Many people’s dream of relocating abroad goes hand-in-hand with the aspiration to start their own business. Starting a company abroad will be challenging and will require a significant amount of work and effort. You will also need to ensure that your proposition can be a success whilst remaining within the legal requirements of the country you relocate to. There are a number of areas you should consider when contemplating setting up a business abroad-
Legal Requirements of Starting a Company Abroad
The first major area to consider when you are contemplating starting a company in a new country is the legality of doing so. If you already have a visa you should check that this visa allows you to run a business entity and what limitations there may be on the percentage of a business you are legally permitted to own. In some countries, for example, you will be required to have a local business partner while others will only let foreigners have a minority share in any business. Don’t automatically assume that a right to abode in a country will permit you to start a business that you can own in full. Research all the facts in full before you start any type of investment.
If you do not already have any visa for the country you are planning to relocate to you will need to consider the type of visa you will need to start you own business. This will need to be secured prior to any other activities. Full details of the visa requirements and laws for your chosen destination can be found in each Expat Info Desk relocation guide.
Selecting your business
You may not necessarily have a business idea to start with and could be looking around for a suitable opportunity to pursue. Instead of starting a company abroad you may wish to explore the idea of buying an existing business. This will be easier in some ways as the basic operational infrastructure will already be in place and many people, when selling a business, are prepared to train the buyer and show them the ropes. Alternatively you may wish to start one from scratch. There are many different options for expatriate businesses, see our guide to ideas for an expatriate business for more detail.
Viability of your business plan
Once you have established that you do have the right to move to, and operate a business from, your chosen destination you will need to consider the viability of your business plan itself within your chosen destination. Research the market in the country you intend to operate from and ensure that all your decisions are based upon facts and figures, not assumptions. Just because a business concept works extremely well in one location doesn’t necessarily mean that it will be a success somewhere else, and you should research the potential demand for your offerings through considering the following factors:
- Who are your clients?
- Where will you find them?
- Are they really already aware of your product/service?
- Are your potential customers sufficiently affluent to afford your product or services?
- Will your potential customers truly be in the market for your product or services?
- Will demand be seasonal? Will such demand by sufficient to support your lifestyle and costs throughout the year?
Money and Financing
Once you have researched your business idea and you are confident that there is a sufficient, stable market for your offerings you will need to start looking at the investment that will be required to get your business off the ground. When starting a company abroad you will need sufficient capital to secure premises, invest in materials and resources, pay all legal costs, utility bills, advertise and market your offerings and, where applicable, fund the relocation itself. You should ideally have sufficient money to allow you to survive for a minimum of a year. As a general rule, most businesses can take up to 18 months to get established and to start turning over a profit. This, of course, will depend on how large your business is and what your monthly outgoings are. Research the local banks and find out which one offers the best rates for a business account. Find out about international transfer rates as well as any overdraft facilities, loans, interest rates and charges. Open an account and transfer any money which you will need into your new account. Before relocating you will also need to research currency restrictions and fully understand how much of your home country currency you can bring into the country and what you can take out as this may impact your business plans.
You should always research local taxation and reporting requirements in advance of starting to operate your business in order to ensure that you pay the right amounts of money to the authorities at the right time. Make detailed inquiries about import-export duty, sales tax in your new country and VAT from the Customs and Excise Department. This can be as simple as sending an email to the local tax department or researching on the internet. Consider hiring a local accountant to help you with the process and ensure that you strictly adhere to all reporting requirements. Full details of taxation policies of your chosen destination can be found in each of our international relocation guides.