Last Updated on July 27, 2021
Expanding your business can be an exciting time. This will likely mean that you are doing well enough to support yourself and your business comfortably but have the hunger to progress it even further. One way in which to do this, is to take your business international. This may sound like a simple enough endeavor, but there is a lot to consider. Not only will you be dealing with your own domestic corporate system but also an international one. This article will help you come to terms with the vast international business market.
Where to set up Internationally
This is one of the first considerations you need to make. There has been a trend recently to expand businesses in the Middle East. This is because governments there actively encourage foreign expansion providing benefits to do this. This is so popular that creation business consultants in Saudi Arabia have begun to make a fortune. They can help you set up a presence on their soil and guide you through your expansion.
When your company is ready to consider global expansion, one of the first things you will be advised to do is to set up an international entity. This can also be known as a foreign legal entity. This will be your foreign arm in the new country. It is one of the primary tools you will need when beginning your journey overseas. But in order to do this you will usually be required to fulfil three main criteria:
- A Representative Office – This establishes a presence in the country you want to expand into. This type of office can conduct research and begin exploring the idea of further expansion. Importantly it does not function as a business and because of this is usually easy to set up. All it needs is registration with the national and local government.
- A Branch Office – A branch office is an extension of your company. It is owned by your company and its taxes and administration are handled according to the law of your company’s home country. This grants a little bit more flexibility in your international business transactions but can also open you up to greater legal liability. You will need a manager as a responsible business representative in this office though. They will need to apply for permanent residence in the host country.
- A Subsidiary – A subsidiary is something that is owned by the parent company but can operate as a separate legal entity. This means that the parent company is protected from legal liability. This also has the benefit that your company can branch deeper into foreign markets and gain more international credibility. However, they are expensive and can face regulatory challenges that are specific to the country they reside in. On top of this you will need a company representative who can speak on behalf of the company and yours.
How to know the time is right?
Statistically speaking less than a quarter of businesses set up from the US are globally successful. However, this should not deter you. You should research where you want to expand and take your time in following the steps. Rushing ahead can mean that you miss important information that may cost you in the future. Once you understand the market, you can then thrive in it.