As a successful business owner, it's only a matter of time before you start mapping out a plan for your expansion. As part of your market-entry strategy, you'll likely be weighing the pros and cons of establishing a branch or subsidiary overseas or incorporating your company in another country. With these options comes the hefty task of understanding and complying with local legal and commercial regulations.
\r\nThankfully, there's an easier solution for businesses that are looking to dip their toes in a new market without overwhelming themselves with major investments and a raft of foreign compliance requirements. If you're looking to expand overseas using a lower-cost, lower-risk business model, engage with a PEO.
\r\nEditor's note: Looking for the right PEO service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.
\r\n\r\nDepending on the country you're targeting, there'll be a number of different legal entities (business structures) for you to choose from when expanding. Many of these will likely come with minimum capital investment requirements, along with legal, accounting, and other obligations that your headquarters and senior staff overseas will need to keep on top of.
\r\nBusinesses can be left quite vulnerable during expansion as they're heavily reliant on local experts to fully understand and meet their obligations in the new country. On top of this, it's a crucial period for establishing a client base and relevant industry contacts as well as for hiring the right people to support and nurture your investment.
\r\nThis process is costly, and it can be even more expensive if wrong steps are taken or elements of local law are overlooked.
\r\nBut businesses and their fledgling expansions have another option: working with companies known as PEOs that can take on some of the burden, and drastically lower the risk your company takes when entering a new market.
\r\nPEOs are professional recruitment agencies through which you can outsource your employment needs. Through a co-employment model, you can enter a new market before investing in a formal commercial footprint in the country such as a branch or incorporated company.
\r\nPEOs can support your business with the following services:
\r\nThis co-employment model means that a PEO will formally be the staff member's employer of record. As an employer of record, the PEO assumes all employer responsibility for the staff member, while they undertake work for the hiring company. Your overseas team members will carry out their roles with your company while being brought into the structural fold of the PEO.
\r\nWhy invest in a large-scale expansion in your new market – such as forming a branch or subsidiary – when you could start smaller and lower your risk profile?
\r\nThough local legislation can differ between countries, expanding businesses generally have a limited set of options for configuring their overseas operations. Available business structures (also known as legal entities) can include:
\r\nThough establishing a formal local entity such as those mentioned above will add immediate weight to your presence in a new market, they can be a costly move for companies, especially if they don't succeed.
\r\nBuild your market entry strategy around a microlevel investment by using a PEO's services. This is especially helpful for first-time expansions and budget-sensitive SMEs. Having one or two senior sales representatives or other executives on the ground means you can still achieve fundamental expansion activities at a lower price. If your company chooses to withdraw from the market, the market exit process is quicker and the potential sunken costs of the venture are considerably lower.
\r\nPEOs don't just act as the regulatory umbrella for your staff members; they can offer additional benefits to your overseas employees, too.
\r\nYour company may not be able to extend the same kinds of benefits to staff working outside the country where your headquarters is based. Likewise, your company's policies on human resources, health and safety, and risk management may not be easily transferable to a new country that potentially has very different local regulations on these matters.
\r\nPEOs can offer greater overall coverage for your overseas employee, adding significant value to a staff member's employment experience. This is especially true for smaller companies expanding abroad; a PEO's \"big company benefits\" can sweeten the deal for an employee or team working away from the company's headquarters.
\r\nHaving local employment support means your staff can access helpful guidance and regular engagement with someone who is familiar with the surrounding area. Outside of learning about the specifics of their job with you, PEOs can be a point of contact for your staff members to get information about different environmental aspects of their overseas role.
\r\nPEOs can facilitate training opportunities for your staff that you may not otherwise have been able to offer. With the co-employment model, your staff can tap into such plans offered by the professional employment company.
\r\nA PEO may offer employee benefits such as health or dental insurance, which is enticing for prospective candidates. On top of that, their internal or corporate policies are compliant with local legislation. You can, therefore, rest assured that your employee is adequately supported and protected by the PEO.
\r\nMost business expansions start small and it can be an isolating experience for your first overseas team member. Once you've found the right person for the job, you want to implement the right strategy to retain them. Expanding your business is a critical procedure, and you need to find and retain the right people to support this process.
