Expanding a company to other countries is a major move for any business. It offers the opportunity to reach new customers and find new ways to grow. However, this path is filled with complex rules and laws.
In the UK, for instance, businesses must comply with detailed employment laws and strict data protection requirements under the UK General Data Protection Regulation (GDPR). Worker protections, notice periods, and pension obligations are also more structured, leaving little room for error.
By contrast, the U.S. legal landscape is more decentralized. Employment laws often differ by state, data privacy regulations vary across jurisdictions, and compliance requirements can shift depending on where a business operates.
That makes one thing clear: different countries mean different laws, regulations, tax rules, employment standards, and compliance requirements.
Don’t worry, though. You can navigate the legal side of global expansion with confidence. How? We’ll share that here.
#1 Choose the Right Business Structure Abroad
Choosing a business structure is the most critical step in an expansion strategy. This decision directly determines your company’s legal liability, the weight of its regulatory burden, and its ongoing tax obligations.
Mainly, businesses choose between a branch office and a subsidiary. Instead of a separate legal entity, a branch is viewed as an extension of the parent company. This lack of legal separation means that the parent company is 100% responsible for the branch’s liabilities, debts, and regulatory compliance issues.
The downside, however, is that branches struggle to gain credibility with local banks and suppliers, who may perceive them as less permanent or transparent.
In contrast, a subsidiary is a legally distinct entity incorporated under the laws of the host country. While the parent company owns the majority stake, the subsidiary operates with its own management and liabilities. This creates a corporate veil that protects the parent’s domestic assets from exposure in the foreign market.
However, if you wish to evaluate a market without committing to full operations, the representative office (RO) serves as a temporary, non-commercial vehicle. An RO is strictly limited to non-revenue-generating activities, such as market research, brand promotion, and relationship building.
#2 Hire Local Experts
Don’t try to wing everything yourself. Hire local experts, so you can understand the local culture and the small details of the law better. They help avoid mistakes that could cost millions of dollars.
Local lawyers are the best guides through a new legal forest. They can draft agreements that the local courts will respect. They also know how to protect intellectual property like brand names.
Taxes are also hard to manage across borders. A local accountant knows the tax codes of their home country, making sure you pay the right amount of tax.
Finding local experts can be challenging if you’re expanding without a legal entity. But EOR services can help you with international hiring. According to Remote, a global HR and payroll platform, “An EOR—meaning employer of record—allows you to hire people in other countries by acting as the legal local employer on your behalf.”
Employers of Record services are especially of great help in countries like the UK, where 76% of recruiters report that finding quality candidates is hard. A UK Employer of Record (EOR) service can find quality candidates and handle payroll as well. That way, you can focus on growing your business.
#3 Stay Compliant with Data Protection and Privacy Laws
Data is now one of the most protected things in the world. Many regions have passed laws to protect customers’ personal information.
The most well-known is the General Data Protection Regulation (GDPR) in Europe. Remote explains that GDPR governs how businesses collect and process personal information from individuals inside the European Union (EU).
One of the most critical legal complexities for U.S. businesses is the GDPR’s extraterritorial applicability. The law does not only apply to companies based in the EU. It applies to any entity that offers goods or services to EU residents or monitors their behavior.
The stakes for non-compliance are exceptionally high. Fines can reach €20 million or 4% of a company’s global annual revenue, whichever is higher. For many small-to-medium enterprises, a single major GDPR penalty could be existential.
Other than the GDPR, countries worldwide have enacted their own data privacy laws. These include Brazil’s Lei Geral de Proteção de Dados (LGPD) and the California Consumer Privacy Act (CCPA) in the United States. Each law has different consent rules, data storage requirements, and breach notification timelines.
To stay compliant, you must understand the laws, map your data flows, review consent and disclosure requirements, and update policies and contracts accordingly.
Navigating the legal landscape of global business can be challenging, but it is possible with a well-planned approach. These tips can help you navigate the complexities with confidence, so follow them.
Take things one step at a time and don’t be afraid to seek help. Rest assured that you can expand confidently into new markets while protecting your business every step of the way.
