In August 2023, I had the pleasure of interviewing my friend Siddhartha Havelia, the founder of Mercurius Advisory Services. MAS is an international company providing outsourced services in the areas of accounting, taxation, and business support.
We talked about a lot of things, but I wanted to share my top takeaways regarding how his international accounting firm can help US and foreign-based companies.
Brandon: I recently had a situation where a client of mine was planning to start a venture with a non-US individual as his partner, and this overseas partner had some reservations about how to manage his US and overseas tax reporting. We both know that moving US funds between countries is challenging. What are your thoughts around this?
Siddhartha: Foreign investors may feel they are starting at a disadvantage when they bring their capital into the United States. The American market is new and unfamiliar, and in most industries, there is a certain American “way” that the business gets done.
Our job, then, is to work with the investor to carefully plan and pick the most advantageous US state to incorporate in and select an appropriate business structure for the venture considering the risk appetite, availability of capital future funding requirements, and the overall tax map of the client. I cannot stress enough how these initial decisions regarding state and structure can help (or actually hurt) an overseas investor.
After the state and structure decisions are made, we execute the plan, vis-à-vis the Registered Agent, incorporating the entity, and ensuring the filings are made properly. Next, we assist with the acquisition of the required state licenses and registrations – sales tax, employment tax & other required business licenses. At the federal level, the business needs an EIN & ITIN for its nonresident members. As you know, all of these steps are precursory to opening that all-important US bank account, so capital can start flowing into the new company.
Brandon: What about growing businesses? We have 50 different states with 50 different sets of rules to comply with. How do you help US-based clients expand?
Siddhartha: Help is always around, but you need to look for it in the right place. Once a business is established in one US state and plans to expand to another, the volume and complexity of compliance issues certainly does increase. Obviously, there are additional state-level registrations such as a Foreign Profit Corporation or Foreign LLC, but if you plan to transport or store goods or hire employees in new states, the company can expect a new round of employment and tax filings. Even if the company doesn’t establish a physical presence, but is connected economically to the new state, they likely have met what’s known as economic nexus and hence sales tax compliances come into play.
Brandon: I recently heard you talk about challenges that professional practices, like law firms or medical practices, have been facing in keeping up with
their back office activities and finding time to focus on growth.
Siddhartha: As a business law expert, I know that your firm sticks to doing what you do best. Specialist physicians do this too. I have seen many firms, in many industries, struggle to manage growth and operations simultaneously. Perhaps that is one reason I see jobs like paralegals, compliance reporting, business process management and office administration, financial management, and reporting all being outsourced in large quantities. Offloading many of these support functions to entities like us, who are good at it, allows the business owner to focus more of his/her energy on growth. The same can be said for a talented, but overworked, office manager who, frankly, wastes hours and hours per month sending out the company bills, handling payroll, or paying vendors when one of my talented staff here back in India could easily have it done overnight.
Brandon, the numbers speak for themselves. Outsourcing today is a 100 billion dollar market and the United States counts for about 60% of it. So, the tide is changing… and for good.
My job, then, is to attempt to undo some of the outdated (and unfair) myths about overseas labor. I frequently hear that outsourcing is only for large players, my data will be unsafe, the time zones are confusing, or the quality is poor. Decades ago, these challenges did exist, but no longer in 2023. My new professional office clients quickly realize that their back offices now run better, and more cost-efficiently, than they did before.
Brandon: How does a well-oiled back office contribute to a company’s success if it doesn’t actively sell more products or attract new clients?
Siddhartha: I disagree. If your US-based staff spends its time with repetitive filing tasks, or worse, “putting out fires” then their time and attention are being diverted AWAY from the real money-making activities like sales or production, and that hurts your company’s bottom line. With a well-oiled back office in place, your staff can retain their focus on important revenue-generating activities.
Brandon: How would a US-based company even start the process of moving some of its work offshore?
Siddartha: For this, we need to have a good understanding of client requirements. Getting on introductory calls, understanding the business processes and the pain areas, and asking hard questions regarding the client’s expectations are all part of our initial client engagement.
Next, we review the data and propose solutions. Then, as we move into operations, the accuracy, timeliness, and completeness of our deliverables gain importance. To do this, we implement best practices such as control checks, segregation of duties, audit trails of deliverables, and strict adherence to client communications. You tell us how you want it done, and we do it exactly your way, every single time. We don’t take days off and we don’t take shortcuts. We use several project management tools for this purpose and share this data with the client.
Meanwhile, we are also able to look at the rest of your `company and offer our expertise in the areas of sales pipeline, overall profitability reporting, collections status, administrative/Infrastructural needs, resource deployment, and marketing strategy. We have some of the top finance, marketing, and management talent in the world in our employ, with degrees from prestigious US and UK universities, ready to help…just ask!
As always, if you have any questions about buying or selling a business, or business law generally, please don’t hesitate to contact us! If you have questions about Mercurius Advisory Services, we can gladly put you in touch with the company!