Global Expansion

Home Blog Global Expansion

### Towards Global: A Financial Guide for Global Expansion

In the post-COVID-19 economy, businesses large and small face new challenges in the U.S. and global economy. Volatility, uncertainty, complexity and ambiguity have become the new normal in many industries; This makes it important for companies to prioritize business flexibility, especially when it comes to budgeting, cost savings and reducing operational leverage. One way rich countries reduce costs is through international expansion. By moving overseas support to a lower level, business leaders can better serve their companies through future uncertainty.
I run a financial advisory company in Tbilisi, Georgia, where I have worked as the CFO of companies in my country, the US, the UK and Europe. From my work with more than 50 foreign investors from various sectors from IT to manufacturing, I have seen two activities that are both important for worldwide expansion: the promotion of foreign trade and the opening of foreign branches.
There are many advantages to each solution . Outsourcing support to a contractor or other company can provide flexible, cost-effective options that allow your business to scale up and down more quickly. Opening a branch abroad also allows you to benefit from global talent and provides flexibility to your organization by keeping operating costs lower than at the headquarters.
Whether you outsource to foreign resources or expand your business abroad is a good decision that depends on your company, your business, the environment, and decisions beyond this article. Whatever your choice, there are many factors to consider when considering international expansion, and this article outlines the key points to help you make the right decision for your company.

### Easy to do business

When opening a foreign company or sales office, remember that it is easier and cheaper to open and do business in some countries than in others, and choosing the right one can have a big impact on your profitability. . As we all know, the ease of making business decisions includes the freedom to operate without government restrictions and regulations that may interfere with normal business, housing rights, employment rights, and employment. Many of these qualities are routinely measured in the World Bank's annual jobs report, which measures the job and business environment in 180 economies around the world. (This report has been revised and updated as part of the B-READY project at the time of this writing.)
As an example, this chart from the World Bank compares the economy of the United States and Georgia - ranked #1. Ranked 6th and 7th, respectively, for the overall business environment in 2020 (a lower number indicates a looser environment):
As you can see from this breakdown, some of these two countries are below overall similarity in most cases, though those looking to expand worldwide Depending on their importance, companies may want to consider Georgia more than the United States.
But there are many factors beyond the scope of this guide, and in my experience the most important factors when deciding: open an external office.

### Starting a business

Find out how long it takes to start a business in your target area and what costs and terms are involved. The simpler and simpler the process, the less administrative, logistical and financial it will be.
In some countries, it can take months and a lot of money to get through the bureaucracy. It's possible to start your own business, but places like New Zealand, Singapore and Denmark know how easy it is to start a business there. In Georgia, for example, it only takes one day to register a business after due diligence, all necessary documents are available at the state registry office, and you only need to sign and pay $35.
Find the physical location you'll still need to pay for (maybe even create your own) and provide it if you want. This requires renting or purchasing space, obtaining building permits, finding and paying contractors, installing utilities, and more. Regional differences in these rates can also be taken into account.

### Understanding taxes

Understanding taxes Calculating taxes is important because different countries have different tax systems and different tax rates. I always recommend that business owners hire an advisor who has worked in the target country for some time and understands the laws, practices, and fewer exceptions. Having a local tax professional audit your operations will keep you compliant and also help your company save money. Here are some specific tax issues to consider.

## Corporate Income Tax

Corporate tax is paid on the company's earnings. Note that the difference between the two countries will not only be in the tax rate, but also in the way the tax is calculated. For example, among the 62 countries that signed the Estonian tax treaty (including the United States, Georgia, Italy, and Japan), companies do not pay taxes on their profits unless they distribute them. So, if you have a back office in another country, you may decide to reinvest the income you generate from there back into your business at a 0% tax rate.

## Personal Income Law

In many countries, personal income is calculated and paid by the individual; In other cases, personal income tax is deducted by the employer. But what matters to workers is their after-tax income. Therefore, personal income is, to some extent, a mutual benefit for people and businesses. The higher the tax rate, the greater the negative impact on the company's profits.
Since contract workers will be taxed at different rates, the income tax rate will differ depending on the type of workers the company employs. Long-term employee benefits in Georgia are 20% and taxes are deductible. However, contractors in certain industries may qualify for the tax and pay only 1% tax. This can make it cheaper to hire an intern in Georgia than a permanent employee.

## Tax Free

It is important to know how to save money on unnecessary taxes. Many countries have specific industries, products, types of workers, etc. imposes taxes. This is one of the reasons why it is so important to work with local experts, because only then you can calculate the return on investment of starting a business in the country.

## Professional standards

Some jobs are governed and regulated by certain standards and it is important to make sure that the professional standards in the country you are offshoring to match the standards you have set within your company. Same. tight For example, as China reforms its regulatory regime, many Western pharmaceutical companies have begun collaborating with Chinese laboratories on drug development.
Alternatively, it will be easier to offshore only non-essential activities such as IT, marketing, legal support and customer service. You can even offshore some financial functions, such as in-house financial reporting, financial planning and analysis, financial management, and investor presentations.
But not all financial activities, especially taxation and offshore financial reporting, can be safely offshored. Similarly, activities that require compliance with maritime safety standards may not be possible.

## Political Climate

Unfortunately, there are still many political and conflicts in the world and the closeness of these conflicts will affect the economy. Georgia, for example, in addition to dealing with Russia's invasion of its territory, also saw many Russians leave their country in the wake of the Russia-Ukraine war. This leads to more independent work opportunities, which can be beneficial for companies looking to expand in Georgia, but it can also lead to local benefits and higher real estate prices, reducing the cost savings of the business. Of course, political intervention will also affect the economy, which values security.

## Relationships

When opening an office or hiring a foreign employee, you must make sure that your new colleague is prepared to succeed in your departmental company and that your company equates to good work. to them. Three important cultural factors to consider are:

## Education

Education is another important issue to consider. Make sure the new location has enough people with the skills and/or credentials you need.

## Work culture

Finally, culture is important when joining a foreign team. While in some countries it is a strict rule to maintain good relations and discussions, in others employers and employees want to "break bread" (Georgian), which means getting to know each other better and being able to eat together. Understand the needs of your potential employees and ensure they align with your own company culture.
Advice: invest in integrating your team abroad For those doing business abroad, I recommend hiring a dedicated person who will always work effectively. As a business owner, you want to know if your remote team is inclusive and shares the same goals and values as the headquartered team.
Expanding abroad can seem daunting at first, and deciding on a to-do list often takes longer than you think. yes, but even the initial effort and investment reaps rewards in the long run. it could be.
Tags:
Streetstyle Crafts
Share:
Facebook Twitter Google+ Pinterest

#### Leave a Comment

Your email address will not be published. Required fields are marked *

### Category

- Fashion
- Beauty
- Street Style
- Life Style
- DIY & Crafts

### Archive

- July 2018 (9)
- June 2018 (39)
- May 2018 (29)
- April 2018 (35)
- March 2018 (22)
- February 2018 (32)
- January 2018 (21)
- December 2017 (26)

### Popular Post

- 1
  Best Festivals of Himachal Pradesh
- 2
  Airports in Himachal Pradesh
- 3
  Best Hill station in Himachal Pradesh

### Tags

Fashion Lifestyle Denim Streetstyle Crafts Magazine News Blogs