Federal, State, Local: Understanding U.S. Government for Business Expansion

More than federal rules. Why expanding in the U.S. means navigating five layers of government.

When expanding into the United States, one of the first surprises international founders face is just how complex the government system is. Unlike many countries where rules are set mainly at the national level, the U.S. divides authority across multiple layers.

This means that your company won’t just deal with one set of regulations. Instead, you’ll face rules from federal, state, and local governments - and in some cases, additional agencies in between. Each level has its own powers, and understanding how they interact is essential for avoiding compliance risks and costly delays.

Federal Government: National Rules That Apply Everywhere

The federal government sets the broad framework for doing business in the U.S. These rules apply in all 50 states and cover critical areas like:

• Immigration and visas - determining who can work in the U.S.
• Taxes - Internal Revenue Service (IRS) obligations for individuals and corporations.
• Labor and employment law - nationwide standards on wages, workplace safety, and nondiscrimination.
• Environmental and trade regulations - setting baselines for products, imports, and industry practices.

💡 Key point: Federal law sets the minimum standard across the country. States and cities can (and often do) add stricter requirements on top.

State Governments: 50 Different Playbooks

Each U.S. state operates with significant independence. This means that expanding into New York, California, or Texas isn’t just about choosing a location - it’s about stepping into a completely different regulatory environment.

Examples of state-level authority:

• Business registration (LLCs, corporations, etc.)
• State taxes (corporate income tax, franchise tax, sales tax, etc.)
• Employment rules (overtime pay, leave policies, benefits)
• Land use and development (sometimes coordinated with local governments)

💡 Key point: Doing business in two different states can feel like doing business in two different countries.

Local Governments: Where Business Meets Reality

City and county governments are the most immediate touchpoints for companies. They issue the permits and approvals you need to operate day to day.

Examples include:

• Zoning and land use - deciding where offices, warehouses, or factories can be located.
• Business licenses and permits - requirements vary by industry (restaurants, retailers, consultants, etc.).
• Local taxes - some cities (e.g., New York City) levy their own income or payroll taxes.
• Public services - utilities, waste collection, and fire protection often flow through local systems.

💡 Key point: Even if you meet all federal and state requirements, your business can’t open its doors without local approvals.

Why It Feels Complicated

The U.S. doesn’t have a single “top-down” system. Instead, authority is shared and overlapping:

• The federal government sets nationwide laws and standards.
• States write their own playbooks, with rules that vary dramatically.
• Local governments control zoning, permits, and the services you need to operate.

In some regions, special districts or regional authorities add another layer - for example, a water district that issues permits or a transit authority that imposes fees. These aren’t everywhere, but when they apply, they matter.

What This Means for International Businesses

For companies expanding into the U.S., this structure creates three main challenges:

• Multi-level tax exposure - federal, state, and sometimes local or district-level.
• Different compliance obligations depending on where you operate.
• Potential delays if you overlook approvals at one level.

Turning Layers Into Clarity

Understanding the U.S. government layers is essential for international founders. With the right partner, what seems like complexity becomes manageable. At Orbiss, we help businesses navigate these rules with clarity and compliance in mind - so you can focus on growth, not red tape.