European expansion into the US: operational bottlenecks
02 July 2026
You’ve closed your funding round and expansion into the US is your next move. The market is large, the opportunity is real, and your investors expect it.
But European expansion into the US is operationally very different from scaling in Europe. The processes, barriers, and sequence can all look unfamiliar from where you’re standing.
The assumption many founders make is that US expansion is primarily a commercial challenge. But in practice, many preventable delays occur long before revenue generation becomes the issue.
The businesses that enter the US smoothly are typically the ones that understand the common operational bottlenecks before they start building.
Our Global Expansion team has identified four of the most common bottlenecks that European founders encounter as they set their sights on the US
1. Starting US activity before a structure is in place
Many European founders begin their US push before the entity is formally established. They attend meetings, work with contractors, or have a co-founder spend extended periods operating in the country.
What most do not know: sustained commercial activity here can create a ‘permanent establishment’ for your European parent, making it subject to US corporate tax even before a formal subsidiary exists. If you have already started US-facing activity, this is worth reviewing before you formalise your structure.
2. The EIN bottleneck
An EIN (Employer Identification Number) is a federal tax ID number issued by the Internal Revenue Service (IRS) to identify a business entity for tax and administrative purposes.
Obtaining an EIN is where most European founders hit their first wall, primarily because they believe it will be a relatively quick administrative step.
For European founders without a US Social Security Number (SSN), the standard IRS online EIN application is unavailable. The responsible party listed on the application must hold a US SSN or Individual Taxpayer Identification Number (ITIN).
Without one, a fax or mail application is required. This process can take three to five weeks under normal conditions, and longer when the IRS is backlogged.
3. The banking catch-22
You need an EIN before most US banks will open a business account. You need a US bank account before you can make payroll, sign leases, or receive client payments. You need both before your first US hire can start.
Opening a US business account as a foreign-owned company involves enhanced due diligence requirements that go beyond what a domestic business faces. Banks are required by law to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. You should prepare:
Corporate documentation
- Articles of Incorporation and corporate bylaws
- EIN confirmation letter from the IRS
- Corporate resolution authorising the account
- US business address verification
Ownership and compliance
- Proof of identity and address for all directors and beneficial owners
- Source of funds documentation
- Description of intended US business activity
- Current banking partners and relationship history
The process can take two weeks to two months depending on the bank and the complexity of your corporate structure. Some banks require in-person attendance from account signatories while others do not.
The choice of banking partner also matters as not all US banks are equipped to work efficiently with foreign-owned entities. The wrong choice can cost you months.
4. Hiring is more complex and expensive than many companies expect
Your first US hire is likely a VP of Sales, a Country Manager, or a technical lead. Before that person starts, it is important to understand how US employment differs from Europe.
In most US states, employment is “at-will”, meaning either party can terminate the relationship at any time, for any reason that is not legally prohibited. There is no statutory notice period, which has implications for how you structure contracts and manage risk from the outset.
Hiring also introduces federal and state payroll obligations, which vary depending on where your employees are based. As companies expand into additional states, each new hire can trigger further registration and compliance requirements.
Benefits are another key consideration. While health insurance is not always legally required, it is typically expected in order to attract talent and represents a significant cost for early-stage teams.
Taken together, these factors mean total employment costs often sit well above base salary. This is something many companies underestimate when planning their first US hires.
How ZEDRA Can Help
These challenges are all manageable. The problem is that many European founders encounter them when expansion timelines are already locked in, with hiring plans already underway. Understanding where delays crop up allows companies to sequence their expansion correctly and avoid unnecessary disruption.
ZEDRA has supported over 6,100 companies globally, and facilitates hundreds of established US entities a year. Our Global Expansion team based in Boston and New York works primarily with Series A and B tech, software, and life sciences companies expanding from Europe.
We do not subcontract; the team that manages your setup is the team that manages your ongoing operations. Your account manager acts as a local controller, coordinating across legal, tax, accounting, and HR so your European leadership team has a single point of contact and partner for everything on the ground.
Download our full guide to setting up a business in the US or get in touch with Raphaël de Roubin for support in identifying bottlenecks before they slow your expansion.
