Multinational business operations have long been the purview of giant organizations with deep pockets for branding and marketing.
But in the 21st Century, technology has dramatically changed the global business landscape, opening doors for small and medium enterprises (SMEs) to take their business operations abroad.
Navigating the global business landscape can be costly and time consuming for smaller entrepreneurs, but you don’t have to go it alone. An Employer of Record (EOR) solution provides global expansion tools and local expertise to SMEs, to help you quickly and easily get your business up-and-running in a multitude ofcountries around the world.
Use this convenient Guide to learn more about global business expansion, and discover convenient and affordable solutions available for mitigating compliance and taxation risks, and optimizing international business growth.
Challenges Faced by SMEs When Expanding Abroad
Venturing into a foreign business landscape can be at the same time exhilarating and intimidating, especially for smaller companies with limited resources to allocate for global expansion. You have to carefully weigh your risks against potential gains, with little room for error or loss.
Some of the biggest risks faced by SMEs when expanding abroad include:
- Cultural and language barriers. For your company to succeed on the global business landscape, you need to be cognizant of local laws and customs, and be respectful of local culture. In many countries, like France and Poland, the inability to communicate in the local language can pose serious barriers to launching and conducting business operations.
- Risks of non-compliance with local labor laws. Many companies make the mistake of assuming that foreign countries’ labor laws are similar to those at home. But most countries have unique laws for regulating business practices, and many impose stiff penalties on foreign enterprises that fail to comply.
- Immigration challenges for your expat team. If the nature of your business demands feet on the ground from your home office, you will need to dig into the requirements of your target country, to ensure your expat employees meet all legal requirements for immigration and residency.
- HR management and payroll issues. Most countries have clearly defined regulations regarding human resources and payroll, and rigid laws governing employee termination. This can place an overwhelming burden on your HR team to ensure compliance and avoid penalties in a distant foreign country.
- Complexities of tax withholding and remission. Taxes are always a pain point for SMEs, who often struggle to balance profits, losses and tax compliance. Foreign countries often have multi-tiered taxation systems, and complex and rigid requirements for international employers.
- Challenges related to diversity in hiring. In recent years, countries around the globe have modified their labor laws to accommodate disabilities, gender issues, issues related to race and religion, and issues specific to women. Those laws heavily favor job candidates and employees, and your company can easily be targeted for discrimination by anyone who chooses to file a lawsuit. Targeted companies can find themselves in a quagmire of lawsuits that disrupt business and quickly deplete resources.
- Difficulties associated with business entity establishment. Some of the world’s most coveted locations for setting up business have some of the most complex and difficult-to-navigate processes for establishing a business entity. Without a local advocate who knows the ins and outs of in-country business establishment, your company could be doomed to months of bureaucratic red tape that eats up all your resources.
How a Global EOR Solution can Streamline Business Expansion and Mitigate Risks
SMEs often have limited resources when expanding abroad, and you cannot afford to take costly risks. In addition, recent lockdowns, travel restrictions and mandates have amplified the risk of venturing into new territories where conditions can be volatile.
For many SMEs, a global Employer of Record (EOR) service provider offers the perfect solution for companies that are not yet ready to fully commit to an established business entity in a foreign country.
A global EOR solution provides numerous benefits for SME global expansion:
- Hiring and HR management. Onboarding and compensating the best talent is key to business success. A global Employer of Record hires your global workforce on your behalf, manages payroll and benefits, and takes care of employee termination, easing the burden of your HR team at home.
- Tax withholding, filing and remittance. Tax issues are always a key pain point for any business, and complying with taxation laws in a foreign country is critical for international businesses. A global PEO works with local partners, to ensure that employee taxes and contributions are withheld and remitted according to local taxation laws.
- Assistance with expat immigration. Immigration laws vary widely from one country to the next, and the immigration process can be difficult to navigate in some locations. Your global PEO can assist you with sponsorship, documentation and form filing, so you can get your expat team on the ground in record time, with minimal hiccups.
- Guidance on local culture and customs. An international EOR provides local support for your personnel, to ensure they transition smoothly into their new country of residence.
- Assurance of full legal compliance. With a global PEO as your partner, you never have to worry about being in violation of local compliance requirements. Avoid risks, fines and penalties, and establish your reputation as a trusted local brand.
- Stress-free invoicing. Leave the details of HR management to your EOR partner, and pay a single monthly invoice, no matter how many countries you choose to expand your business to.
- Round-the-clock support. Your global EOR has international employment experts available 24/7 to answer your questions and provide support for your team.
Partnering with a Global Employer of Record
A global EOR solution such as Express Global Employment can save you time and money, and expedite the time it takes to build your team and get your business operations underway. In many cases, you can hire and onboard some of the world’s top talent in a matter of days.
Partnering with a global employer of record is a savvy way for SMEs to test the international business waters, with minimal risks and challenges. Your EOR does the heavy lifting of HR management and in-country compliance, so you can focus on growing your business.
Read more:
Savvy SME Guide to Global Business Expansion