Seeking opportunities and experiences in other countries is one of the reasons why expats thrive elsewhere. Countries with booming economies attract expat entrepreneurs, but it can be quite a daunting task, especially if you want to build a business from scratch.
Rest assured, though, it’s doable. Here’s a comprehensive guide to getting you started.
Business Landscape for Expat Entrepreneurs
More than 160 countries host nearly 9 million American expats. This number is big enough to populate major cities, including Chicago, Philadelphia, Los Angeles, and Tucson.
While Americans take the top spot in the most number of expats by citizenship, United States passport holders do not have a monopoly on the expat experience. According to an Internations survey, other citizenships that take up large portions of the expat population include British, Indian, German, Italian, Canadian, French, Australian, South African, and Dutch.
The same survey reveals the usual motivations for expat migration—love and family, education, lifestyle, and job and career. Among survey respondents who migrated for “job & career,” only 2% answered, “starting my own business.”
However, it’s important to note that this seemingly slim figure is not on account of a lack of business opportunities. The trend is more traceable to the all-too-possible scarcity of expats who have the heart and guts to pursue an entrepreneurial endeavor abroad, which will be a real test of a person’s business acuity.
9 Best Countries to Start a Business Today
The subject of how to start a business is no laughing matter. It requires earnestness—unless you have an inexhaustible amount of time and money to spare, which is never the case. Things get even more serious if you’re looking at a money-making venture in a foreign country. In that regard, the first order of business is narrowing down your options in terms of location. Here’s a list of viable choices.
- New Zealand – The country claims the top spot in the World Bank report on ease of doing business. Business registration may be done online. Processing costs only NZD 10.22 and takes as little as 24 hours.
- Denmark – Ranked fourth in the same World Bank report, this Scandinavian country’s government is pro-business as a whole. This manifests in entrepreneur-friendly policies on tax payment, contract enforcement, property registration, and construction permit application, among others.
- United Kingdom – Online business registration in the UK costs only GBP 30 and takes less than a day. Other benefits include the diversity of the population, which means a wide market to tap. The quality of life makes up for high taxes.
- Norway – Business digitization has become one of Norway’s most championed causes. This has significantly eased bureaucratic challenges in starting a business. The country scores high in World Bank business parameters, including insolvency resolution and contract enforcement, among others.
- Sweden – The country ranks tenth in the World Bank report on ease of doing business. While taxes are on the higher end of the spectrum, you can expect tangible returns to your contributions through government services such as top-notch infrastructure.
- Singapore – This is one of the least corrupt countries in the world, which is undeniably good for business. In terms of infrastructure, this small city-state scores high as well. Other business perks include low import and export costs and low taxes.
- Hong Kong – Business registration takes less than a day and costs less than HKD 3,000. That covers the application fee, business registration fee, and business registration levy. Another advantage of doing business in HK is low taxes—it also doesn’t hurt that the tax system is easy to grasp.
- South Korea – This country is a global superpower that consistently champions business innovation. As per World Bank business parameters, it scores high, especially in contract enforcement and insolvency resolution.
- Georgia – Straddling Europe and Asia, Georgia boasts easy trading across borders. On top of that, it offers progressive taxation, smooth business laws, and government incentives to entrepreneurs. Those are just a few reasons why the country consistently attracts foreign investors.
How to Open a Business for Expat Entrepreneurs
Once you’ve picked your country of choice, the next step on how to start a business abroad is the preparation stage. Here’s what we recommend.
1. Know the country
Countries don’t have the same business regulations. It’s imperative to know the specific policies imposed by your nation of choice. For starters, different data protection policies exist depending on where you are. You must study those to develop appropriate data management protocols that ensure utmost government compliance.
2. Study the market
You cannot do away with foolproof market research. That’s what will inform your business plan. The dominant market in your choice of a country can spell a huge difference with the success of your business. Furthermore, this will give you insight into what type of products or services will thrive.
3. Make a business plan
A business plan is the blueprint of your entrepreneurial venture. It will gauge the feasibility of your idea and allow the plotting of action plans by which you can pursue your objectives. You can better navigate fluctuations in the market with a solid business plan.
4. Set your business budget
Budgeting for business must take into account available resources, fixed and variable costs, and profit projections. As an expat entrepreneur, it’s important to be pragmatic. Otherwise, you may end up spending more than what you can without getting the ROI you need to keep going.
5. Create a marketing plan
Doing business in a foreign country means dealing with cultural nuances that you may miss without thorough study. That means your marketing plan must be tailored to fit where you are. Your marketing plan should also foresee business expansion along the line.
6. Get an international license
The rules for registering your business will depend on the country. Ensure utmost compliance, so you do not unwittingly break local policies.
7. Buy an insurance policy
It’s best to prepare for all contingencies. For example, if your business falls victim to a catastrophic natural event, it pays to be covered by business insurance.
8. Work with a tax professional to sort your business taxes
Do not hoard all responsibilities. Delegate tasks such as your business tax duties. Work with a tax preparation services provider. You will have peace of mind if you do so, knowing you’re tax compliant. Meanwhile, you can focus on more critical aspects of running your business.
U.S. Taxes for Expat Entrepreneurs
One of the core business concerns you will have to deal with is tax compliance. In that regard, here are the necessary steps you should take:
- Choose the right corporate structure
Keep in mind that your tax filing requirements will depend on how you register your business structure. For example, foreign (non-US) corporations have to file the oft-confusing Form 5471.
- Check the requirements for self-employed taxes
- Have an offshore bank account
Declare your offshore bank account via the Foreign Bank Account Report (FBAR). For offshore accounts with at least a $10,000 balance in the aggregate (in total) at any point during the calendar year, the owner must file the Form FinCEN 114.
- Learn your new tax deductions qualifications
Keep abreast of tax deductions to which you may be eligible. For example, you may apply for the Foreign Earned Income Exclusion (FEIE). Through the FEIE, you may exclude as much as $112,000 from your taxable income in 2022.
- Review the country’s tax system
You must be tax compliant with both your home and host countries. Failure to pay your tax duties will result in fines and penalties that can easily cause your business liquidity problems.
4 Crucial Tips in Opening a Business as an Expat
To maximize the prospects of your foreign business venture, make sure to adopt the following strategies.
1. Build your network
Know as many people as you can from as varied industries as possible. Your built network can help you in one way or another. For instance, someone working in the shipping industry can introduce you to a logistic partner that will significantly improve your ecommerce business.
Do not limit your network to fellow expats. Get intimate with the locals, too.
2. Do proper documentation
Document online and off. Keep physical records in reliable storage so you can easily refer back to them when you need to. As for digital records, you can use the cloud for back-end business documents. Meanwhile, there’s social media for records you want your target market to see. Remember to post accordingly and in a way that’s consistent with the brand you want to build.
3. Follow all the legal requirements and processes
Government compliance will do you no wrong. So, make sure you are aware of all local policies relevant to your business.
4. Immerse yourself in the culture
You will not know your target market in a foreign land if you refuse to be immersed in their culture. So, roll up your sleeves and acclimate to where you are, not just as an entrepreneur but as a human being.
Start A Global-Ready Business
After a major roadblock in the past couple of years, the world is again opening up. In no time, borders will happily welcome expats from all over sans restrictions. That will be your chance to pursue your dream of building a business from scratch in a foreign country. If you take to heart this comprehensive guide, you increase your chances of succeeding.
As for your business’s tax compliance, it’s best to work with a reliable tax resolution partner. On that note, you get the best in class tax preparation services from Tax Samaritan, so don’t hesitate to reach out to our team of tax experts.