Expanding an International SaaS Company into the United States: Key Legal Considerations

(This post appears on the Kader Law blog at https://www.kaderlaw.com/blog/expanding-an-international-saas-company-into-the-united-states-key-legal-considerations/)

The United States is a major market for software-as-a-service (SaaS) and enterprise technology. It offers scale, access to funding, and opportunities to sell into large commercial and government institutions. But to succeed in the U.S., international SaaS companies must navigate a complex legal environment. This post outlines the key legal considerations for international SaaS and software providers planning to expand their operations into the U.S.

1. Forming a U.S. Legal Entity

Most international SaaS companies establish a U.S.-based legal entity as a first step. A Delaware C-Corporation is typically the preferred structure, especially if fundraising or enterprise sales are in the plan. A Delaware LLC may be appropriate if your focus is on operational flexibility and tax pass-through treatment.

Forming a U.S. entity allows you to:

• Contract with U.S. customers under local law
• Register for a U.S. Employer Identification Number (EIN)
• Open a U.S. business bank account
• Hire employees and issue equity
• Satisfy procurement and compliance requirements for enterprise customers

It also helps manage risk by limiting liability to the U.S. business and separating it from your parent entity.

2. Localizing Your SaaS Contracts

SaaS contracts must be tailored to U.S. legal standards and buyer expectations. U.S. customers are familiar with specific commercial and legal norms that may differ from those in your home country.

Key documents to prepare or localize include:

• Master Subscription Agreements (MSAs)
• Terms of Service and Acceptable Use Policies
• Privacy Policies and Data Processing Agreements (DPAs)
• Service Level Agreements (SLAs)
• Reseller or Partner Agreements, if applicable

Pay close attention to governing law, limitations of liability, indemnities, and dispute resolution clauses. Enterprise buyers often request negotiation on these points, and U.S.-specific templates will help reduce friction in the sales process.

3. Appointing a U.S. Point of Contact

Many enterprise procurement teams require a U.S.-based point of contact for legal, compliance, and support matters. You should consider:

• Listing a U.S. business address and phone number
• Appointing a registered agent
• Designating a local contact for support or legal notices

Having a U.S. point of contact builds trust and helps meet state-specific registration or service-of-process requirements.

4. U.S. Data Privacy and Security Compliance

SaaS companies handling user or customer data must comply with a growing patchwork of U.S. privacy and security laws. While there is no single federal privacy law, states like California (CPRA), Virginia, Colorado, and others have enacted their own privacy regulations.

You may be required to:

• Provide disclosures on how you collect and use personal data
• Offer opt-out mechanisms for data sharing or targeted advertising Implement reasonable security controls
• Enter into DPAs with sub-processors and vendors
• Enable consumer data access, deletion, or correction rights

If your software serves regulated industries, you may also need to comply with:

• HIPAA for healthcare-related data
• GLBA for financial data
• FERPA for education platforms
• FINRA/SEC rules for tools supporting financial services

SaaS vendors that store or process sensitive or regulated data should undergo a security risk assessment and build a compliance roadmap before entering the U.S. market.

5. Subscription Law and Consumer Protection Compliance

Recurring billing and auto-renewals are common in SaaS, but they are closely regulated in the U.S., especially for B2C or SMB-facing platforms.

Key requirements include:

• Clear, upfront disclosure of billing terms and auto-renewals Easy-to-use cancellation mechanisms
• Advance notices for renewal or price changes Refund policies that comply with state laws

California, New York, and other states have specific subscription laws that carry civil penalties and exposure to class action litigation if not followed.

Additionally, U.S. consumer protection laws, such as the Federal Trade Commission Act, prohibit deceptive or unfair marketing practices, including hidden fees or misleading free trial terms.

6. Insurance Coverage for U.S. Operations

Many U.S. enterprise customers and partners will require proof of insurance before signing agreements. Recommended coverage for SaaS companies includes:

• Technology Errors and Omissions (E&O) Insurance
• Cyber Liability Insurance to cover data breaches or cyberattacks
• Commercial General Liability (CGL)
• Directors and Officers (D&O) Insurance if raising capital or appointing a U.S.-based board

Having adequate coverage demonstrates maturity and readiness to work with sophisticated buyers.

7. Complying with Labor and Employment Laws

If your expansion includes building a U.S. team, make sure you comply with federal and state employment laws. Best practices include:

• Drafting enforceable employment agreements with IP assignment and confidentiality provisions +
• Using proper classification between employees and independent contractors
• Registering for state and local employment taxes where applicable

Many states have strict labor laws, especially regarding worker classification, non-competes, and employee benefits.

8. Complying with U.S. Marketing Laws

Marketing your SaaS platform in the U.S. triggers compliance with laws like:

• CAN-SPAM for email marketing
• TCPA for SMS and phone-based outreach
• COPPA if targeting children under 13

Make sure your customer acquisition strategies include clear consent, opt-out mechanisms, and appropriate age gates where needed.

Let Us Help

This is intended to be a high level overview of the legal considerations when expanding your SaaS into the U.S. market. If you are looking for assistance, please contact us.

This post is not legal advice, and does not establish any attorney client privilege between Law Office of K.S. Kader, PLLC and you, the reader. The content of this post was assisted by generative artificial intelligence solutions.