5 Challenges Companies Face When Doing Business Overseas
Due to fast-changing market dynamics and increased competition, many organizations seek to expand their market internationally. To do this, companies set up legal entities in foreign locations to support their operations, simply their legal structure, lower operating costs, and comply with local statutory and legal requirements. Yet, such ambitions can be fraught with challenges. Listed are five major obstacles companies are likely to encounter when going global.
Hiring talent while setting up a business can be challenging on its own; throw a new country into the mix and it can place added stress and burden on your hiring team. Many times, the hiring process varies in other countries – from where to post jobs to how conduct interviews to the actual job offer.
Employee Management and Training
Effective employee management is crucial to improved productivity, reduced risks, and providing a great employee experience. Companies that poorly manage employees or fail to provide thorough training can find a new location being isolated from the company culture or organizational values and goals.
Tax Codes and Compliance Issues
Setting up a legal entity overseas entails learning different tax codes and understanding local business regulations. For example, in several countries opening an office for longer than six months may require you to file local tax returns before the due date otherwise you may incur penalties.
Payroll administration involves tasks ranging from calculating employees’ remuneration to ensuring compliance with employment laws. Whether in the United States or a foreign country, payroll administration can get complex quickly. Further, various aspects such as commission, pay rates, and annual state withholding amounts change from time to time, making payroll administration even more complex.
HR and Benefits Tasks
Managing HR tasks such as onboarding, health/benefits administration, offboarding, and more are critical and time-sensitive tasks. It often gets difficult for businesses to keep up with the HR changes in another country or even to create policies and train employees according to these changes in a timely manner.
An effective strategy needs to be in place to overcome the challenges that arise with setting up a legal entity in a foreign location. A reputable service provider or professional employer organization (PEO) can help establish a comprehensive talent acquisition process, help you manage and nurture employees, and even administer tasks on your behalf. A PEO can turn a hectic, time-consuming, and costly situation into a hassle-free process to help your business grow.