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Setting up Your Own Business Abroad

By: Sarah Knowles BA, MA - Updated: 28 Nov 2012 | comments*Discuss
 
Own Business Abroad Self Employed Taxes

Using a career break to set up a business abroad can help you test the water to see if the venture can exist long-term, and is also a potentially lucrative way of funding your trip.

But setting up your own business in another country can be fraught with pitfalls, so get good advice and do your research to avoid falling into the usual traps.

Making several visits to the country you are considering before you take the final leap is an excellent idea, allowing you to check out the competition, research your customer base and set up a network of possible business contacts.

Consider moving to an area where there is a skills shortage, an easily filled gap in the market, or one where you can bring a particular expertise.

Get Some Business Know How Before You Go

Setting up business abroad requires specialist advice, so don't think you can do it completely on your own. Most major UK banks have offices abroad which can give you the advice you need to become self employed, as do corporate lawyers and independent agencies that can be of assistance from setting things up to closing shop. Ask yourself the following questions first.

  • Will I be allowed to work legally in the country? Many entrepreneurs have a gung-ho work ethic. But being all fired up doesn't mean bucking the system. Get all the right work and residence permits before you go, and check that you will be allowed to do what you plan on doing.
  • Am I familiar with the country's rules and regulations? Red tape is a common factor many countries unfortunately share, and foreign bureaucracies can be formidable. Be prepared for things to be difficult at least some of the time.
  • Do I speak the language, and if not, can I get help along the way? Don't expect things to run smoothly if you expect everyone to speak English. They won't. In the same vein, embracing the new culture and having realistic expectations will help you succeed.
  • Are there currency restrictions on what I can bring into and take out of the country? Some countries do have strict restrictions, although you can have invoices paid directly into a UK account. You'll also need to set up a bank account in the host country, which in some case can be exceedingly time-consuming.
  • Make sure all your bases are covered when it comes to actually setting up your new venture. Take the right documents and identification with you, have comprehensive insurance, and ensure you have adequate funds to cover you for the first few months. Similarly, it's a good idea to have an exit plan if it all goes pear-shaped.

Think About Freelance

If you plan to work at home or become a freelancer abroad, the rules are largely the same. Find out what is legal - and what is not - before you start, and make sure you have all the right work and residency permits. Often freelancers feel that as a self employed unit they have fewer regulations to follow, but that's not the case. Any commercial transaction needs to be accounted for, whether that means selling your own paintings, freelance articles or trading antiques from your house.

Bear Taxes in Mind

Know the local tax situation before you set up in a foreign country. If you are not au fait with the tax and VAT rules and regulations, you may end up paying too much of your profits in taxes. Getting an accountant in the country is highly recommended, as is talking to a UK accountant who knows about your situation before you go. Don't forget there is still an excellent chance you will have to file a UK tax return!

Building a business abroad can help you have a profitable career break, or can set the tone for your entire future. The key to becoming a successful entrepreneur abroad is to plan carefully, do your homework and respect your new culture. And have fun while you're at it!

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