When I work with a U. S. company that is going to do business outside the United States, here is where I start. I want — as quickly as possible — to move from infinite potential to plausible reality. Let’s only consider things that might really happen. Then let’s choose the best we can.
The first thing I do is look at stuff out of everyone’s control. That means, first, government regulations. Look at your home country (USA) laws. Look at the country where your company will be doing business. Are there any laws (employment laws, licensing rules, rules limiting foreign ownership, etc.) that force you to choose a particular type of legal structure? If you have this situation, well I’m sorry, but the somebody has already dealt the deck and you have the cards you were dealt.
Here is an example that is completely non-international. But it is simple and demonstrates what I’m talking about.
Law firms in California may be corporations, general partnerships, or limited liability partnerships. They may not operate as limited partnerships or limited liability companies (LLCs). That’s what California law says. So when a California law firm is formed, there are limits on what can and cannot be done. As much as you might want to use an LLC, you can’t.
Is there something analogous for your business that will deliver a knockout punch in Round 1? For this, you need someone smart in the country where you will be operating. Get that answer first in order to prevent a lot of wheel-spinning by your U. S. lawyers and accountants.
And when you ask this question of your foreign lawyer, ask it very specifically. Ask strictly about regulatory and legal restrictions that mandate doing business in one fashion or another. You will have many other questions later. But don’t confuse your advisor by asking him/her too many questions at once. Ask the right questions, ask them specifically, and ask them in the right order.
Yeah, I know. Not very technical. So sue me. This approach saves time, money, and brain cells.