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Assouline & Berlowe • Aug 1

BASIC STEPS TO EXPAND YOUR BUSINESS TO FLORIDA

The U.S. Census Bureau calculated that, from 2014 to 2018, the total Brazilian population in Florida was estimated to be around 88,400. The total immigrant population from Brazil in the United States is of 399,500[1]. What are these people doing here? Among other things, Brazilians in Florida are “doing business”.  Florida’s total trade with Brazil last year was $21 billion, while with the second largest partner, China, was $10,464.0[2].

Brazilian foreign direct investment in Florida is very important to both Brazilian nationals in Florida and the Florida economy in general. Brazilians have been choosing to establish their business hubs in Florida for several reasons. Sofia Araujo, General Counsel at VMI Security, a global company focused on x-ray security inspection, decided to bring VMI from Brazil to the U.S. and to settle in Florida because of the reliability of an American brand among investors, the facilitated logistics, and Miami’s convenient location, among other reasons.

Jaime Pádua F. Filho, co-founder, and CEO at Furia Esports, a Brazilian e-sports organization sponsored by Nike, Clear Hair Care, and other big companies, has decided to bring his team to Boca Raton based upon similar motivations. A familiar environment because of the weather, direct flights from Miami to major cities in Brazil and other countries, and tax advantages caused Furia to establish its principal place of business in Florida.

Florida is one of the most international states in the United States. It is the gateway to Latin America, and it concentrates a multilingual workforce and corporate and financial resources combined with facilitated logistics and transportation services. Florida has 15 deep-water seaports, 20 commercial service airports, two spaceports, more than 12,000 miles of highways, and approximately 3,000 miles of freight rail track routes[3]. Moreover, the quality of life in Florida is considered high. The state ranked second in Fiscal Stability in the U.S., third in education, and ninth in terms of economy[4]. The list of reasons why should Brazilians do business in Florida is long.

Once you have decided to expand to Florida, it is essential to establish an internationalization plan for your business. It is possible to engage in direct or indirect exportation and relocate with or without cooperation. Direct exporting is when an organization sells goods directly to a client in an international market. Indirect exporting involves selling goods to national intermediaries, who then sell them to the global market. When a company relocates, it transfers all or part of its business abroad. The cooperative relocation is made in collaboration with partners, and the noncooperative relocation depends on the organization’s own resources.

The Brazilian investors who decide to relocate must carefully consider the existent market entry strategies. Besides the traditional relationships, such as import and export, licensing, and franchising, there are strategic alliances available, like affiliation, sub-contracting, co-branding, and joint ventures. Beyond strategic alliances, there are the merger & acquisition and the subsidiary strategies, which involve more risks but also can result in more returns.

Along with the market entry strategy, an investor must choose the appropriate corporate structure. When the owner runs a company in his or her own name, it is called a sole proprietorship. There are several other partnership types available, including The General Partnership (GP), the Limited Partnership (LP), and the Limited Liability Partnership (LLP).  Each of these partnerships has different aspects as to its structure, management, and level of liability. Moreover, there is a traditional American corporation, which starts as what is called a “C Corporation”, but if it qualifies, may later elect to be treated as an “S Corporation”.

Additionally, and most importantly, is the Limited Liability Company. This is very popular in Florida due to its flexible nature.  As to each of these structures, depending on the nature of the entity, they may have shareholders,  partners, or members, who own the entity.  They may also have a Board of Directors or Managers that operate the entity.

The impact of deciding for the market entry strategy “X” and the corporate structure “Z” has tax ramifications too. Likewise, it has a financial effect and affects the paths a business must take to grow. Of course, the company’s profitability can be affected by the way you, as an investor, will structure your business’ operations.

Therefore, it is crucial to hire reliable consultants, accountants, and lawyers to assist you in expanding your business to Florida and successfully take your organization to an international standard. Accessing the U.S. market through Florida is not complicated. However, a Brazilian investor should count on a high-qualified team of professionals to facilitate the transition to a different legal system, tax environment, government, market, language, and culture.

 

[1] U.S. Immigrant Population by State and County, Migration Policy Institute, https://www.migrationpolicy.org/programs/data-hub/charts/us-immigrant-population-state-and-county?width=1000&height=850&iframe=true (last visited July 11, 2020).

[2] 2019 Florida International Business Highlights, Enterprise Florida, https://www.enterpriseflorida.com/wp-content/uploads/report-florida-international-business-highlights.pdf (last visited July 12, 2020).

[3] Foreign Direct Investment, Enterprise Florida, https://www.enterpriseflorida.com/international/foreign-direct-investment/ (last visited July 12, 2020).

[4] Florida #13 in Overall Ranking, U.S. News & World Report, https://www.usnews.com/news/best-states/florida/ (last visited July 14, 2020).

Read the article in Brazilian Portuguese here.

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