Location is probably just as important as legal structure when you’re starting up a business. The impact of local regulations, tax policy, and currency is often underappreciated. While most businesses simply register wherever their headquarters happens to be located, some entrepreneurs have the liberty to pick the location that suits their business model.
Here’s what you should consider before you decide where to register your startup:
Potential advantages.
There’s a lot of opportunity in other parts of the world. Also, certain governments are more likely to support businesses that they believe will benefit the local economy. Certain businesses, like location-independent consultancies or ecommerce companies, are easier to manage in other countries.
For an entrepreneur, the choice of location hinges on the potential for tax incentives, cost advantages, local talent pool, and access to new customers. Setting up a business in one of Dubai’s numerous free zones, for example, could allow you to tap into the Middle East and North African trade market. Setting up a RAK Freezone company in Dubai could give you access to lower tariffs, lower bureaucracy, and an investor visa or residency permit.
Similarly, setting up a business in Singapore or the European Union could give you access to the Southeast Asian or European market. Depending on the nature of your products or the competitive advantages of your company, moving operations to another jurisdiction could be a catalyst for growth.
Incentives like these are designed to kickstart growth for small and medium-sized businesses that are trying to access a new market.
Potential Hurdles.
Of course, starting a business in a country you’ve probably never visited could be complicated. Many entrepreneurs make the mistake of believing that taxation rules and business regulations are uniform across the world.
Tax residency and differences in regulations are probably the biggest hurdle for a global business. As an entrepreneur, you may need to consider the strength of the local legal system or the availability of infrastructure before you decide to move. You may also need to consider the tax implications of earning an income in a country where you do not live permanently.
Learning the basic rules of commerce in a new region, the customs of local business, and the preferences of regional customers is a challenge for many startups. To ease the transition, entrepreneurs must consult a local expert or a global consultancy with experience in helping businesses.
To Sum Up.
Setting up a business abroad could be the ideal move for your business. If you think another country can offer you better incentives, higher demand, or better talent, moving overseas could be the best decision you take. However, make sure you consult an expert and plan your move carefully to avoid the pitfalls of international trade and global entrepreneurship.
