Where should I set up my global internet business?


4

Is there a widely recognised 'best place of business' for global social-media style internet businesses, and what are the considerations? Considerations I'm thinking about are taxation, regulation, intellectual property, structure. And what else should I be thinking about?

Legal Tax Corporate Structure

asked Nov 25 '10 at 19:48
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Trish
186 points

3 Answers


8

The first answers here accept the basic premise of the question, that one should consider incorporating overseas to benefit from lower tax levels / less regulatory overhead / more streamlined intellectual property regulation, etc.

I'm going against the grain, and say that 99% of all entrepreneurs should not consider this, they should initially focus on creating wealth. And in practical terms, that typically boils down to a) incorporate where you live right now, or b) move to a well know startup hub like Silicon Valley, and incorporate there.

Is there a widely recognised 'best place of business' for global social-media style internet businesses,

Yes there is, it is Silicon Valley.

Considerations I'm thinking about are taxation, regulation, intellectual property, structure. And what else should I be thinking about?

You should worry less about the things you mention, and worry more about:
  • Potential for finding awesome co-founders.
  • The potential for finding risk-willing capital (Angel / VC money).
  • Potential for finding great like-minded startups to cooperate with.
  • Strength of the startup venue at large, i.e. entrepreneur meetups, associations, etc.
  • Quality of life and family connections, i.e. how would you feel about living there for 3-5 years, will it boost your energy level or reduce it?
If you ever get super-successful, then it is possible to fix tax levels and intellectual property issues retroactively. You can hire professionals to reduce your tax bills or strengthen your intellectual property defenses if you need this. But get successful first -- that's the hardest part, and incorporating overseas before success is premature optimization.
answered Nov 25 '10 at 22:00
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Jesper Mortensen
15,292 points
  • To clarify, are you saying that I should most definitely incorporate where I live, because the first priority is on having the company succeed operationally? And that if I'm willing to move to Silicon Valley, then it would be worth incorporating there? (I actually could move to Silicon Valley as I have friends, family and important connections there, but it isn't something I would do immediately.) I do agree with you - focus on success first. I only asked the question to be sure there weren't dire consequences for incorporating in the 'wrong' place initially, which it sounds like there aren't. – Trish 9 years ago
  • @Trish: You're not saying which country you're in, which makes it more burdensome to help you. To your first 2 questions, yes and yes. The only exceptions would be if you live in a very (sorry to be so blunt) backwater country. If you live in the US, then yes, moving to Silicon Valley or another startup hub *could* be very worth it. Investigate this further yourself, I'm not a US citizen, so I can't make a definitive recommendation on this. Also look at startup seed programs like Y Combinator and Techstars, getting into one of these might swing your decision reg. location. – Jesper Mortensen 9 years ago
  • @Trish: Last bit of info, if you live in the US, then you should read Dana Shultz's posts regarding where to incorporate. http://answers.onstartups.com/users/1841/dana-shultzJesper Mortensen 9 years ago
  • Apologies. I live in Australia so I don't want to move to the US any time soon. Thanks for referring Dana Shultz - he's answered lots of questions that are of interest to me. Trish – Trish 9 years ago

2

The answer is that it depends on a few things:

  1. Where you live. Mostly if you live in the US, Canada, Australia, UK and you want to operate legally you should have your business in your country in order to avoid potential tax disadvantages of operating the business offshore. If you live in a place that does not tax you on your worldwide income you should start your business in an offshore tax free location and you will not have to pay taxes! If you live in most of the western world you will have to pay tax if you want to do things legally, and so the easiest option is to operate in your own country.
  2. Where are you "doing business". Even if you are a global enterprise, you could be doing business in the US, in which case you are probably better off having your company in the US. This is a complex tax question that I can't answer here, but if you have an office or employees in the US you are doing business in the US for example.
  3. Where are your employees - if you have employees in another country then you might have some advantages setting up a business in that country.
answered Nov 25 '10 at 21:31
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Rob
151 points
  • Thanks Rob. You've raised pertinent issues. For 1. I live in Australia, and so yes, I'm taxed on my worldwide personal income. With respect to tax, I was more thinking about company tax advantages and disadvantages. 2. The business will literally be global and business dealings location-wise will be dispersed. So I don't need to think about setting up in any one place to benefit operations. 3. Hmm, employees. I'm outsourcing a lot at the moment, so right now it's not really an issue. So in conclusion, I'll still look into the company tax issue (in Australia company tax is 30%). Cheers, Trish – Trish 9 years ago

1

I looked at various options in terms of taxation (the laws regarding the others are much of a muchness in any Western country), but I just went with my own country (England) since I have better access to lawyers and accountants locally to meet my needs. Ultimately, if you want to change country later on, it isn't that hard (unless you have employees). So I would suggest waiting until you come up against a specific issue before thinking about this and just startup where you are.

answered Nov 25 '10 at 20:03
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David Benson
2,166 points
  • Thanks David. Your response puts me at ease that I don't have to worry about this issue too much at this stage - particularly your comment that it isn't that hard to change country later on. Cheers, Trish – Trish 9 years ago

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