\r\nPEOs can often offer a support network that the hiring company can't, due to their established presence in the country.
\r\nThis is an especially important advantage of partnering with a PEO. If your chosen country has a shortage in the skillset you need, you won't be able to easily or regularly find replacements for that position.
\r\nConsider the value a professional employer will add here. The organization's larger footprint and employee numbers in the country offer greater networking opportunities and social support for your staff member or team, ensuring your employees are engaged and supported, and reducing the risk of turnover during your expansion.
\r\nExpanding into a new country is a critical time for businesses. Companies have many things to contend with during this time; they must understand and comply with new and unfamiliar commercial, tax, employment and sector-specific regulations.
\r\nThis exposes the company to varying levels of risk. If your business doesn't already have local experts on hand to advise you on best practice and next steps, you could quickly find yourself caught up in complications with local authorities over noncompliance.
\r\nReduce the burden and stress on your business venture and engage with an experienced PEO. Not only can a PEO provide ongoing employment and payroll services, but their structure is an asset to retaining your talent and keep your expansion operations flowing smoothly.
\r\nProtect your business and support your overseas footprint by working with a PEO that can carry out the necessary activities to further your success in a new market.
\n","docType":"article","guid":"articles_f43549e0ba4a6d369503bb09c9125241","lastModified":"2019-11-07T18:00:00.000Z","published":"2019-11-07T18:00:00.000Z","structuredData":null,"subtitle":"Learn how working with a PEO makes it easier for your business to retain staff abroad.","template":"v1","title":"The Smart Way to Expand Your Business Abroad","type":"article","author":{"avatar":null,"bio":"Craig is an experienced business professional living in Latin America. Craig founded and is the managing partner of the Biz Latin Hub Group that specialises in the provision market entry and back office services. He is also a co-founder and managing partner of the Green Gem Investments, which is a leading emerald mining and exploration company. Craig initially commenced his career within the Australian Army and completed active service in Australia, the Middle East and Afghanistan. After-which, he entered the natural resources sector, reaching executive levels and working within Australia, Canada, Colombia and Peru. Craig is a professional mechanical engineer and also holds Master’s Degree in Project Management from the University of New South Wales.","name":"Craig Dempsey","image":null,"slug":null,"social":{"facebook":"https://www.facebook.com/bizlatinhub/","linkedin":"https://www.linkedin.com/company/biz-latin-hub-group/?viewasmember=true","twitter":"https://twitter.com/bizlatinhub","website":"https://www.bizlatinhub.com/"},"status":"enabled","title":null,"type":"New BDC Member","user":{"imagePath":"https://staging.business.com/images/uploads/user/profile/f2fd75ccfe1ccc14e6b533cb2e8721764b89a.jpg","profile":{"company":"Biz Latin Hub\r\nGreen Gem Investments","jobTitle":"Co-Founder and Managing Director","website":"https://www.bizlatinhub.com/"}}},"breadcrumbs":null,"channels":{"primary":{"name":"Human Resources","slug":"human-resources"},"sub":{"name":"HR Solutions","slug":"hr-solutions"}},"meta":{"robots":"index, follow","description":"Learn how a professional employer organization provides an easier solution for businesses that are looking to dip their toes in a new market.","title":"Why SMBs Should Use PEOs When Expanding Overseas - business.com"},"parsedContent":{"toc":[{"id":"expansion-demands","title":"Expansion demands"},{"id":"engage-with-a-peo","title":"Engage with a PEO"},{"id":"lower-costs-and-risks-of-overseas-expansion","title":"Lower costs and risks of overseas expansion"},{"id":"look-after-your-overseas-employees","title":"Look after your overseas employees"},{"id":"reduce-turnover","title":"Reduce turnover"},{"id":"peos-are-a-lifeline-for-expanding-businesses","title":"PEOs are a lifeline for expanding businesses"}],"json":[{"component":"ul","children":[{"component":"li","children":["Professional employer organizations (PEOs) are professional recruitment agencies through which you can outsource your staffing needs."]},{"component":"li","children":["PEOs don't just act as the regulatory umbrella for your staff members; they also offer additional benefits to your overseas employees."]},{"component":"li","children":["If you're looking to expand your business abroad using a lower-cost, lower-risk model, engage the services of a PEO."]