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What are the primary issues when considering hiring employees in a foreign country? (Webinar Attendee Question)

This question was asked during the Proformative webinar "Going Global: Expanding Internationally the Right Way."  A video of the webinar can be viewed here:


Topic Expert
Vernon Reizman
Title: CFO
Company: RCM Industries, Inc.
(CFO, RCM Industries, Inc.) |

Make sure you have the right fit as terminating employees can be an expensive and lengthy process.

Topic Expert
Bob Stenz
Title: Controller
Company: Silicon Valley start-up
(Controller, Silicon Valley start-up) |

The following comes to mind: (1) payroll should be administerred locally to ascertain proper treatment of taxes and benefits, (2) employment agreements with consideration to local customs/regulations, (3) foreign entity strategy so as to separate US/foreign business ownership and taxes, (4) defined roles/responsibility that conforms to foreign entity tax considerations (i.e. cost plus may not allow foreign employees to sign contracts, etc.) and (5) plan for managing your foreign employees.

Dave Weil
Title: Executive Consultant
Company: DLW Consulting
LinkedIn Profile
(Executive Consultant, DLW Consulting) |

Consider using a firm such as Nair & Co. to take care of your payroll and HR needs and assist you with related international expansion administrative issues.

Topic Expert
Joan Varrone
Title: CFO
Company: Cloud Cruiser
LinkedIn Profile
(CFO, Cloud Cruiser) |

I concur with all the comments. Another company to consider for taking care of your administrative and legal needs is High Street Partners. There is the larger issue that Bob mentioned which is the legal structure. Will you have a rep office, branch or subsidiary and that choice will influence your overall costs and operations.

Topic Expert
Stephen Wares
Title: International Expansion Expert
Company: CCW Business Solutions
(International Expansion Expert, CCW Business Solutions) |

Bob nailed the key points! I would add:

1. Understand the implications of granting stock options to your non-US employees.
2. Try to address termination of employment provisions as best you can under local legislation within the employment agreement.

Topic Expert
International Representative
Title: International Expert
Company: Nair & Co.
(International Expert , Nair & Co.) |

Balancing cost and risk, structuring the operations tax efficiently (eg either to use up your US NOLs or to setup a foreign profit center), setting in place buffers to protect the US company from foreign employment and regulatory liabilities.

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