When starting an international business, do not forget the employment law issues!

Friday, December 13, 2013 | Published by

A recent report by the World Bank ranked New Zealand as the easiest place in the world to set-up a small and medium-sized enterprise. The definition of “easy” is based on how many steps are required to establish the company, the costs of incorporating, capital contributions, and the amount of days involved before the enterprise is officially recognized as a legal entity. All you have to do in New Zealand is register your company online, pay the processing fee (around US $129) and best of all, a minimum capital investment is not required. It takes a total of 1 day!

Taxes by Jason Dirks, on FlickrMeanwhile, other countries require upwards of ten steps and a waiting period of several months before you can do business under your newly formed Limited Liability Company. Yet in Canada, you can have your business number in five days or less after completing an online registration form. Other relatively easy countries to form a business include Hong Kong, where, amongst other requirements, you have to sign-up for a local pension fund as well as an insurance policy and in Georgia you have to open a new bank account and complete a registration form.

Throughout the world, city-by-city, there is increased competition over where to establish your start-up. Silicon Valley is ranked first, followed by London. Although recently, Paris has stepped-up its efforts to be more competitive by announcing that it will spend over $150 million to create the world’s largest “startup incubator” offering affordable workspace and access to investors and consultants. Other cities such as Toronto, Rio de Janeiro, Tel Aviv and Boston are also considered entrepreneurial hot spots.

As we know, taxes play an important role in these decisions and sometimes, amidst the time pressure, the important consideration of employment law is often neglected. Finding a perfect market for business to grow is key, but it is equally important to understand how to lawfully recruit employees, form binding contracts, honor health and safety obligations, avoid violating discrimination or wage and hour laws, and, if necessary, defend against strikes and collective actions. In that respect, some countries which may not be the first choice for start-ups, certainly deserve a second look.

Image by Jason Dirks, on Flickr.