For startups, the journey into the U.S. market can be exciting — but also tricky and expensive. If you’re leading an Israeli startup that’s registered as a U.S. company (whether in preparation for fundraising or to serve American clients), there are several things you must know to avoid regulatory trouble.
At Danoy, we see it time and again: companies with great products, talented teams, and experienced investors — but they stumble on the fine print of U.S. regulations. To save you from penalties, delays, and unnecessary hassle, we’ve gathered the five most critical regulatory mistakes companies make — and how to avoid them.
Mistake #1: Delaware Isn’t Enough
Yes, Delaware is the home state for most U.S. companies. But if you’re actually operating from another state (e.g., development based in New York or a physical address in California), you’ll need to register there too and comply with that state’s regulations.
Ignoring this can lead to fines, retroactive fees, and even having your operations blocked.
Mistake #2: Don’t Neglect Annual Reports
Every U.S. company is required to file reports with federal, state, and sometimes even local authorities — even if it has no activity or revenue.
Late submission or missing a single report can result in sanctions. A local Israeli accountant is not enough — you need a partner who understands U.S. reporting requirements.
Mistake #3: U.S. Employees Aren’t Israeli Employees
Hiring an American employee requires registering as an employer entity, opening dedicated payroll accounts, obtaining mandatory insurance, and maintaining ongoing compliance.
Without all of these, you’re exposed to lawsuits, compensation claims, and regulatory complications. It’s a full legal framework — so before hiring U.S. staff, make sure you understand your employer obligations thoroughly.
Mistake #4: Cross-Border Tax Planning
Whether you have a parent company in Israel or dual activity, without proper tax planning you might end up paying double tax.
The tax treaty between Israel and the U.S. exists — but knowing how to operate within it is critical. For example, an investment received by the U.S. entity and misreported in Israel may be taxed as income.
The solution? Careful cross-border tax planning, ideally as early as possible in your U.S. operations.
Mistake #5: Regulation Isn’t Just Bureaucracy
U.S. regulation is much more than paperwork. It’s part of your startup’s operational strategy. It influences how investors view you, your next funding round, employee terms, and even what you’re allowed to sell.
That’s why we recommend planning your regulatory structure in advance — in a way that aligns with your business strategy — instead of constantly reacting to it after the fact.
Regulation in the U.S.: Do It Right
At Danoy, we specialize in full financial support for Israeli companies operating in the U.S., including outsourced CFO services, reporting, employee management, tax planning, and navigating all layers of regulation.
Whether you’re at pre-seed or already working with clients — we’ll make sure your growth isn’t held back by a missed form or misunderstood regulation.