Global expansion: Checklist for your business

Businesses and organizations aspiring to go global need to consider many different aspects during the expansion process. Our global expansion checklist offers you step-by-step guidance so that you can be sure your expansion project runs smoothly. Simply tick the items off your list as you go.

Issue

In the beginning of the venture, it is crucial to develop a global expansion strategy which clarifies aims and objectives and defines how operations will be run in the new market. That is to say whether you will use local freelancers, hire full-time employees via an Employer of Record (EOR) or set up a foreign legal entity.

Action items

• Assess already existing knowledge about the new target market.

• Decide whether to work with local freelancers or full-time employees.

• Define the business activities you will engage in.

• Evaluate your commitment to the new market: Will it be a long-term market engagement or will it rather be a short-term project.

• Decide on the number of full-time employees you want to hire (if any).

• Check if you need to create a local legal entity.

• Consider hiring local full-time staff via an Employer of Record - Reach out to Lano for assistance.

• If a local entity is needed: Establish guidelines for which competencies remain with the headquarters and how much autonomy will be given to the local entity.

• Decide which expansion-related business functions will be managed in-house and which ones will be outsourced.

Issue

International expansion requires a whole team of experienced executives and reliable local partners who can offer advice whenever needed. Building a strong team is the next crucial step to make global expansion a reality.

Action items

• Check if and how many members of your current team have experience with international business expansion and could potentially supervise the project.

• Decide whether to deploy some executives from the headquarters to prepare the launch of the new market or whether to use interim executives.

• Prepare for recruiting a permanent local leadership team.

• Start building your global network of legal, finance and employment experts - Reach out to Lano for help.

Issue: Compliance with local employment laws

If you decide to hire your own full-time employees in the new market, you will need to be familiar with the local rules and regulations that govern employment relationships.

Action items

• Check requirements for employment contracts, mandatory employee benefits, regulations on working hours, minimum wage and workplace safety as well as the required termination procedures.

• Check collective bargaining agreements that may apply to the industry your business operates in.

• Consider hiring local employees via an Employer of Record - Skip the research process and choose a suitable EOR provider from Lano’s partner network.

Issue: Employee misclassification

Misclassifying contractors as employees can result in hefty fines for your business. If you intend to work with local freelancers and contractors, you should make sure you understand the rules that govern employee classification.

Action items

• Check which categories of workers are acknowledged in the jurisdiction you are expanding to.

• Compile a list of relevant criteria that need to be fulfilled in order to classify workers as independent contractors - Use Lano’s country-specific contractor checklists.

• Establish a plan to regularly assess your local contractors’ situation and the contractual arrangements you have established with them.

Issue: Mandatory insurances and licenses

Foreign jurisdictions may require companies to take out special business insurances or acquire a local operating licence.

Action items

• Check which insurances are mandatory for businesses in your industry.

• Confirm if there are special licenses businesses need to acquire before they are officially allowed to operate.

• Check the necessity of registering your company’s trademarks in the new geography.

• Research the intellectual property rules applying in the new jurisdiction.

Issue: Data privacy and protection

Operating in several jurisdictions means having to comply with different regulations on data protection and security. Special care needs to be taken with regard to transferring data between different entities.

Action items

• Assess which employee and customer-related data will be collected in each jurisdiction and if and how it will be transferred between entities and jurisdictions.

• Check local requirements for notifying employees and customers about how their data is stored.

• Check if your data protection levels are sufficient - both in terms of storage and transfer.

• Consider data security when choosing external service providers.

Issue: Immigration

Under certain circumstances, you may want to relocate team members to a different entity - e.g. when sending executives abroad to supervise the launch of a new market. In this case, it is crucial to review visa requirements and immigration laws beforehand.

Action items

• Assess the worker’s individual situation, including the intended length of stay, their position and the tasks they will carry out while staying abroad.

• Check visa and work permit requirements.

• Select the permit and visa option that is suitable for your employee.

• Check if they need to be registered with local authorities for tax and social security purposes.

Issue: Legal entity types and corporate set-up

There are several legal entity types to choose from when expanding into new markets. The main types are: local branch, representative office and subsidiary. Each of them comes with different tax implications and limitations with regard to local operations.

Action items

• Research local entity types, their operational functionality and their financial requirements.

• Decide which entity type suits your business needs and objectives.

• Check the timeline for entity set-up and adjust your expansion roadmap accordingly.

• Confirm whether it is necessary to appoint local directors.

Issue: Corporate taxation

Different local entity types come with different corporate tax implications. And even if you don’t set up a foreign legal entity, conducting business abroad may expose your company to permanent establishment risk.

Action items

• Check the tax implications linked to the legal entity form you have chosen (if any).

• Reach out to local experts to discuss how you can mitigate permanent establishment risk.

• Establish a tax calendar for each country which includes important dates and deadlines for corporate tax filing and reporting.

Issue: Payroll taxes and social security

In most countries, employers are responsible for withholding their employees’ income tax and making social security contributions on their behalf. Miscalculations or missed deadlines for filing may result in fines.

Action items

• Consider outsourcing payroll processing to a local payroll service provider - Reach out to Lano to find the right in-country partner.

• If you decide to run global payroll in-house: Get your payroll team to familiarize themselves with local tax rules and regulations and establish tax and compliance calendars for each jurisdiction.

• Register your employees with the relevant social security bodies.

• Build a network of local tax and accounting experts.

Issue: Financial infrastructure

Conducting business transactions and employing employees in different countries around the globe requires a financial infrastructure which allows you to efficiently issue local and global payments.

Action items

• Check the need to set up a local bank account.

• Check if a local payroll provider is allowed to pay employees on your behalf.

• Find a way to avoid costly cross-border payments - Create your digital Lano Wallet to send payments to employees, contractors, EOR and payroll partners in over 180 countries.

Issue: Global benefits management

Multinational organizations with a global team need to develop a global benefits strategy which determines how employee benefits are administered across the different geographies.

Action items

• Develop a global strategy for employee benefits administration.

• Consult local experts or hire via an EOR provider to ensure the benefits package you offer in each jurisdiction is compliant and competitive.

• Think about employee perks you can offer to your globally distributed team to create a common ground.

Issue: Global payroll management

Processing payroll in multiple countries requires businesses to develop a way to efficiently manage and consolidate their global payroll data to increase transparency and process efficiency.

Action items

• Consider outsourcing payroll processing to in-country partners.

• Invest in a global payroll solution like Lano to consolidate data and payroll providers in one platform.

Issue: Managing a globally distributed team

This is not only a big challenge for your legal and finance teams but also for your HR department as recruitment, hiring and onboarding processes need to be adapted. Communication and collaboration processes also have to be redesigned.

Action items

• Prepare your HR team to conduct remote job interviews.

• Increase cultural awareness by encouraging conversations and by offering special training.

• Develop an onboarding process that is suited to remote employees based in different countries.

• Compile an onboarding checklist for new hires and enable remote access to necessary onboarding documents.

• Adapt your company policies and procedures to embrace having a global team.

• Invest in asynchronous communication tools to enable collaboration across geographies and time zones.