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4 Legal Issues to Consider Before Opening a Business Overseas

Global expansion is the goal for many business owners, but getting to that point can be an uphill climb. The company may have reached a point where global expansion makes sense, but navigating the local laws in the country can be a challenge.

Consider these four legal issues before expanding your business overseas.

1. Local Employment Laws

Expanding your business overseas means hiring staff in other countries. Employment laws may vary significantly from one country to another and may even vary from one region of a country to another.

Make sure that you understand and comply with wage, safety, health, and other employment law requirements. Failure to comply with local employment laws may lead to severe legal penalties from authorities. Depending on the violation, you may be forced to shut down operations in the country.

2. The Logistics of Starting a Business

Establishing a business in any country can be a complex process, but in some countries, entrepreneurs have to jump through hoops to launch their company.

Take, for example, Indonesia. The country may have a strong economy, but launching a business is a nine-step process that takes about 47 days to complete. The process involves several registrations and requires business owners to work with the Ministry of Law and Human Rights, the State Treasury, and the Ministry of Manpower.

“Some business activities, such as importing or construction, require additional licenses from the respective Ministries,” says Emerhub, a company that helps business owners launch their businesses in emerging markets such as Indonesia, Vietnam, or the Philipines.

Because the logistics of starting a business in some countries can be complicated, it may be worth considering working with a professional who can walk you through the process.

3. Corruption

Corruption is still an issue in many parts of the world. You may find that there are certain customs regarding the way business is done. Sometimes, you may even be asked for payments or gifts to get your business off the ground.

Following through with such requests can have very severe legal consequences. Engaging in such practices may put you in violation of anti-corruption laws in your home country, which can come with hefty fines and even jail time.

Understanding the process of launching a business in the country may help you avoid being prosecuted for something you were led to believe was a customary practice.

4. Compliance with Tax Laws

Regardless of where you want to launch your business, you can be sure of one thing: you’ll have to pay taxes.

When expanding overseas, you add another element into the tax equation that can quickly complicate matters. Having a skilled accountant with the right experience can help you avoid violating tax laws.

Consider working with competent tax advisors in each country you expand into.