A Few Basic Legal and Financial Tips for Expats Starting a Business Overseas

A lot of expats and digital nomads dream of building and running their own businesses while living abroad. While it’s easy to set up a simple LLC in the US, navigating paperwork and financials in another country is a whole different beast. Here are a few basic tips to get started.

Address Pre-Launch Legal Questions

Understand Local Business Laws

Every country has its own rules for foreign entrepreneurs. Before you even choose a business name, gather answers to questions like these, so you know what you’re getting into:

• Do foreign citizens need a local business partner?
• What rights or access will you need to operate legally, at your business’ most basic level?
• Are there rules for operating in specific industries, such as education, media, or finance?

Select the Right Business Structure

Your taxes and in-country operating responsibilities depend on the type of business structure you choose. As a business owner, you can choose between a variety of setups – many expats opt for sole proprietorships, LLCs, or even forming a branch office of an existing business.

Take the time to understand how each structure works in your host country, and how it influences the taxes in your home country. If you’re forming an LLC with partners, you’ll need a clear and legally sound operating agreement. This type of agreement outlines everyone’s roles, responsibilities, and payout processes – critical stuff when running your business across borders.

• Read our comprehensive guide to LLCs for freelancers, digital nomads, overemployed, and remote workers

Visa and Residency Rules Matter

Not all visas allow you to operate a business in your destination country – in fact, you may need a specific visa type if you’re doing any work at all in your host country, regardless of whether you own a business or work for someone else. Make sure your residency status is compatible with entrepreneurship!

A few things to look into when researching your residency requirements:

• Entrepreneur, startup, or digital nomad visas as an alternative to standard tourist visas.
• Investment thresholds for business owners – for example, some countries require that you have a minimum amount of capital in your business.
• Required local hires or job creation guidelines – some destinations require foreign business owners to employ a minimum number of local workers if operating in that country.
• Deadlines and application processing timelines to ensure you don’t begin work in-country when you technically can’t.

Don’t Forget Intellectual Property (IP)

If your business has a name, original goods, or a logo, keep them safe. Get trademarks or patents from the IP office in the country where you are based. If your market spans more than one country, you should look into getting protection in those places as well. The work is worth it, especially in areas where people often copy without permission.

Gather Financial Planning and Compliance Documents

Open an Expat-Friendly Business Bank Account

Many countries require that you open a local bank account to register your business or receive payments. When you choose a bank:

• Ask about procedures that are different for foreigners, as well as any resources that can help streamline the process.
• Learn about the fees and costs of transferring money between countries.
• Make sure the bank guarantees online access so that you can manage your finances easily.

Understand Your Tax Obligations

To deal with taxes as a foreign business owner, you need to look at both your host country’s and your home country’s tax rules (especially if you’re American and still have to file).

A few items we’d recommend that you look into:

• Corporate vs. individual tax rates
• VAT or GST registration points
• Double-taxation agreements
• Withholding obligations for local hires

Consulting a tax advisor who understands both countries is one of the best early investments you can make.

• Read our tax guide for digital nomads!

Know the Rules Around Hiring

If you plan to hire staff or work with freelancers, learn your host country’s labor laws. These will cover issues like minimum wage and benefits, termination rules, visa requirements for foreign hires, and contractor vs. employee classifications. In most countries, staff management requires formalized payroll procedures and tax documentation, and you don’t want to end up in hot water through honest mistakes or lazy research.

Set up Your Accounting Systems

Once you have a bank account ready to go, and before sending out your first invoice or completing your first transaction, create an accounting structure. Make sure that it:

• Tracks foreign income and expenses accurately
• Divides personal and business finances
• Prepares for international tax filing needs

There are international accounting platforms that will help you with this, like QuickBooks and Xero. And if language is a barrier, make sure you have the number for a bilingual accountant early in the game!

Gain Cultural and Market Insight

Business is about people, not just numbers. Understanding your destination country’s business culture and criteria is crucial to your success as an entrepreneur.

• Learn about how people truly build trust in your host country – from first meetings to signing contracts and beyond.
• Remember that the values of different societies are not the same – what works for a business in your home country might not do very well in your host one.
• Spend some time getting to know contractors and local business partners – they’ll be able to help you down the road, and it’s a fantastic way to share insights, recommendations, and new business.
• Adapt your marketing to local customs, language quirks, and even how people use the internet.

Build a Strong Support Network

Starting a business abroad shouldn’t happen in isolation. Tap into these resources to make your journey smoother:

• Local business incubators or accelerators for expats
• International entrepreneur meetups
• Government economic development programs
• Legal support or accounting firms with cross-border expertise

And don’t sleep on virtual networks! Connect with business owners across different regions to share information and insights.

Ready to Get Started?

Opening a new business should be exciting, not scary. Crossing borders to do it adds another layer of planning, but if you do thorough research, take the time to gather and prepare all of your paperwork and applications, and stay positive and action-oriented, you can do it! Set yourself up for success – you want to create the business and life you’ve always wanted, so you may as well do it right.

Featured image by Brooke Cagle on Unsplash