Challenges when Expanding into New Countries

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Global expansion is always an exciting opportunity, but when it comes to setting up business entities, hiring employees, and getting payroll up and running, things can get complicated.

Global expansion is always an exciting opportunity, but when it comes to setting up business entities, hiring employees, and getting payroll up and running, things can get complicated. There are several key aspects of starting up in a new country that are often overlooked and unique challenges in each country when expanding and hiring. Here are some common challenges companies face when expanding into a new country:

  1. Business Entity setup: Creating a new entity is not as easy as it sounds. Depending on what type of entity you are setting up impacts your tax liabilities, you may need to hire local talent for certain positions within the company, and the required reporting and deadlines for tax payments are sometimes determined by the type of entity created as well.
  2. Bank Accounts: Do you need an in-country bank account in order to pay local employees, or can you pay staff from a bank account that is based in your companies current location? Understanding the payroll regulations in each country and the bank accounts required for payroll is key to hiring and paying your employees. Some countries require a local bank account and some will allow for bank accounts that are based in your companies current location to use for payroll.
  3. Multi-country Payroll: Will you use different in-country providers in each country to manage payroll or one platform to manage all of your countries? Using different providers can cause a multitude of issues when it comes to reporting and visibility. It is also difficult to manage all of the currencies for payments. If you have one platform to manage all of your payroll, you have real-time access across all countries, you can settle payroll from multiple currencies, and you have customized reporting for each country and aggregated views across all countries.
  4. HR Compliance: Once you’ve figured out payroll, then it’s time to hire employees. What are the statutory benefits in the countries you are expanding in? What happens if your benefits are not in compliance? There are unique HR regulations required in each country – some have limits on how many locals must be employed, some positions can only be filled by local talent, etc. You need an HR compliance partner to help navigate the circumstances in each country or face fines and penalties for non-compliance.

Getting started in a new country is always an adventure, but if you’re prepared you won’t face disaster as you’re trying to launch. Know before you go and your global expansion will be seamless and you’ll wonder why anyone ever thought it was complicated!

Author – Julie Gaertner – Blue Marble Payroll

Black Mountain Group

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