}]},{"component":"p","children":["As a successful business owner, it's only a matter of time before you start mapping out a plan for your expansion. As part of your market-entry strategy, you'll likely be weighing the pros and cons of establishing a branch or subsidiary overseas or incorporating your company in another country. With these options comes the hefty task of understanding and complying with local legal and commercial regulations."]},{"component":"p","children":["Thankfully, there's an easier solution for businesses that are looking to dip their toes in a new market without overwhelming themselves with major investments and a raft of foreign compliance requirements. If you're looking to expand overseas using a lower-cost, lower-risk business model, engage with a ",{"component":"a","props":{"href":"https://www.bizlatinhub.com/professional-employement-outsourcing-peo/","target":"_blank","rel":"nofollow noopener external"},"children":["PEO."]}]},{"component":"p","children":[{"component":"strong","children":["Editor's note: Looking for the right PEO service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs."]},{"component":"strong"}]},{"component":"RfqWidget","props":{"className":"bz-form-widget","id":"bz-form-widget-0","widgetCategoryId":"10092"},"children":[" "]},{"component":"h2","props":{"id":"expansion-demands"},"children":["Expansion demands"]},{"component":"p","children":["Depending on the country you're targeting, there'll be a number of different legal entities (business structures) for you to choose from when expanding. Many of these will likely come with minimum capital investment requirements, along with legal, accounting, and other obligations that your headquarters and senior staff overseas will need to keep on top of."]},{"component":"p","children":["Businesses can be left quite vulnerable during expansion as they're heavily reliant on local experts to fully understand and meet their obligations in the new country. On top of this, it's a crucial period for establishing a client base and relevant industry contacts as well as for hiring the right people to support and nurture your investment."]},{"component":"p","children":["This process is costly, and it can be even more expensive if wrong steps are taken or elements of local law are overlooked."]},{"component":"p","children":["But businesses and their fledgling expansions have another option: working with companies known as ",{"component":"Link","props":{"href":"https://www.business.com/categories/best-peo-services/"},"children":["PEOs"]}," that can take on some of the burden, and drastically lower the risk your company takes when entering a new market."]},{"component":"h2","props":{"id":"engage-with-a-peo"},"children":["Engage with a PEO"]},{"component":"p","children":["PEOs are professional recruitment agencies through which you can outsource your employment needs. Through a co-employment model, you can enter a new market before investing in a formal commercial footprint in the country such as a branch or incorporated company."]},{"component":"p","children":["PEOs can support your business with the following services:"]},{"component":"ul","children":[{"component":"li","children":["Recruitment"]},{"component":"li","children":["Onboarding"]},{"component":"li","children":["Paying staff wages and managing payroll"]},{"component":"li","children":["Making contributions under employment tax laws"]},{"component":"li","children":["Ensuring an agreed-upon level of employee safety"]},{"component":"li","children":["Providing staff compensation coverage"]},{"component":"li","children":["Complying with local employment law"]}]},{"component":"p","children":["This co-employment model means that a PEO will formally be the staff member's employer of record. As an employer of record, the PEO assumes all employer responsibility for the staff member, while they undertake work for the hiring company. Your overseas team members will carry out their roles with your company while being brought into the structural fold of the PEO."]},{"component":"h2","props":{"id":"lower-costs-and-risks-of-overseas-expansion"},"children":["Lower costs and risks of overseas expansion"]},{"component":"p","children":["Why invest in a large-scale expansion in your new market – such as forming a branch or subsidiary – when you could start smaller and lower your risk profile?"]},{"component":"p","children":["Though local legislation can differ between countries, expanding businesses generally have a limited set of options for configuring their overseas operations. Available business structures (also known as legal entities) can include:"]},{"component":"ul","children":[{"component":"li","children":["Limited liability companies"]},{"component":"li","children":["Foreign branch offices"]},{"component":"li","children":["Subsidiaries"]},{"component":"li","children":["Partnerships"]},{"component":"li","children":["Public corporations"]}]},{"component":"p","children":["Though establishing a formal local entity such as those mentioned above will add immediate weight to your presence in a new market, they can be a costly move for companies, especially if they don't succeed."]