 00:34:40]
Find advisors early is my number one piece of advice. Where do you find advisors is the question. And there are so many trade organizations. The Department of Business and Trade is in the UK. They’re fantastic at directing you.

Christy Woskobojnik:
[00:34:40 – 00:34:56]
There are other organizations, there’s one called ApSco, which is recruitment and staffing, industry based. But find that organization. Or talk to your UK accountant, talk to your UK lawyer. They’re part of networks. So find the advisors.

Christy Woskobojnik:
[00:34:56 – 00:34:59]
Speak early before you make decisions.

Richard Taylor:
[00:34:59 – 00:35:12]
Okay. A slightly different question. If you think about all the conversations you’ve had, all the clients you’ve got, people come to you who are already here, what’s the biggest issue that’s already occurred? You know, what do you find you unwinding the most that you just wish that you could just get to people.

Christy Woskobojnik:
[00:35:13 – 00:35:14]
Before the state issue.

Richard Taylor:
[00:35:15 – 00:35:17]
The state issue, really the 50 states.

Christy Woskobojnik:
[00:35:17 – 00:35:42]
And the complexity surrounding that. Because you can move freely throughout the US and sell freely throughout the US, but you can’t do so without there being tax implications. So that is the number one complexity that people stumble into because they just start hiring people in other states not understanding what’s happening or even the economic threshold.

Richard Taylor:
[00:35:42 – 00:35:44]
That’s literally why I did.

Christy Woskobojnik:
[00:35:44 – 00:35:48]
Yeah. It is the number one complexity that causes the most problems.

Richard Taylor:
[00:35:48 – 00:35:57]
Yeah. Chrissy, I have to be honest with you. A lot of what I’ve learned and preach now has been learned through hard knocks. Like plan first. Wealth didn’t exist prior to us.

Richard Taylor:
[00:35:57 – 00:36:04]
I’ve learned a lot of this the hard way and now I preach it to try and help people avoid it. But. Interesting. So the state issue, you put that above the structuring issue?

Christy Woskobojnik:
[00:36:04 – 00:36:12]
I do, because 20% of clients that are referred to us have already set up an LLC. So, you know, we go through this, but the IR’s has an election.

Richard Taylor:
[00:36:12 – 00:36:14]
Yeah, it’s quite simple, right? To fix that. Yeah.

Christy Woskobojnik:
[00:36:14 – 00:36:40]
Yes. We can check the box and change the way they’re taxed and there’s even late relief for that. So you have a time period in which to check the box and if it went by, you can apply for late election relief. So that is a far more simple fix than having employees in multiple states. Workers comp, unemployment taxes, corporation taxes, registered agents.

Richard Taylor:
[00:36:40 – 00:37:00]
Yeah, we’re a small firm, but we’re four employees in four states. We’ve got all that. So if you’re a bigger employer in multiple states, like I can’t even begin to imagine, and then you find out down the road and you have to because you can get. I remember once in New York, the penalties for not meeting the workers comp rules are also staggering. $10,000 I got a $10,000 bill from New York.

Richard Taylor:
[00:37:00 – 00:37:06]
I got it rescinded because I was a single member, LLC. I can’t remember what the rule was. It rescinded, but that was not a nice piece of mail to get.

Christy Woskobojnik:
[00:37:06 – 00:37:20]
No. We call them nasty grams. Some states send out more nasty grams than others. New York and California being two of them, of course. And with New York, if you go beg for mercy and say, I didn’t realize this, it’s in place.

Christy Woskobojnik:
[00:37:20 – 00:37:31]
They will oftentimes abate that penalty because you didn’t know. But the time it takes to get it and the heart attack you have when you open that piece of post.

Richard Taylor:
[00:37:31 – 00:37:42]
Christy, you’re bringing back suppressed memories here. And it got rescinded. But it got sent onto a debt collection agency. It wasn’t even that I needed it rescinded. I actually wasn’t not meeting my obligations.

Richard Taylor:
[00:37:42 – 00:37:51]
They just misunderstood what kind of structure we were. We weren’t even required to have it. And yeah, start getting calls from debt collection agencies. Thank you, New York.

Christy Woskobojnik:
[00:37:51 – 00:38:17]
No, it’s absolutely maddening. And because my background isn’t in public tax, my background is in working for entrepreneurs in my career and being a CFO and controller and running different aspects of a business. That’s why I’m the beginning part of the discovery, answering questions and onboarding of our clients, because we go through all of these things. You need workers comp. This is how you get it.

Christy Woskobojnik:
[00:38:18 – 00:38:27]
You need to register for these things. We can help you. This is how you do it. Because those are the things that they just don’t know. And a payroll company is not going to tell you these things.

