Incorporating a Tech Startup in a Foreign Country

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MBA in Singapore

In this current age of globalization, many tech startups are taking the bull by its horn to fully enjoy the privilege of starting a business in a foreign country. Of course, the thought of leaving your comfort zone alone is daunting, but it becomes rewarding when you follow the due procedures of expanding and incorporating your start-up.

Digital nomads know the advantages of registering their business in a foreign country since they can work from any part of the country and still run the start-up successfully. What many are unaware of is how to incorporate their start-up.

Tips On How to Incorporate Your Tech Start-up In  a Foreign Country

There is no doubt that saving taxes is one of the reasons why many start-ups register their company in a foreign country, hence the need for a low tax or zero tax country.

Deciding on which country to incorporate is a whole curriculum that should be studied in schools because some countries will only help save taxes; deep down, the country is bad for business.

Some countries are regarded as tax havens but do not have a good reputation with a Double Tax Agreement (DTA) with your country making your business pay for all the taxes you save outside.

Also, the ease of incorporation of your business, reliable banking services, and the ease of doing business in a foreign country need to be studied critically. The country of registration also needs to be examined as most territories are not trusted in the global market, and this will hunt the start-up when they need investors later in the future.

All these are what to consider before incorporation into a foreign country. Now, let’s discuss the tips for incorporating into a foreign country.

1. Decide The Country

You don’t just plan to incorporate a business in a foreign country without having a specific country in mind. For a tech startup, it is important you have more than two countries, and after a comprehensive comparison, you can narrow it down to the most preferred country.

Countries like Singapore and China help save a lot on tax, so you might consider them. Hong Kong being a popular hub and tax haven for offshore tech start-ups because of its low tax (around 16.5 percent), and its strong financial system can be your priority.

Company registration in Hong Kong is straightforward, easy, and cheap when compared to company registration in other territories. Similarly, it is recognized anywhere in the world in case you need to attract investors to your start-up later in the future.

2. Choose The Business Type and Select a Name

There are different types of business entities, there is limited liability company, limited liability partnership, and sole proprietorship general partnership, amongst others.

If you prefer to be on your own, a sole proprietorship is the perfect business entity. If you want a partner, then you can consider a general partnership, but here, you will be responsible for the start-up’s debts and liabilities, so to avoid the liabilities, you can choose limited liability partnership or limited liability company.

Also, the name of your business is crucial to your incorporation; without it, your business cannot be incorporated. You need to come up with a unique and easy to remember for your clients; make it manifest what you do or what you offer the public.

3. Hire Legal Experts

Although it might seem unnecessary, it is recommended that you hire legal experts for your business registration. Incorporation involves a lot of complex paperwork, and a little mistake can spell doom for such business. Once this is settled, you can enter a pre-incorporation agreement before your business can be fully registered.

4. Draft the Articles of Incorporation

The articles of incorporation are the main document needed to incorporate your business. This can be drafted on your behalf by the legal experts you hire, or you do the honors yourself while they put you through to avoid mistakes.

5. Draft the Shareholders Agreement

As the name implies, this deals with rights or the shareholders, and it is just as important as the Articles of Incorporation.

6. Register and Pay for the Incorporation Fees

Once you have drafted all the necessary documents and the business’ name has been reserved, you can file for incorporation and pay for the stipulated incorporation fees after submitting all documents.

Conclusion

Incorporation is just as important as the business itself; it gives you the privilege of ownership and also saves you unnecessary taxes, even though this may vary in different countries.

It is incumbent on you to do due diligence before expanding to any country. The ease of business incorporation is as important as business incorporation, but when the process is too demanding, then you should see that as a red flag.

Lastly, business incorporation gives your business the chance to survive in foreign countries, particularly the tax havens that offer very low or zero tax.

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