What are considerations on how to structure your company when you're expanding internationally?

If you are a small company, International expansion can be full of pitfalls and you should not take this lightly or do it too quickly.

Initially I advise doing everything you need done through distributors or nonemployee consultants in the particular country. At all costs, avoid incorporating in any jurisdiction, whether it be Europe or otherwise. Make all shipments from the US to avoid being required to incorporate or open facilites, bank accounts and the like.

Eventually you will find you will need to change the above advice, but not before you have explored the market, gone through a number of persons that did not work out, perhaps switched the country where you want your headquarters, and learned a lot more about the tax laws and business environment. It has been my experience that taking on a corporate presence in any country can be very difficult, require substantial legal costs, and often initial decisions do not work out and must be changed. A corporate presence makes this much more difficult.

Avoid signing any kind of exclusive distribution contract until you have experience with the company or individual involved and know the laws of the country where the distributor operates. Despite what it says in your agreement, in some countries a distributor acquires rights by law and you need to know what these restrictions are. This can make it hard to get rid of a distributor that is not performing.

There are companies, including the big 4, who consult in the area of tax and laws in various countries. This is money well spent; going overseas blindly can be extremely expensive when avoidable mistakes are made. If you are looking overseas to contract for goods or labor, initially avoid setting up your own factory or software shop. Again, you may go through many companies or people before you find the top performers. Don't lock yourself into any long or exclusive agreements.

If and when you business starts to grow, you will have avoided entanglements until you can afford to do otherwise.