For most venture-backed companies, planning for international expansion starts when a few oversea sales begin to trickle in; once the leadership team starts to survey larger opportunities, it becomes imperative.
Taking a company global is a complex process that requires critical understanding of multiple factors and a consistent approach by your leadership team and all stakeholders. But while most companies start expanding internationally as part of their natural growth stage, even the earliest stage companies can lay a foundation of planning well before those first sales come in.
Early Planning Sets the Stage for International Success
Identify your objectives, goals and strategic intent
- Why does it make sense to have an international plan?
- When will it make sense to “pull the trigger”?
- Do you have a defined short-, medium- and long-term strategy?
Ensure your infrastructure is scalable
- Internally does your organization have the structure needed to successfully execute your strategy?
- Are your legal, tax and finance teams able to scale with you as you go global?
Perform extensive due diligence & risk analysis
- Have you analyzed the impact that going global will have on all facets of your organization?
Two Options to Start:
U.S. Company with Foreign Sales
- US company expands into foreign markets by selling directly from the US.
- Foreign sales are included in US taxable income.
- Because the tax rate in the US is 40% (including state taxes), the result is a high Effective Tax Rate (ETR).
U.S. Parent Company with a Foreign Subsidiary
- US company establishes foreign subsidiary to manage non-US sales.
- Foreign sales are not included in US taxable income until repatriated.*
- If the foreign subsidiary is located in a low tax jurisdiction the result may be a significantly lower ETR.*