Christy Woskobojnik:
[00:38:27 – 00:38:43]
And that’s another misnomer. When you’re coming from the UK to the US, the payroll companies here are data in, data out. They process everything for you. Make sure everything gets paid, people get paid. And make sure your monthly quarterly tax reconciliations are completed.

Christy Woskobojnik:
[00:38:43 – 00:38:55]
And that’s wonderful, but they will not think for you, and they have their own set of liabilities, and they will not prorate your payroll. They will not advise you on how to get workers comp.

Richard Taylor:
[00:38:56 – 00:39:07]
They can’t landmines. There are landmines everywhere. And it can be quite frustrating as an entrepreneur because you feel like you’ve been missold in a way, because America is this land of opportunity, and it really is.

Christy Woskobojnik:
[00:39:07 – 00:39:07]
It is.

Richard Taylor:
[00:39:07 – 00:39:30]
The opportunity here is massive, but it’s kind of sold to you as like a freer, less bureaucracy, like, we make it happen. When you get here and there’s this myriad of these byzantine rules and regulations and terrifying penalties and you kind of feel like miss sold to in a way. And you just have to get over that. Frankly, our version of the payroll company didn’t tell me is, oh, my accountant didn’t tell me how to do that. Well, who’s your accountant?

Richard Taylor:
[00:39:30 – 00:39:41]
Oh, it’s Bob around the corner. Well, one, Bob doesn’t know about this stuff, to our point earlier. And two. Wait, did he tell Bob about the offshore account? Well, no, even if Bob did know, Bob couldn’t tell you if he didn’t tell him about it.

Richard Taylor:
[00:39:41 – 00:39:42]
So.

Christy Woskobojnik:
[00:39:42 – 00:39:43]
Yeah, exactly.

Richard Taylor:
[00:39:43 – 00:39:44]
The joys.

Christy Woskobojnik:
[00:39:44 – 00:40:00]
And that’s another good point about having the right advisors in place for what you’re doing, is because we have these quarterly calls with clients and we tell them we’re going to ask you questions that you didn’t even know you needed to answer because we know the requirements and we’re going to help you understand those.

Richard Taylor:
[00:40:00 – 00:40:06]
Super duper. All right, Christy, so where can people find you if they want to hunt you down and pick your brains?

Christy Woskobojnik:
[00:40:06 – 00:40:21]
Oh, they can find me on LinkedIn. They can email me. I’m Christy Waskaboynick. If people don’t know my email, our website is dykesley.com. I love answering questions.

Christy Woskobojnik:
[00:40:22 – 00:40:37]
I actually spend probably 20% of my week just answering simple questions about the US. Someone’s not ready to expand, or they’re not expanding, but they get us questions, tax forms, whatever. And I’m happy to help people with those things.

Richard Taylor:
[00:40:37 – 00:40:40]
What’s the tariff for that? Hundred dollars a pop. Dollar 200 a question?

Christy Woskobojnik:
[00:40:40 – 00:40:54]
No. Goodwill makes me happy. We get to make a difference. I know it sounds corny and cheesy, but get to make a difference. And we actually have a tagline for our firm and it’s called safeguarding futures.

Christy Woskobojnik:
[00:40:54 – 00:41:03]
We want to help people start, right? Keep going and help them reach whatever that goal is that they would like to reach with their us business.

Richard Taylor:
[00:41:03 – 00:41:11]
I’m into it with a similar sort of thing on a personal level, so I like it. I get it. Wonderbar. Well, listen, Christy, thank you so much for being on the podcast.

Christy Woskobojnik:
[00:41:11 – 00:41:14]
Thank you for having me. This has been a wonderful experience.

Richard Taylor:
[00:41:21 – 00:41:41]
Alright, folks, that’s another episode of we’re the Brits in America, under our belts. Thank you for listening. I appreciate it. And I appreciate you. If you’re enjoying the show and would like to support the mission, which is to help brits thrive in America, I’d ask you to subscribe to the podcast wherever you listen and also consider leaving a rating and a review.

Richard Taylor:
[00:41:41 – 00:42:05]
This stuff really does matter. Please help me us get this information to the people who need it. That is your fellow Brits living in America. Just a quick reminder that this show is brought to you by plan first, wealth. We are a us based US UK cross border financial planning and wealth management firm, and we help successful british expatriates living across the US to make the most of their opportunity and ultimately to retire happier.

Richard Taylor:
[00:42:05 – 00:42:26]
So, if you’re a British expat living in America and you’d like to know more about what we do before people like you, you can find us at our website, www.planfirstwealth.com or you can look me up on LinkedIn. Do get in touch. We’d love to hear from you. As always, thank you to Sam Nash and the podcast guys for their help producing this episode and the entire show. See you next time.

Retire Happier.

Plan First Wealth Is A US/UK Wealth Management Firm Serving Successful British Expats in America With at Least $1M net worth Make the Most of their Opportunity.

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