Small Biz: Finding Greener Pastures Overseas

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Less than 1% of the nation’s 26 million small firms export, but the savvy entrepreneurs who do send their goods to other countries have access to a business-boosting global marketplace.

Larry Harding, president and CEO of High Street Partners, an Annapolis, Md.-based consultancy helping small and medium-sized firms navigate the regulatory aspects, policy details and plain basics of exporting, says if you’ve got a market in the U.S. for your products or services, then there’s a bigger market for you outside U.S. borders.

With 96% of the world’s consumers living outside of the U.S., according to the U.S. Chamber of Commerce, what’s stopping you?

There are four things areas that any company operating overseas will need help with, according to Harding:

  1. A one-time set up process and expenses relating to the registration and opening of a subsidiary;
  2. Payroll paid every month;
  3. Compliance issues like tax returns and required filings; and
  4. The never-ending list of non-recurring questions and advice.

His top advice to new clients looking to export is to make sure the individual identified as the “importer of record” is not you. The importer of record is responsible for all compliance issues and is ultimately responsible for following all of the rules. When a product is developed and a sales outlet overseas is found, either the seller or the customer must take on the importer of record label.

“When you take on that responsibility, you have importer [value-added tax] duties, rates and other complicated items in an export transaction that land in your lap,” says Harding. “Unless you’re a highly staffed and sophisticated firm, you don’t want to have to deal with that if you can help it.”

Generally, a U.S.-based firm can successfully make the argument that it’s easier for a European firm, for example, to be the importer of record “because on a scale of one to 10, [European companies have] a difficulty of two but a U.S. company has an eight,” says Harding.

A small business should argue that its overseas counterpart “is already there, already has a VAT number and the mechanisms in place to be the importer.”


He also cautions American firms to be prepared for entirely different rules and regulations.

For example, in the European Union it’s much more difficult to fire an employee without an “extremely generous separation package” while in the U.S., it’s a “two-week notice type of thing,” he says.

There are also blatant and subtle changes in wording that can get a business into hot water if it’s not careful.

“We’ve seen time and time again U.S. business owners who think they can retool their U.S.-style offer letter to someone in France,” for example, but they’ve misunderstood the different policy regulations or how some of their language might be misinterpreted.

Here are some free resources to get into the export game:

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