},{"component":"p","children":["Build your market entry strategy around a microlevel investment by using a PEO's services. This is especially helpful for first-time expansions and budget-sensitive SMEs. Having one or two senior sales representatives or other executives on the ground means you can still achieve fundamental expansion activities at a lower price. If your company chooses to withdraw from the market, the market exit process is quicker and the potential sunken costs of the venture are considerably lower."]},{"component":"h2","props":{"id":"look-after-your-overseas-employees"},"children":["Look after your overseas employees"]},{"component":"p","children":[{"component":"Link","props":{"href":"https://www.business.com/articles/expand-your-business-abroad-by-leveraging-local-peo-services/"},"children":["PEOs"]}," don't just act as the regulatory umbrella for your staff members; they can offer additional benefits to your overseas employees, too."]},{"component":"p","children":["Your company may not be able to extend the same kinds of benefits to staff working outside the country where your headquarters is based. Likewise, your company's policies on human resources, health and safety, and risk management may not be easily transferable to a new country that potentially has very different local regulations on these matters."]},{"component":"p","children":["PEOs can offer greater overall coverage for your overseas employee, adding significant value to a staff member's employment experience. This is especially true for smaller companies expanding abroad; a PEO's \"big company benefits\" can sweeten the deal for an employee or team working away from the company's headquarters."]},{"component":"p","children":["Having local employment support means your staff can access helpful guidance and regular engagement with someone who is familiar with the surrounding area. Outside of learning about the specifics of their job with you, PEOs can be a point of contact for your staff members to get information about different environmental aspects of their overseas role."]},{"component":"p","children":["PEOs can facilitate training opportunities for your staff that you may not otherwise have been able to offer. With the co-employment model, your staff can tap into such plans offered by the professional employment company."]},{"component":"p","children":["A PEO may offer employee benefits such as health or dental insurance, which is enticing for prospective candidates. On top of that, their internal or corporate policies are compliant with local legislation. You can, therefore, rest assured that your employee is adequately supported and protected by the PEO."]},{"component":"h2","props":{"id":"reduce-turnover"},"children":["Reduce turnover"]},{"component":"p","children":["Most business expansions start small and it can be an isolating experience for your first overseas team member. Once you've found the right person for the job, you want to implement the right strategy to retain them. Expanding your business is a critical procedure, and you need to find and retain the right people to support this process."]},{"component":"p","children":["PEOs can often offer a support network that the hiring company can't, due to their established presence in the country."]},{"component":"p","children":["This is an especially important advantage of partnering with a PEO. If your chosen country has a shortage in the skillset you need, you won't be able to easily or regularly find replacements for that position."]},{"component":"p","children":["Consider the value a professional employer will add here. The organization's larger footprint and employee numbers in the country offer greater networking opportunities and social support for your staff member or team, ensuring your employees are engaged and supported, and reducing the risk of turnover during your expansion."]},{"component":"h2","props":{"id":"peos-are-a-lifeline-for-expanding-businesses"},"children":["PEOs are a lifeline for expanding businesses"]},{"component":"p","children":["Expanding into a new country is a critical time for businesses. Companies have many things to contend with during this time; they must understand and comply with new and unfamiliar commercial, tax, employment and sector-specific regulations."]},{"component":"p","children":["This exposes the company to varying levels of risk. If your business doesn't already have local experts on hand to advise you on best practice and next steps, you could quickly find yourself caught up in complications with local authorities over noncompliance."]