6 Reasons you should THINK ABOUT BEFORE creating a foreign subsidiary

Here are six headaches you can expect when you create, maintain, or dismantle your foreign subsidiary:

Initial Cost: A Foreign subsidiary is expensive to set up.  It may cost you between $30K and $40K to set up a Ltd company in Dubai

Maintenance Cost: Foreign subsidiaries cost to maintain.  For just one employee you can expect to spend $20/25K per year in hard costs, on average.

Dissolving Cost/Difficulty: A Foreign subsidiary is like the Berlin Wall when it comes to tear it down.  What happens if the person you hired doesn’t work out or the strategy shifts?Take both the start-up time and cost and multiply them by a factor of 3.

Ever-Changing Compliance: When you have a foreign subsidiary you must keep-up-to date on changes to national/regional/local tax laws, payroll withholdings, employment law changes, and banking regulations – just to name a few.

Local Directors: A foreign subsidiary often requires a local Director.  Are you going to let your one sales person be the Director?  Or will you outsource to someone you’ve never even met and give them the keys to the bank account?

Time Consuming: No matter how much you outsource, expect executives from your legal, finance, and HR team to invest HOURS of time coordinating a foreign subsidiary.
The legal team must review all documents, the finance team must sign off all the expenses and deal with the bank account set up, and the HR must team must review all the employment details.

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