While starting your business in the United States is a routine matter if you are an American citizen, there are many more things to consider when starting a business in another country.
Let’s take a look at the difference between starting an international business located in the United States and starting a business located in another country...An international business based in the US
If you’re a United States citizen who wants to start a business based in the United States that has an international reach, then you may either be considering using the internet for selling digital goods or services, for instance an information course or online consulting, or you are considering an import-export type of business for selling tangible goods.
In this case, you will primarily abide by United States business laws and tax regulations since that is where the business is physically located and registered. Depending on the nature of your business, you may also have to abide with any regulations by the country or countries you are doing business with. For instance, you may have to comply with tariffs or import-export restrictions. Dealing with the difference in currency exchange rates should not be a problem since you will be able to use established financial channels like an international money transfer
Since your business is based in the United States, things are fairly straightforward. First, set up your business model; then, comply with all legalities.
Setting up your business model will include writing a business plan, getting any business assistance or training that is necessary to run the business competently, choosing a suitable business location, and financing your business.
Complying with legalities will include deciding on the legal structure of the business, registering the business name, registering for local and state taxes, obtaining any necessary licenses or permits, and fully understanding and complying with your responsibilities as an employer.An international business based in another country
If you are a United States citizen who wants to start a business based in another country, it is usually because you see a fresh market opportunity. This same business opportunity may have already become saturated in the United States. For instance, there may be little demand for a certain technology in the United States because there are so many providers, but, in contrast, there may be a huge demand in another country because the technology is relatively unknown and there are few, if any, providers.
When setting up shop based in another country, there are five essential things to consider:
Your business philosophy
- Choose a country where you will be able to easily comply with all government regulations. In addition to working with the laws of the land, you must still abide by United States tax laws. According to a New York City, CPA, Jonathan Meadows in an interview with Bloomberg, “Americans working overseas should contact the IRS and the tax authorities in their state to make sure they’re aware of the reporting requirements.”
- Choose a country that does not have a record of confiscating foreign-owned property or businesses. Instead, pick a country where your rights as a foreigner will be respected regardless of the change in leadership or state of the economy.
- Choose a country with a promising economy. For instance, the country should have stable economic indicators like low debt in relation to GDP, low unemployment rates and strong consumer spending.
- Choose a country where you can establish partnerships with businesses that are familiar with your industry. It will be much easier to penetrate the markets if you are working in collaboration with a local business partner who can help you navigate the unfamiliar business practices. Ideally, all partners should be able to bring something unique to the table. For instance, you might be able to provide the capital and technical know-how while your business partners help you figure out marketing, cultural, and distribution factors.
- Choose a country where the cultural and language differences are not insurmountable. If you are unfamiliar with the language and the customs, then you are at the mercy of the translators that you hire. Since you have no idea what is going on, you could be easily swindled. It is much better to choose a country where English is spoken as a first or second language or whose language you know and whose customs you understand or can quickly learn.
Regardless of whether you build a US-based business with an international reach or relocate to another country, the fundamental principles of business philosophy still apply such as hard work and constantly striving for business growth