Corporations and Companies

5 Legal Issues for Global Business Expansion

Every single business owner in the early stages of business development considers a global expansion as a clear sign of growth, something extraordinary to look forward to, and something to celebrate. While this is, indeed, a cause for celebration and proof that you’ve managed to scale beyond your humble beginnings and raise brand awareness, there are certain challenges that come with such staggering growth that each of those owners needs to face. One spectrum of those challenges revolves around the legal issues concerning that global expansion, since you will start working beyond your original borders and targeting an entirely new audience. 

Working in international waters is far from simple, and you’ll need professional legal assistance every step of the way, a sizeable budget to fund your endeavors, and a hunger for knowledge so that you can adapt your brand to the needs of your new audience. Avoiding fees and legal issues is one relevant aspect of growth, so take a look at the following legal conundrums you might encounter on your way to a global presence, and how best to prevent them successfully.

Understanding your tax obligations

Much like when you started your business originally in your current state of residence, your new locations and registrations require you to learn about your tax obligations towards these countries. Every country is different, and their laws prescribe different rules for local and international companies, which will ultimately determine your own tax requirements. 

By talking to someone who is expert at the local tax laws, you can make sure that the structure of your business enables you perhaps lower certain taxes. That way, you can make sure that you are in line with the law but that you also make use of any rights you have.

Staying in line with environmental policies

Countries such as China that deal with substantial amounts of pollution have recently introduced a range of different policies that limit every business’s activities that could jeopardize those environmental initiatives and their target goals. That means that in order to avoid fines and damage to your reputation you need to stay in line with China pollution policies and ensure your business doesn’t produce a massive carbon footprint to contribute to the local and global environmental crisis. 

Learning about such specific regional issues can help you preserve your brand’s future image in those countries, while it also helps you prevent unneeded fines and penalties. 

Hiring local staff 

When you begin learning about the local tax laws, you will also need to find out what your rights and duties are when hiring new people to join your ranks. Hiring the local workforce means that you’ll need to learn about employee regulations, their rights, as well as certain cultural norms such as holidays and other important issues that will affect their relationship with your business. Make sure to talk to local experts and have a local HR representative fully informed on the best practices and your legal obligations towards your employees. 

Following the same logic, your business should look into various hiring and collaboration options available. Offering them a position within your own company means that you need to craft locally relevant contracts to ensure proper employee protection, and to clearly outline the conditions in which you’re either hiring someone, or letting them go.

Handling real estate issues

Modern-day diversity in employment and collaboration has enabled the rise of flexible work spaces and offices where freelancers and workers from various companies can do their jobs without distractions. However, if your business involves other, more complex processes, such as local manufacturing, distribution, and shipping to local cities, then you need to consider the implications on your entire production line.

Perhaps you have no ownership rights in your target destination, but maybe renting or sharing the space is a possibility. It’s essential to look into such options early on before you actually begin the expansion.

Marketing and advertising limitations 

If you want to truly succeed in any new environment, you need to be able to market your business far and wide, and allow your audience to get to know your brand. To understand your marketing and advertising rights and regulations, you need to learn about what each country allows foreign business entities to do. For example, China’s latest advertising regulations clarifies the boundaries for what constitutes as online advertising or not, which can make a difference between dealing with a fine or attracting your clientele.

In essence, each region has its own marketing boundaries that you need to follow, so as to make sure that your brand’s reputation is protected, and that you won’t waste your budget on pointless fines.

Wrapping up

Yes, your global business expansion is a worthy endeavor that will take time and brand adjustments along the way. While it’s unavoidable to completely prevent issues, it’s best to make sure that your business, your brand, and your employees are legally protected through this transition, and that you’ll only need to tackle practical problems that naturally occur whenever there’s a structural change in how you operate your brand. Use these tips to ensure legal protection for your business, and hopefully, your global expansion efforts will go smoothly and successfully.