},{"component":"p","children":["Reduce the burden and stress on your business venture and engage with an experienced PEO. Not only can a PEO provide ongoing employment and payroll services, but their structure is an asset to retaining your talent and keep your expansion operations flowing smoothly."]},{"component":"p","children":["Protect your business and support your overseas footprint by working with a PEO that can carry out the necessary activities to further your success in a new market."]}]},"resource":null,"sponsorship":null,"thumbnail":{"path":"https://staging.business.com/images/content/5dc/2424c9c658a932c8b4569/1500-0-","caption":"vladans/Getty Images","isBlurred":false},"bestPicks":null},"related":{"relatedArticles":[{"title":"HR Compliance Challenges Small Businesses Face Today","canonical":"https://www.business.com/articles/8-hr-compliance-challenges/","slug":"8-hr-compliance-challenges","thumbnail":"https://www.business.com/images/content/5dc/f62b95a215e4c348b4567/1500-0-","dek":"HR regulations are always evolving, and businesses need to monitor them to stay compliant.","lastModified":"2019-11-18T14:00:00Z","published":"2019-11-18T14:00:00Z","sponsored":false},{"title":"What Services Can a PEO Provide to Your Small Business?","canonical":"https://www.business.com/articles/peo-services/","slug":"peo-services","thumbnail":"https://www.business.com/images/content/5e1/63a4c7b437435798b458b/1500-0-","dek":"Learn more about the HR services PEOs provide.","lastModified":"2020-01-13T13:00:00Z","published":"2020-01-13T13:00:00Z","sponsored":false},{"title":"How to Hire for Your Business","canonical":"https://www.business.com/articles/how-to-staff-business/","slug":"how-to-staff-business","thumbnail":"https://www.business.com/images/content/5ea/9c8bb9c658aee018b456c/1500-0-","dek":"Sterling Staffing Solutions CEO Stephen Carter shares his tips on staffing your business.","lastModified":"2020-07-31T15:00:00Z","published":"2018-08-16T12:00:00Z","sponsored":false},{"title":"Protect Yourself: LegalZoom Lawyer Discusses How to Shield Your Business From Potential Lawsuits","canonical":"https://www.business.com/articles/legalzoom-laywer-shielding-business-from-lawsuits/","slug":"legalzoom-laywer-shielding-business-from-lawsuits","thumbnail":"https://www.business.com/images/content/5c6/225da9c658ae2398b4592/1500-0-","dek":"Legal compliance in HR issues should be a top priority for every business.","lastModified":"2019-02-08T19:00:00Z","published":"2019-02-08T19:00:00Z","sponsored":false},{"title":"Are PEO Payroll Services Worth It?","canonical":"https://www.business.com/articles/peo-payroll/","slug":"peo-payroll","thumbnail":"https://www.business.com/images/content/5e1/f59075a215e01698b4575/1500-0-","dek":"When you need help with your payroll, should you hire a payroll service or a PEO?","lastModified":"2020-06-26T18:23:00Z","published":"2020-01-16T13:30:00Z","sponsored":false},{"title":"Are You Paying a Living Wage?","canonical":"https://www.business.com/articles/small-business-living-wage/","slug":"small-business-living-wage","thumbnail":"https://www.business.com/images/content/5a9/4732251ee479b088b4580/1500-0-","dek":"Employees who earn enough to get by improve performance and overall business.","lastModified":"2018-02-27T13:00:00Z","published":"2018-02-27T13:00:00Z","sponsored":false},{"title":"What to Do if ICE Serves Your Business With a Form I-9 Audit","canonical":"https://www.business.com/articles/ice-serves-i-9-audit/","slug":"ice-serves-i-9-audit","thumbnail":"https://www.business.com/images/content/5e6/64def7b43740a2a8b456e/1500-0-","dek":"Make sure you're prepared should Immigration and Customs Enforcement come knocking.","lastModified":"2020-03-10T15:00:00Z","published":"2018-09-17T18:00:00Z","sponsored":false},{"title":"Expand Internationally by Leveraging Local PEO Services","canonical":"https://www.business.com/articles/expand-your-business-abroad-by-leveraging-local-peo-services/","slug":"expand-your-business-abroad-by-leveraging-local-peo-services","thumbnail":"https://www.business.com/images/content/5d2/48d4a7b4374e14b8b456c/1500-0-","dek":"A professional employer organization can make an international branch painless.","lastModified":"2019-07-10T12:00:00Z","published":"2019-07-10T12:00:00Z","sponsored":false},{"title":"From COVID-19 to Hurricane Season: Disaster Preparedness for Small Business","canonical":"https://www.business.com/articles/business-disaster-prep/","slug":"business-disaster-prep","thumbnail":"https://www.business.com/images/content/5e7/a495e5a215eb11d8b4569/1500-0-","dek":"Natural disasters – whether a hurricane, tornado or outbreak like COVID-19 – can have a disastrous effect on small businesses, but they don't have to. 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