If you have a business with international management and or production, hire an attorney who specializes in business law. This wise advice is worth noting because an attorney with this special insight can explain how a taxpayer can be most efficient in setting up their business, avoiding some costs with having business in another country, and creating the framework for the business to be successful over time.
It is no secret that we live and do business in a global world where we are interconnected in almost every way possible. One lens of globalization in the business sector is seen through jobs and employment. If a US business wanted to spread their wings and establish business in another country, then seeking a thriving marketplace that matches the emerging trends and employment structure is key to starting a business overseas.
For example, India is a thriving market place for new and established businesses because of their population is very proficient in areas such as software technology, data services, online customer service, infrastructure and e-commerce.
Three important aspects of starting business in a foreign country are the implications of nationality in the business structure. Why is this important?
- Revenue. Nationality of a company determines which country collects taxes and which country should offer protection to the company if/when there is turbulence in the business location.
- Location. Nationality determines where the management and control of the business takes place. For example, there is a common misconception that nationality of the company is where the business was incorporated or where it resides—not where the work gets done. Many businesses located in India are used only to carry out production but the management of the company takes place in another country. Therefore, even though these companies also located in India and perform important tasks necessary for the company to succeed, the company would not be an Indian national. This has major implications on the finances of the business because it would now need to declare its profits in order to be assessed for tax purposes in US. This aspect is foundational to avoid being taken to court for tax evasion which carries a penalty of imprisonment.
- Civil Privileges. Nationality also determines the diplomatic protections by the country if there is civil unrest or political turmoil for the company.
As big business and small business alike seek the best strategies to operate their business, nationality will continue to evolve and remain an area of counsel for international success. Equally relevant in strategy is the need for members of the U.S. Asian Indian community to seek counsel as they may also go back to Indian to start companies.
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