6 Things to Consider as an Expat Business Owner
If this is the year you finally take steps to make your dream of living abroad come true, congrats. As an expat living in Italy, I can say it’s definitely going to change your life for the better!
If you plan to take your business with you, or you want to start a business once you move, there are a few things you’ll need to take care of.
What You'll Need to Know As an Expat Business Owner
1. Understand How Taxes Work
Don’t assume that because you’ve moved out of the United States you have no tax responsibilities there. You do. You still have to file taxes in the U.S., though you may only have to pay self-employment taxes if you don’t have a home or other assets in America.
This applies whether your clients are local or in the U.S. The United States taxes on what it calls “global income,” so it doesn’t matter where you earn the money; it’s got to be reported.
You will most likely also have to file taxes in the country where you move. Here’s where you’ll want to get a tax professional who understands the intricacies of taxes for expats: some countries (like Italy) have agreements with the United States that keep you from being double taxed. For example, here in Italy if I pay €2,000 in taxes, my American taxes are discounted that much. But I’m no tax expert, so talk to an accountant or the equivalent in your new country, and make sure they understand international tax law! I spoke to about five accountants in Italy, all who pretended they understood what I needed, but who actually didn’t have a clue. Keep looking until you find someone you can trust to do the job correctly.
2. Find a Way to Cut Through the Red Tape
Whether you’re doing business locally or not, there may be permits and licenses you need to apply for in order to run your business legally. Start by heading to your local city hall or Chamber of Commerce and inquiring about what you need.
If you aren’t fluent in the local language, take someone with you who is. I speak fairly good Italian, but I find it helps to take someone with me since I don’t speak “business Italian,” and there are often terms I don’t understand. To avoid misunderstandings, I make sure I have someone who can explain anything confusing to me.
3. If Your Business Is Local, Learn the Language
Speaking of language, if you aim to open a local business, be sure you speak your customers’ language! This seems like a no-brainer, but you’d be surprised at how many expats conceitedly assume everyone speaks English. In some areas, English isn’t spoken widely, and even with rudimentary language skills, you can go a long way to showing your customers that you’re making an effort to be a part of their community and culture.
4. Meet Other Entrepreneurs
One thing I notice that is a bit different in Italy than in the U.S. is how people will go out of their way to help you. Need directions? An Italian will not only tell you how to get where you’re going, but he’ll even accompany you there and buy you a coffee on the way.
Being an expat can be lonely, and so can being an entrepreneur. But if you find your tribe, that is, other entrepreneurs (or other expats, or other expat entrepreneurs!), you’ll not only find support, but you may also get valuable advice and be introduced to people who can help you on your journey.
Larger cities may have business meetups. If you’re in a smaller town like I am, simply introduce yourself to business owners. Ask their advice on business matters (everyone loves being asked their opinion!). Give to them without expecting something in return, and I guarantee they’ll be happy to help.
5. Know the Market
This also only applies if you’re opening a business in your local community. It can take a while to understand the vibe and culture of a place, so don’t decide a month after you move to a new country that what your new town really needs is a pizzeria. You’ll first need to understand the legal requirements to open a business, but you’ll also want to spend time understanding customer habits.
How many pizzerias are there in your neighborhood? How much business do they get? Are there any gaps in the market that you could fill, such as offering gluten-free or vegan pizzas?
Realize also that many people may be averse to frequenting a business run by a foreigner. Not everyone is happy to see us, so you’ll need to build the trust of your new community before investing a dime (or a centesimo, as it were) in a business that might not thrive.
6. Figure Out Your Banking Needs
If you, like me, will still have American expenses, you’ll need a way to funnel money between dollars and your new currency. Exchange rates and fees can cost you, so do your research to find the most affordable solution for currency exchange.
I use Revolut and I have accounts in both dollars and euros. I exchange money with low fees, and then I transfer the funds to either my American or Italian bank account. Also, I use Bill.com, which allows clients to pay an invoice in Euros, and that money goes directly into my Italian bank account. You’ll need to consider where you need money more (in the U.S. or your new country) and open bank accounts in each place.
Living and running a business in another country can be a wonderful experience, but make sure you start off on the right foot by taking care of legal requirements as well as truly understanding the market.
