GREAT IDEAS FOR ENTREPRENEURS FROM THE THOUGHT LEADERS AT CASEY NEILON
THINKING ABOUT GOING GLOBAL?
SIX KEY CONSIDERATIONS FOR ENTREPRENEURS WITH INTERNATIONAL ASPIRATIONS
By Xin Chen
In the twelve years now that I’ve been with Casey Neilon, we’ve had the privilege of serving dozens of entrepreneurs with international aspirations. You may not think of Casey Neilon this way. Many of our clients see us as a local provider of tax, audit and consulting services for entrepreneurs. We certainly are that. But we are also trusted advisors to business owners who want to go global.
After working with numerous entrepreneurs and advising them on how to grow their business internationally, I’ve come to recognize just how feasible and how valuable this move can be. It is probably more doable than you might realize. But there are also many pitfalls to avoid. Here are six key considerations for entrepreneurs who want to expand globally.
This Is Not About Outsourcing American Jobs
I want to make this point clear. I don’t believe that this opportunity is primarily about outsourcing American jobs to cheap international labor. Not one of the opportunities for international expansion that we’ve been involved in had off-shoring jobs as a core motivator. Not one.
There are all sorts of reasons to expand globally, more reasons than I could possibly cover in this short article. But the core motivation is nearly always growth. The entrepreneurs we serve want to grow their companies by expanding thriving businesses into new markets. I’m proud to be a part of that.
One of the reasons this matters to me is because my life today, here in the US, is a result of “global expansion.” I was born in South China and lived there until age 19 when I emigrated to the US. My husband and I now have a great life with our wonderful children. I love my life today in America. But I also respect and appreciate my cultural heritage from China. I am living proof that going global really works.
You may not be sure about this. Most of the entrepreneurs we’ve served are eager to expand internationally, but also have a lot of concerns, some of which hold them back from fully exploring the opportunity. Fear is often the enemy of entrepreneurs, as my colleague Nicola Neilon has said. It’s wise to be cautious, but it’s not wise to withdraw from due diligence until you’ve gained the full picture.
Global expansion, or even just opening a new office in another country, does require research and careful planning. But it can be very rewarding and something to be really proud of. I’ve seen this launch entrepreneurs to a new level, propelling them to new heights of success and increasing their sense of self-worth and their confidence. Is this the right move for your company?
After reflecting on my own experiences and the experiences of entrepreneurs we’ve served, I’d like to share 6 key considerations for going global. Three of these ideas are for US-based entrepreneurs who are looking to expand operations into another country. Three of these ideas are for entrepreneurs who are not based in the US but who would like to expand into this country.
It’s not wise to withdraw from due diligence about international expansion until you’ve done enough research to gain a complete picture.
Three Ideas For US-Based Entrepreneurs Looking To Expand Globally
Here are some frequently-mentioned concerns of US-based entrepreneurs who are thinking of going global:
- How do we communicate with people in another country?
- How do we launch the business?
- Who can advise us about common pitfalls to ensure we avoid obvious mistakes?
The good news is that there are great solution to all of these concerns. Let me explain.
Technology now makes communication, collaboration and remote productivity more efficient than it’s ever been for international businesses. Internet video chat tools, like skype, email and even mobile networks now make this almost like doing business with someone across town, not across the globe. If you are not familiar with these technologies, we really should talk because they are much easier to use than you might realize.
For example, the film Snowpiercer was an international sensation when released in 2014. But what you may not know is that the film was written by a screenwriter in New Jersey and a director in Seoul, South Korea who almost never got together in person. They had a standing Monday meeting (7:00 AM New Jersey time and 9:00 PM in Korea) in which they collaborated, shared ideas and updated their screenplay.
But it’s not just entertainment companies who are doing this now. Almost any kind of company can open an office in another country and have regular meetings with the headquarters in the US. It just requires some planning and possibly some meetings at times outside of normal business hours. But this is far less expensive and time-consuming than international travel.
Another concern for entrepreneurs is launching a business in a new country. There are all sorts of things to consider here including:
- What sort of business structure should we form?
- How does the business structure impact taxes?
- What local and national laws and licenses do we need to consider as we form the business?
