By going overseas, you can access bigger markets, diversify your customer base and more easily withstand any adverse economic conditions that arise locally through earning foreign business income.
However, because every market has different rules, regulations and taxes, successfully taking your business overseas requires thorough planning, plus a healthy respect for the impact of cultural difference among your overseas clients. So at White & Black Accountants, we’ve written this blog to outline a few of the key things you need to know before you leap into international markets.
Test Your New Markets
Predicting overseas demand for your product/service can be difficult, so test the waters first. For product-based businesses, test the appetite for your product through export markets or a trial via online distribution channels such as Amazon, complemented by targeted ads. If your business is services-based, arrange a business visa and personally pitch to your target market. The response you receive should indicate how your business will fare overseas, informing your expansion decisions. You may also be eligible for government support such as the Export Market Development Grant to develop your business overseas.
Get Professional Advice
If you’re taking your business overseas, your advisors are your best friends. Work with lawyers, accountants and others who understand the overseas landscape you’ll be entering, and who have networks of like minded overseas partner firms that can help seamlessly manage your expansion from Australia. By seeking the right advice, you can ensure that your expansion overseas is profitable, not painful.
Speaking of profits, the right business structure is vital for avoiding expensive mistakes and maximising your profit. The taxation of foreign business income is complicated, there is no denying that. Your tax structure and foreign tax compliance will become your biggest headache when taking your business overseas if it is not done correctly, so seek a qualified advisor who can both advise you and assist with implementation. Your structure should allow you to operate in each jurisdiction as needed (e.g. allowing you to hire overseas staff) while protecting you from unnecessary tax burdens.
Adapt as Required
Depending on local and cultural norms and nuances, you may need to adapt your product, service, message or sales approach to suit your new location. For example, a “hard sell” is not acceptable in all cultures. Similarly, to avoid being seen as promoting Christianity, the Red Cross is the Red Crescent in Islamic countries. So while you should be as consistent as possible in your branding, be sure to adapt to your overseas markets as required.
Set Up Locally
Depending on your business, you may be able to operate almost exclusively from Australia, or you may need to go local. This may involve setting up a separate overseas entity or working through an alliance with a local business. Even if you’re operating from Australia, you’ll still need to arrange overseas bank accounts and a local address. To ensure you can hit the ground running, organize these details before you go full steam ahead.
If you will be operating overseas, setting up will also involve organising staff for your new office. You may choose to hire locally or to send some of your Australian staff overseas. If you’re hiring, consider using a reputable local recruitment agency to make your life easier. Either way, if you want to avoid any expensive legal or compliance problems, you need to familiarize yourself with local payroll rules and any specific tax requirements.
Look Forward to Success
We’ve been careful to outline some of the key pitfalls to taking your business overseas, but going overseas isn’t all doom and gloom – it’s actually an exciting opportunity! In particular, you can enjoy the advantages of deeper markets, more favorable overseas market conditions, diversify your earnings through foreign income and the ability to leverage a successful business model in a new environment. Just imagine what that could do for your business…
It doesn’t matter how great your service or product is, or how successful your business is in Australia; if you don’t thoroughly prepare before heading overseas, your foreign business could lose big money – and the resulting headache could be a major distraction.
However, with the right preparation, going overseas can be a lucrative opportunity.
Have you taken your Australian business overseas? Do you have any “lessons learned” that could help other business owners? Let us know in the comments below.
What White & Black Does
At White & Black Chartered Accountants, we’ve spent years advising businesses on making the move overseas. Our extensive international tax experience, along with networks of like-minded overseas partners, allow us to help you make the transition from local to international business as smooth as possible. Click to read more about our international tax services.