Sometimes, Americans can seem to have a bit of a superiority complex in the eyes of the rest of the world. We treat nationalistic slogans as if they were passages from the Bible. “Made in America” can sound like we think products made anywhere else are suspect. Perhaps it just means that we support hard-working Americans. But what about hard-working people from other places who have been providing us with products for decades?
“Proud to be an American” can sound like there is something divine or implying accomplishment by being born in America as opposed to someplace else. Surely, people living in other places also have reasons to be proud? No one means any harm with these slogans. But you have to be mindful of them when doing business in and with other countries.
There are all kinds of reasons to look elsewhere for business. Here are three:
- Expansion opportunities are plentiful elsewhere.
- Aspects of doing business are less expensive elsewhere.
- Infrastructure elsewhere might favor your business needs.
If you have a good reason to consider doing business in another country besides the one you are in, here are a few things you need to know:
How to Get Savings on Manufacturing
Regulatory red tape can eat up your profits quickly. If you plan to do business in Mexico, you are going to need to know the regulatory landscape very well, especially if you are in manufacturing. This is where a shelter company comes in. From one of the leaders in the industry:
Shelter Manufacturing in Mexico allows companies to forego establishing as a foreign subsidiary, which is standard in most countries, by instead setting up a maquiladora program to quickly begin operating in the country.
This type of arrangement offers unique opportunities to companies looking to dip a toe into offshoring.
Become Familiar with Foreign Currency and Tax Law
The saying, “dollars to doughnuts” is rather meaningless in a place that doesn’t run on dollars. Come to think of it, that saying doesn’t make sense anywhere. But you get the point. You are going to have to do more than brush up on how to accept foreign currency payments for your Airbnb.
Doing business outside the country does not exempt you from US tax obligations. The IRS makes it clear that wages you pay to a citizen or resident by a U.S. person for work they do for you outside of the US are subject to federal income tax withholding save for a few exceptions. Here are a few examples from the IRS:
- Certain combat zone compensation of members of the Armed Forces of the United States;
- Certain compensation for agricultural labor (see IRS Publication 51, Circular A, Agricultural Employer’s Tax Guide);
- Compensation for domestic service in a private home (unless both the employer and the employee agree to withhold);
- Compensation (for less than $50) for service not in the course of the employer’s trade or business performed in any calendar quarter by an employee;
Money is a difficult subject to understand in any language. You need to be sure you speak it fluently in your home country as well as the countries where you do business.
Cultural Sensitivity Is Essential
It is not just political jingoism we have to guard against. It is everything to do with culture, including religious sensitivity. There is an old saying about doing as the Romans do when in Rome. Well, Rome is a pretty nice place to visit for a Westerner. How will you fare in the East where ideas about human rights might be very different from what you are used to?
Rome is a vacation compared to other parts of the world where you might actually want to do business. Doing business online does not insulate you from such concerns. When it comes to laws, regulations, and more, the World Wide Web is shockingly local.
Doing business somewhere other than the place you call home can be challenging to say the least. But it can also be richly rewarding when done right. Just be sure to sort your manufacturing infrastructure and compliance, foreign currency, and cultural norms.