Setting up a business abroad can be one of the most exciting and bold experiences that one can have but the most important question to consider is how can one begin. There are multiple ways to consider when seeking to expand your business internationally. Some of these options might sound easier than others while other options can provide greater rewards but they also might be riskier and will have consequences such as higher cost. Before deciding on which option is appropriate for your expansion it is of vital importance that one considers the business idea, the time and the budget that you want to invest.
The first and most obvious option that comes to mind when considering expanding overseas is to set up an international entity or open an office. Although the most obvious option, registering a legal entity abroad can be a large and complicated investment depending on the local laws and requirements set forth by the specific country. Considering your business and its requirements, it is essential to acknowledge costs and options that involve limited commitment such as using EOR for international expansion before you plan on making a big effort and investment of time and money.
Introducing EOR for International expansion
During the pandemic, (Employer of Record) EOR services have evolved and created a way for businesses to expand overseas without the need to register a local entity. EOR allows overseas companies to hire and manage individuals and/or teams in the country of their choosing by utilizing a local EOR provider as the proxy by which HR and payroll is managed. This option is fast, easy, flexible, empowering and simply revolutionary…
Analysing before investing in Entity setup
One of the most important factors when expanding is to understand the market that you are planning to launch your product/services into. Many firms fail to successfully settle as they do not understand the local regulations and the culture of the region that they enter. Proper planning along with detailed market analysis is very essential for establishing a successful company abroad. As the laws and regulations vary significantly from country to country, there it is very important to keep those in mind while planning your international expansion abroad.
Only when a company has fully worked on the local market and all the regulatory requirements of setup are clear, it is then when a clear decision of investing in an entity will be clear.
Is entity setup beneficial or not for global expansion?
Setting up an entity for international expansion is a straightforward approach depending upon the long term goals of a company. It not only provides the access to foreign markets but also helps increase brand recognition worldwide. However, establishing an entity overseas is not only expensive but it also makes one sensitive to the regulations and laws of local market along with the risk associated with the market fluctuations and economic crisis. Therefore, it is important to be sure if you are ready to invest high amount in an unfamiliar and unpredictable market.
Another factor that has made the market volatile is the COVID-19 pandemic. With the restrictions to international travel and the closed borders has made entity setup more complex consuming great amount of time and effort.
However, other approach makes the international expansion possible keeping your business risk at minimal.
Employer of Record (sometimes called PEO)
One of the best, easiest and flexible options to expand overseas is to use a Professional Employment Organisation (PEO)/(EOR) Employer of Record firm. An employer of record (EOR) provides in-county HR outsourcing including hiring, payroll, and HR liability outsourcing enabling you to hire and manage teams of any size in any country. Tasks including employee benefits, payroll and workers’ compensation are handled by the EOR firm while you maintain a normal working relationship with your remote employees and focus on business.
With EOR service global expansion is easy to handle. Whenever you decide in expanding internationally an Employer of Record service can help you in following ways:
If you are willing to reduce the cost and risk associated with entity setup, EOR can help you test the market by helping hire employees for you while you work on evaluating the market readiness without investing in company setup.
If you have a country selected for your international expansion that is crucial for your growth and you need employees on-boarded immediately then EOR firms are there to help you get running asap while you can work on your entity setup option in parallel.
Benefits of the EOR
Below mentioned are some points that highlight the importance and the advantages offered by EOR in business expansion.
Limiting the Payroll Burden
EORs can handle everything related to payment to employees including the benefits, payroll calculations, filings, expenses disbursements and on-boarding and off-boarding the employees.
Assures Full Compliance to local laws
EOR can help companies in the hiring and staffing process while taking care of the local regulations and working in full compliance with the local labour laws.
Outsourced Liability
EORs will reduce your liability load as they hand