You’ve landed on this blog post so you’re probably considering the possibility of starting a business overseas. Maybe you’ve done some digging and realised that your current place of residence is not amenable to young businesses, and you’re looking for alternatives.
When starting a business, there are a number of different things to keep in mind and it could very well be that another country is more beneficial for your business goals. We’ve listed the top 10 reasons to start a business overseas to help you get started.
If your country of residence is experiencing a long-term recession, dealing with perpetually high inflation, or suffering some other form of economic turmoil, it’s better to open a business abroad. Each country experiences growth differently, and the future success of your business is often directly tied to the region’s economic situation.
Even if you’re product or service is available to an international customer base, you will still struggle disproportionately if the economy is collapsing around you. To illustrate this point, imagine starting a business in an economy which is suffering from long-standing hyperinflation.
In such an environment, the local infrastructure on which you depend for work - like a stable internet connection, working phone lines, passable roads, police to fight corruption - will begin to disintegrate and damage your business.
Instead, look for jurisdictions which enjoy relative stability like Switzerland, Cyprus, Estonia and Singapore. In such an environment, you can focus on starting and growing your business. That being said, if you are strongly considering a European country, it might be worth waiting until the full implications of Brexit are known.
Opening a business is an important step, and you want to start off on the right foot!
In addition to the economic situation of a country, you may also want to start a business overseas to escape an unfriendly political climate. This can play a crucial role in your day-to-day business operations and is therefore worth considering.
The extreme example of a poor political climate, would be a revolution and its easy to understand why this would be bad for business.
Depending on your chosen industry, even a relatively small amount of political change can have a detrimental impact. As shown in this study by the London School of Economics, a shift from a democratic to an autocratic government negatively impacts businesses in the tourism industry for example.
As a takeaway, make sure to find a jurisdiction with an amenable political climate. Switzerland, Singapore, and Malta are good examples of stable countries in which to open a new business.
The success of your business will also depend on how much money you can reinvest into it in order to facilitate its growth. If your local taxes are too high, your business will likely struggle and fail. It’s extremely important to sit down and calculate exactly how much you will be taxed. It’s vital to look at not just corporation tax, but also taxes like VAT, offshore tax, employee tax, real estate tax, recurring fees and any other costs that you will face.
You might be surprised to find that your country of residence actually isn’t all that friendly when it comes to taxing local businesses. In this case, looking overseas to countries like Cyprus, Switzerland, and Estonia, which all provide fair taxation, is a great idea.
To get a great overview of the taxes levied by different jurisdictions, make sure to download the SelfKey Wallet and check out the Incorporations Marketplace. Here we list many excellent jurisdictions and provide clarity on the taxes they charge.
Depending on where you live, the process of launching a legal business entity can be extremely difficult. If corruption is rife, it might involve having to bribe officials or being flat out rejected for no reason at all. Alternatively, your region could have a very long and detailed bureaucratic process, meaning it could take months to get your business going.
While we think it’s good to be thorough, sometimes the sheer amount of documents, appointments, and processes can be overkill. Look for a jurisdiction that has a simple incorporation process. Estonia, Hong Kong, New Zealand, and the United Kingdom all have very straightforward processes for incorporating a legal entity.
Trust ultimately plays the most important role in business. Visitors will not become customers if they don’t trust you or the country you are based in. Several years ago, this was a big problem for Alibaba sellers. Westerners often lacked trust in goods and services coming from China, but as its reputation improved, so did the trust given to businesses located there. Building trust takes a lot of time.
Therefore, incorporating your business in a foreign country that commands a high level of trust can actually help you grow. Countries such as Switzerland, Norway, Canada and Australia are just some of the jurisdictions which are often trusted by consumers.
New industries are particularly attractive to potential business owners because they typically have a much lower barrier to entry and less competition. Having the first mover advantage is real and important. Many people start a business because they are attracted to a new and innovative industry. However, jurisdictions are often slow to provide an intelligent regulatory framework.
The blockchain space is a great example of this. Around 28 countries, including China, have banned cryptocurrency, while others, such as Switzerland, have embraced the new technology. As a result, entrepreneurs in the cryptocurrency space should look to places like Zug in Switzerland as real alternative to their country of residence.
Regardless of what industry you do business in, it’s only logical to learn about the international regulatory landscape. This will allow you to incorporate in a country which has regulations amenable to your industry.
In the blockchain space we work with people from all over the world. As a result, we regularly hear stories about the efficiency - or lack therefore - of government institutions. Some countries are very efficient, while others are excessively thorough and slow (cough Germany cough).
Some jurisdictions welcome innovation and others do not. Some have a six month waiting period for a trivial, government issued document, while others let you complete everything online.
If you’re country of residence suffers from inefficient bureaucracy, you may want to look overseas to start your business.
If you’re planning on opening a local office and hiring employees, you will need to consider the local talent pool for your industry. This can seem rather daunting, but is surprisingly simple if you do a little research. The best way to gage a regions talent pool is by visiting job boards and searching for jobs in your industry. If the talent pool is large, you will find a plethora of companies advertising relevant vacancies. On the other hand, cities with seemingly empty job boards should be reconsidered.
You can also look at relevant events, conferences, panels, and meetups to see how high the interest is in your chosen location. Some cities have become hotspots for certain industries: Zug (Switzerland) for crypto, Silicon Valley (US) for tech, and London (UK) for finance/fintech for example. Incorporating your business in a city with a large talent pool will allow you to hire good people who will help drive your business forward.
Networks grow exponentially and can play a vital role in your success. The person you network with today, might introduce you to your next business partner, investor or co-founder. Networking is most effective when done in person, which makes it crucially important that your chosen residence has access to industry-specific networks.
To get a feeling for the size and quality of networks overseas, it’s best to start by searching industry specific associations in your prefered jurisdiction. These will typically run events, promote speakers and encourage activity. If possible, try to attend some events to assess the quality and begin networking.
Should this be impossible, spend some time researching the speakers and attendees through your preferred search engine - this will provide some insight into the strength of the network.
Tariffs can make or break your business as they partially determine the cost of importing and exporting goods and/or services. Luckily, there are many international agreements on tariffs to make trade easier for local businesses. For example, if you are in the e-commerce space, it is vital that you are incorporated in a country that has fair tariffs with many other countries.
If not, the cost of importing and exporting your products will damage your business and make it less profitable. Switzerland, Hong Kong, and Singapore are all good choices as they have very low tariffs.
For more detailed information on the tax treaties of a jurisdiction, be sure to download the free SelfKey Wallet and check out the Incorporations Marketplace. Here you will find a comprehensive list of tax treaties for many excellent jurisdictions.
As you can see, there are lots of benefits to starting your business overseas. As will all important decisions, due diligence is needed, but if you do your research you will find the ideal place to start your new business.
To get more detailed information on the incorporation process and how the SelfKey Marketplace can get you started, check out this blog post.