- Where do we domicile the business and what options are available to us?
- What kind of insurance protections do we need?
- What sort of compliance considerations will apply to us in the new country?
Fortunately, international business networks have been formed specifically to address these concerns. For instance, Casey Neilon is a member of The Alliott Group, an international business network that serves global entrepreneurs. Through this network, we have access to thousands of qualified experts who stand ready to serve our clients.
This brings me to the third concern entrepreneurs express: who can we trust to advise us in a country where we may not know anyone? I don’t believe it’s wise to try to reinvent the wheel when forming a business in a new country. The advice you need to avoid common mistakes likely exists. But who has that advice and how can you know they are trustworthy?
This again is where Casey Neilon’s partnership with The Alliott Group provides real comfort and peace-of-mind to entrepreneurs. Our Managing Shareholder, Darsi Casey, is a board member of Alliott Group and meets with international business advisors yearly. This means anyone we recommend to you has already been vetted as a qualified, competent and trustworthy advisor.
Three Ideas For Entrepreneurs Looking To Expand Into The US
Entrepreneurs from outside the US who want to expand into the US often have similar questions and concerns as I noted above.
- What sort of entity structure should we form?
- How does the business structure impact taxes?
- What federal, state and local laws and licenses do we need to consider?
- Where do we domicile the business and why is this important?
- Where do we setup operations and how does this impact costs and profits?
- What kind of insurance protections do we need?
- What sort of compliance considerations will apply to us in the US?
Here are three ideas that I think entrepreneurs entering the US should carefully consider:
- Your entity structure, almost more than any other factor, will determine your tax bill.
- Where you choose to domicile your business can have a huge bearing on your tax bill.
- It is advisable to find a local partner you can trust who can help guide you.
Depending on where an entrepreneur is doing business today, the entity formation process in the US may seem familiar or very unfamiliar. One thing I want to emphasize is that the US is very formal about the entity formation process, compared to other countries who may have lax policies or enforcement of business entity regulations. While the process of entity formation can be easy, especially given today’s online tools and resources, this decision should not be taken lightly. Why?
The type of business structure you form will likely have the single greatest impact on your tax burden. I don’t have time in this article to explain all of the different entity structure options (C Corp, S Corp, Partnership, LLC, etc.), but the tax impact of a specific type of entity structure could be the difference between posting a profit or a loss. This decision should be made in careful consultation with both tax and legal professionals who take the time to understand your goals and unique situation.
Where you choose to domicile your business will also have a real impact on your tax burden. Many entrepreneurs carefully examine which US state provides the greatest tax benefit and choose a domicile location and a warehouse location based on that factor. You might not realize that where you store your inventory could trigger the need to pay sales tax for that state. What is not always intuitive is that your base of operations need not always be in the same state as you choose to domicile your business. There are laws and regulations to consider here that can limit your options. But they are well worth considering.
For instance, the state of Nevada, where Casey Neilon operates, has no state income tax. But if you cross over into California, just a stone’s throw from our offices in Northern Nevada, your state income tax bill could be as much as 20% of your annual income. That’s a big difference. They key thing to note here is that some US states are considered tax-friendly and others are not.
Finally, I believe it is advisable to find a US-based trusted advisor to help guide you so you make great decisions you don’t regret. The process of setting up a business in the US can seem deceptively simple. There are all sorts of internet-based resources that claim to make this easy and cheap. But free or low-cost advice is worth the price you pay.
The choices you make while forming your business could have consequences for decades. No computer system will ever be able to sit across from you and listen to you, understand your goals and concerns and then give you great advice. More than that, no computer system can help you actually get the work done and then advocate for you with government agencies that can be very impersonal and challenging to deal with.
If you are a US-based entrepreneur looking to expand into another country, I think it would be advisable for us to have a conversation about your goals. We help US-based entrepreneurs find trusted advisors in other countries and this gives them real peace-of-mind.
If you are a non-US-based entrepreneur looking to expand into the US, we should definitely have a conversation. Our advice has saved business owners from other countries thousands of dollars and countless hours of frustration in dealing with regulations and paperwork. You can simply send me an email and we’ll setup a time to talk.