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Launching a US business means handing some of your most sensitive personal data — passport copies, Social Security numbers, bank details and financial records — to federal and state authorities. Here's why that should make you think carefully, and what you can do about it.
Forming a company, registering for an EIN, filing beneficial ownership reports or opening a US bank account all require documents that would be gold dust to an identity thief: your full legal name, date of birth, home address, passport or ID scans, and often your Social Security number or Individual Taxpayer Identification Number. The IRS, state Secretaries of State, FinCEN and financial regulators all expect this information, and there is no compliant way to launch a US business without providing it.
Federal and state agencies hold vast, centralised troves of personal data on virtually every person and business connected to the US economy. That makes them magnets for cybercriminals and hostile state actors. The IRS alone has suffered repeated incidents, including the leak of thousands of wealthy taxpayers' private files to investigative journalists and, separately, to a congressional committee through a system intended for academic researchers. State governments have fared no better: unemployment systems in several states were exploited for fraudulent claims during the pandemic using stolen identity data, and state tax and licensing databases have been breached on multiple occasions. When you submit a passport scan to a Secretary of State's office, you are trusting that office's cybersecurity — and many state IT systems are underfunded and decades old.
If you are coming from the UK or EU, you are used to GDPR-style rights: data minimisation, purpose limitation and the right to erasure. The US has no equivalent comprehensive federal privacy law. The Privacy Act of 1974 governs federal agency records, but it contains broad exemptions for law enforcement and does little for non-US persons. Government-held data is also typically retained for years or even permanently, and can be shared across agencies far more freely than Europeans would expect. State privacy laws like the CCPA explicitly exclude government agencies from their scope.
US intelligence law permits warrantless collection of data held by US companies under Section 702 of FISA, and the CLOUD Act can compel US-based providers to hand over data they hold, wherever in the world it is stored. For founders who built their business under EU or UK data protection law, this legal environment is a genuine compliance concern, not an abstract one — regulators in Europe have repeatedly flagged US government access powers when assessing international data transfers.
The answer is not to avoid US compliance — it is to manage your exposure deliberately and document every step you take:
The answer is not to avoid US compliance — it is to manage your exposure deliberately and document every step you take: Sending private information to US federal or state governments is unavoidable for any founder entering the American market — but it should never be casual. The combination of attractive-target government databases, weak statutory privacy protections and broad surveillance powers means your data deserves the same care there as it would anywhere else. With sensible minimisation, secure transmission channels and expert guidance, you can stay fully compliant without leaving your personal information exposed. At Atlas Founders Advisory, we help founders navigate US, UK and EU privacy regulations with confidence — from IRS representation by a licensed Enrolled Agent to international data transfer consulting and risk mitigation. Get in touch to launch your US business with your data — and your compliance — properly protected, every step of the way.
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