Article by Adam Dunnet, Director at ZEDRA
Once you have decided that setting up a company in a new market is the ideal choice for your business needs and have identified your target market, there are a number of initial considerations that the majority of internationally headquartered companies will have to address (regardless of their market sector).
We take you through some of the main points below.
1. INCORPORATING A LOCAL COMPANY INTO THE NEW MARKET
There are numerous business models and structures through which you can operate when doing business in a foreign market, but the most common is some form of:
• Representative Office;
• Branch / Establishment; or
• Limited Company
Your global ambitions and the target market should be considered as part of any incorporation process in order to optimise your growth potential.
2. SENDING SOMEONE OVER OR LOCAL HIRES
When entering a new market, you may see a need only for a workforce of “travelling salespeople” or maybe a more layered presence incorporating various functions and services for your customers, both existing and new. Perhaps you wish to relocate someone from HQ to oversee the early stages of expansion or foresee regular relocations of staff during the life of the business.
In any instance, you will need to consider the possible immigration issues and whether an assignment policy is going to be necessary, as well as local employment law, expatriate tax and payroll compliance.
3. BANKING AND MAKING PAYMENTS
Setting up a bank account can be somewhat bureaucratic and should be considered as early as possible as part of your market entry strategy. Some local advisors can provide a client bank account facility for companies that need to make or receive payments fast, allowing you to keep on top of supplier, employee or customer invoice payments.
Often local accounts will be required to handle certain payments.
4. REWARDING YOUR NEW TEAM
Alongside remuneration planning for any expatriates, you will need to consider what the local salary range is for someone with the skillset you need. You will also need to consider the kind of environment you want to create for your team, what kind of benefits and reward programme you would like to offer and what compliance procedures and insurance you will need in place to protect your business and your staff.
Value Added Tax (VAT) / Goods & Services Tax (GST) can be a complex area for any company entering a new market; however, reclaims can be made in certain circumstances. Transfer pricing and corporation tax compliance are also important issues to highlight. We recommend contacting a tax advisor who can advise you on your specific circumstances, as every company and local market is different.
6. FINANCIAL OUTSOURCING
In a comprehensive market entry strategy, there are a number of reporting requirements which need to be adhered to in order to maintain compliance. For example, in the UK, accounts need to be iXBRL coded and there are regular filings that have to be made.
You may wish to consider outsourcing your local management accounts and related procedures – allowing you to ensure you comply with local rules and are able to oversee the local operation from anywhere in the world via an online accounting platform.
7. PROTECTING YOUR BRAND & IP
You're only as strong as your reputation. Protecting your brand identity and your intellectual property is paramount to ensure you avoid costly mistakes in a foreign market. Speak to an advisor, particularly if you are engaging local contractors, as you could find your business objectives being compromised if you don’t have proper agreements in place.
HOW CAN WE HELP YOU WITH A SUCCESSFUL MARKET ENTRY?
Deciding to grow your business into new markets will have you beaming in the long run if you do the due diligence on your part and employ the services, advice, and support of experts.
Our platform – Centuro Connect, dives into blueprint specifics helping you do your research all in one place. It is the ultimate tool for understanding market entry options, HR, Immigration, Legal Requirements, Tax & Accounting, and much more.
Don't struggle with the entire process on your own; we can help. Contact us today!