Foreign entity setup services explained – guide to international legal business formation

Last checked and updated on 19 October 2022

There are many reasons why a business might want to set up a foreign entity. Perhaps you want to expand your operations into new markets, or you need a legal presence in order to do business in a particular country. This is where entity setup services come in.

Whatever the reason, it’s important to understand the different types of business entities available and what is required in the jurisdiction you’re aiming for.

In this article, we’ll take a look at some of the most common questions about foreign entity setup and provide an overview of the services offered by experts in this field.

Compare prices for payroll & HR
payroll accreditations

What is a business entity?

A business entity is a legal structure for a business. The range of entity types varies from country to country.

The type of entity you choose will determine the liability of the owners, the taxes that must be paid, and the regulations that must be followed.

When setting up a foreign entity, it’s important to choose the right type of entity for your business and to comply with all local regulations.

There are many different types of business entities, each with its own advantages and disadvantages. The most common types of business entities are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations, but these often have different names in different countries.

In some countries, there may also be special requirements for foreign-owned businesses.

Can you employ people abroad without a legal entity in that country?

Yes, you can often hire employees in other countries without setting up a foreign legal entity. See our guides to international payroll and international PEO.

However, this is not always true, and there may be certain restrictions on the type of work they can do and how much they can be paid. There are often also considerations relating to visas, work permits and taxes.

It’s always best to check with local authorities to make sure you are complying with all applicable laws.

When is legal entity a good idea?

There are many reasons as to why a business might want to set up a legal entity in another country. Perhaps the company is expanding its operations and wants to open a new office or factory in another country.

Or maybe the company is looking to enter into a joint venture with another business and needs to create a legal entity in that country in order to do so.

Whatever the reason, there are a few things to keep in mind when considering setting up a foreign legal entity.

First and foremost, it’s important to make sure that the country in which you want to set up your legal entity has laws that allow for such entities. Not all countries do, so it’s important to do your research before moving forward.

How does the legislation vary in different territories?

The laws governing business entities vary from country to country.

In some jurisdictions, there may be special requirements for foreign-owned businesses. For example, in China, all foreign-owned businesses must be registered with the local government.

Employment laws also vary from country to country. For example, in the United States, there are laws governing minimum wage, overtime pay, and employee benefits that do not exist in other countries.

It’s important to be aware of these differences and to make sure you are compliant with all local laws when setting up a foreign legal entity.

What are the risks pertaining to international entity setup?

There are a number of risks associated with setting up a business entity in a foreign country.

These include compliance risk, regulatory risk, and reputational risk.

  • Compliance risk is the risk that the company will not be able to meet the legal and regulatory requirements of the country in which it is operating.
  • Regulatory risk is the risk that the company will be subject to changes in government regulation that could adversely affect its business.
  • Reputational risk is the risk that the company’s reputation could be harmed by its association with a foreign country.

Other risks include currency fluctuations and political instability. It’s important to consult with an expert in order to understand all of the risks involved and how to minimise them.

Hiring a foreign entity setup expert – what services are available?

There are a number of service providers and consults who can assist in ensuring your foreign entity setup is handled correctly. These services can include helping to select the right business structure, obtain the necessary licenses and permits, and providing ongoing compliance support.

When choosing a service provider, it’s important to consider their experience in setting up businesses in the country you’re interested in, as well as their reputation. It’s also important to get quotes from multiple providers so that you can compare costs.

Features to look for in an entity setup service

Registered office setup – This service provides a physical address in the country where your business will be registered. This is often required by law in many jurisdictions.

Corporate bank account – Many banks require that businesses have a local business bank account in order to open an account. This service can assist with this process.

Shelf companies – A shelf company is an already-formed company that can be bought and used for your own purposes. This can be a good option if you need to set up a business quickly.

Local registered agent – A local registered agent is someone who is authorised to receive legal documents on behalf of your company. This service can help to ensure that you have someone in the country who can receive and manage any legal documents that come through.

FAQ

Below are some frequently asked questions about foreign entity setup services.

What is a business entity?

A business entity is a legal structure used to conduct business. The most common types of business entities are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.

What is required in other countries when setting up an entity?

The requirements for setting up a business entity in another country vary from jurisdiction to jurisdiction.

Can you employ people abroad without a legal entity in that country?

It depends on the country in which you want to employ people. In some cases, it may be possible to do so without setting up a legal entity. However, in other cases, it may be required by law.

When is a legal entity a good idea?

There are many reasons why you might want to set up a legal entity in another country. For example, if you want to expand your business into that country or if you want to employ people there.

How does the legislation vary in different territories?

The laws governing business entities vary from country to country. In some jurisdictions, there may be special requirements for foreign-owned businesses. For example, in China, all foreign-owned businesses must be registered with the local government. Employment laws also vary from country to country. For example, in the United States, there are laws governing minimum wage, overtime pay, and employee benefits that do not exist in other countries.

What are the risks pertaining to international entity setup?

There are a number of risks associated with setting up a business entity in a foreign country. These include compliance risk, regulatory risk, and reputational risk.

What services are available when hiring a foreign entity setup expert?

There are a number of service providers and consults who can assist in ensuring your foreign entity setup is handled correctly. These services can include helping to select the right business structure, obtain the necessary licenses and permits, and providing ongoing compliance support.

What is the best way to find a foreign entity setup expert?

A good place to start is by asking for recommendations from other businesses or business owners who have set up entities in foreign countries. You can also search online for service providers or consults who offer foreign entity setup services.

When searching, be sure to read reviews and compare prices before making a decision. It’s also important to make sure the provider you choose is experienced in setting up businesses in the country you’re interested in.

How much does it cost to hire a foreign entity setup expert?

The cost of hiring a foreign entity setup expert varies depending on the services you need and the country in which you’re setting up your business. Make sure to get quotes from multiple providers so that you can compare costs.

What are the benefits of setting up a legal entity in another country?

There are many benefits to setting up a legal entity in another country. These can include expanding your business, employment opportunities, and compliance with local laws.

ⓘ Compare prices?

Important – The information provided in our articles is intended to be for general purpose use only, and not advice for you or your business. We strive to publish accurate information, but encourage you to fact-check and seek expert guidance. We recommend that you always speak to a qualified professional to get advice about how to operate your business under your specific requirements and circumstances.