US expansion brings huge opportunities, but also accounting and reporting challenges that many UK finance teams underestimate.
We asked Katrina Nacci, a cross-border accounting advisor to share what UK CFOs need to know before setting up shop in the US or raising capital from US investors.
Katrina works with European scale-ups navigating exactly these transitions. Particularly when investor diligence, audit requirements, or international reporting expectations start to surface.
1. Setting up a US subsidiary: what’s actually required?
If you’re opening a US entity to support growth (like hiring locally or launching in a new market), you likely don’t need to change your accounting standards or bring on a US-based finance team.
But there are a few fundamentals that need to be handled properly from day one:
- US bookkeeping – you’ll need separate, clean books for the new entity
- Intercompany charges – transfers between UK and US entities (or other subsidiaries) should be properly structured and documented (via transfer pricing studies)
- Sales tax – state-by-state rules vary widely and can catch companies off guard
- Accounting alignment – at this stage, differences in classification and treatment are more about compliance with the US tax code than with US GAAP or IFRS. A formal GAAP conversion isn’t typically necessary unless you’re preparing for external reporting or an audit down the line
Early-stage setups don’t require major structural change, but they do benefit from scalable, well-documented processes that can grow with the US operation.
That might include drafting simple SOPs for how intercompany charges or accruals are booked, and starting to document current accounting policies, even informally. A short internal note on how revenue or FX is treated today creates a useful baseline for identifying gaps later. This groundwork makes future consolidation and audit prep far easier, and helps teams adapt more smoothly when transitioning to US GAAP or IFRS.
2. Raising from US or international investors: expectations change fast
Once US investors enter the picture, financial reporting requirements begin to shift.
Many investors will ask for a full set of consolidated financial statements for the group, often accompanied by an audit opinion. These typically go beyond local statutory accounts and may require transitioning to a new reporting framework (usually US GAAP or IFRS), depending on the investor’s location and expectations.
This transition is rarely just about accounting standards. It often involves multiple workstreams: developing group-wide accounting policies, identifying key GAAP differences, preparing consolidated financials, drafting memos for complex areas like revenue or share-based compensation, and building audit-ready documentation.
Where a new GAAP is required, adoption usually happens in phases. A common first step is a qualitative diagnostic: understanding the differences between your current framework and the target GAAP, identifying policy gaps, and scoping the impact. This can (and should) happen before diligence begins. From there, you can move toward preparing full sets of financials under the new standard, and ultimately supporting a first-time audit under US or international standards.
If there’s a Delaware flip or other group restructuring, this adds further complexity, often changing the parent entity, tax profile, and basis of consolidation. Planning ahead is essential.
While a full GAAP conversion might not always be required, the reporting outputs will often need to be tailored meet investor expectations.
3. Pitfalls to watch out for
The biggest risks don’t come from technical accounting mistakes, they come from waiting too long to prepare for what’s coming.
A common issue is underestimating the complexity of US tax exposure, particularly around state-level sales tax and federal income tax obligations. This often results in late filings, penalties, or clean-up work just before diligence.
Another frequent gap is transfer pricing. Many businesses set up intercompany recharges with minimal documentation, only to realise during diligence that their pricing policies haven’t been properly supported, or worse, haven’t been implemented at all.
And finally, the timing of audit readiness can derail a fundraising or acquisition process. Many companies don’t begin preparing for an audit (or transitioning to US GAAP or IFRS) until after investment is received. At that point, producing clean, consolidated financials and supporting documentation under pressure becomes a major operational distraction, and can be a deal risk.
What good looks like at each stage
| Stage | Focus areas | Who you’ll need |
| US subsidiary only | US bookkeeping, intercompany structure, sales tax | Local bookkeeper + cross-border tax advisor |
| Pre-fundraise | Budgeting, internal reporting, scalable finance tools | Fractional finance lead or controller |
| Raising US/Intl capital | GAAP/IFRS alignment, consolidation, audit prep, memos | Cross-border technical accountant |
| Delaware flip / exit | Dual ledger setup, group consolidation, transaction support | Senior accounting advisor |
Final thoughts
Expanding into the US doesn’t require a full rebuild of your finance function, but it does require forward planning.
Tax exposures, intercompany mechanics, and international reporting expectations can all become issues if left too late. But when tackled early and phased appropriately, UK finance teams can scale with confidence, meet investor expectations, and avoid unnecessary complexity during future transactions. Get in touch if you want to chat or would like an introduction to Katrina.
