Opening an office abroad: the first ninety days

Opening an office abroad is rarely one event. For most small and mid-sized companies it is a sequence of decisions and deadlines that runs through roughly ninety days from the decision to the day someone is actually working from a desk in the new country. The order matters more than the detail: choose the legal structure before you register anything, register before you try to open a bank account, and have the account open before you promise a start date to anyone you plan to hire locally. This piece sets out that order, and the points where it usually slips.

Before day one: choosing how you will be there

Three structures cover most cases, and the choice shapes everything that follows.

A subsidiary is a new, separate local company that you own. It files and pays tax in its own right in that country, and its liabilities are generally its own rather than the parent's.

A branch is not a separate company. It is the same legal entity as the parent, operating under a local registration. In the United States, for example, a foreign corporation's branch reports its US income directly to the Internal Revenue Service on Form 1120-F, because in law there is no separate "US company" to report it instead. The parent carries the liability for what the branch does.

An employer of record, or EOR, lets you employ someone in a country without registering any entity at all. A specialist provider becomes the legal employer of that person on paper, invoices you for the cost, and handles local payroll and employment law, while the day-to-day work still reports to you. It buys time to test a market or get one or two people in place before deciding whether a full office is worth it, though it carries an ongoing fee and is not meant as a permanent substitute for a registered presence once the operation grows.

Which one fits depends on how committed you already are. A subsidiary or branch suits a company that already knows it is opening a real office with staff and a lease. An EOR suits a company that is not yet sure, or that needs one or two people in place before the rest of the decision is made.

The first month: registering the thing you decided to be

Once the structure is chosen, registration is usually the fastest part of the whole process, provided the paperwork is in order.

In the UK, an overseas company only has to register a UK establishment with Companies House once it has what the guidance calls "some degree of physical presence" there, a branch or a place of business. An independent agent working on the company's behalf, or a director staying in a hotel during occasional visits, does not count on its own. Where registration is required, it uses form OS IN01, costs £124, and is due within one month of the UK establishment opening, under the published Companies House guidance on overseas companies registered in the UK.

In the United States, the equivalent step sits at state rather than federal level: a company with a physical presence, employees, or other active business in a state other than the one where it was formed generally has to file for "foreign qualification" in that state, under guidance from the US Small Business Administration. Alongside that, a company doing business in the US will usually need an Employer Identification Number from the Internal Revenue Service before it can open a bank account or run payroll. A business whose principal place of business is outside the US cannot use the IRS's online application, but can apply by phone, fax or post, under the process set out on the IRS's EIN guidance page.

Both tests turn on actual presence and activity, not on where the paperwork happens to be filed, and both are worth checking with a local adviser before assuming the registration step is a formality. Rules of this kind change, so check the current guidance before relying on the figures above.

Month two: the account that is usually the real bottleneck

Companies planning the first ninety days tend to assume registration is the slow part and the bank account is the formality. In practice it is often the other way round. A new entity with no trading history, however straightforward its structure, still has to pass a bank's own compliance checks, and those checks run on the bank's timetable, not the company's. The practical lesson is to apply for the account the moment the entity is registered, not after premises are found or a start date is promised to a new hire.

Premises can usually move in parallel with the account, with one wrinkle worth checking early: in some countries the company registry requires a registered local address before it will accept the registration paperwork at all, which means the sequence above is not strictly linear everywhere. Confirm the local registry's own requirements before assuming the office comes after the paperwork rather than before it.

Month three: the first hire and the handover

By the time the account and the premises are settled, the project usually turns to people: hiring the first local staff, setting up payroll, and working out who is actually running the operation day to day. That is the territory our piece on what an international project manager does when you open abroad covers in full, including the written authority question that matters the moment anyone on the ground can sign a lease, open an account or agree employment terms on the company's behalf.

That authority question connects to a separate one worth settling at the same time: whether the person running things locally is meant to have continuing authority to negotiate and close business for the company, which is a different legal position with its own consequences, covered in our guide to choosing between an in-country representative and a local agent.

A ninety-day timeline, as an illustration

The table below is an illustration built for this article to show the rough shape of the sequence, not a forecast for any specific country or company.

Treat the weeks as a sense of order, not a promise. A straightforward registration in one country can take less time than the illustration above; a bank's compliance review in another can take considerably longer. What a business representative abroad actually does covers the separate, earlier question of when a scouting trip or a continuing presence starts to create a registered or taxable presence in the first place, worth reading before this timeline starts rather than partway through it.

What actually slows this down

Four mistakes account for most of the delay companies report:

• Hiring before the account exists. A new employee with no local bank account to be paid from is not a theoretical problem; payroll has to run from somewhere.
• Treating registration as the slow step. It is usually banking, not the registry, that sets the pace.
• Committing to premises before checking the registration requirement. In countries that require a registered address up front, this step can come earlier than companies expect.
• Assuming a short test trip carries no authority questions. The moment anyone on the ground signs anything, however informally, the questions above apply, whatever the original plan was.

What to do next

Work out first whether this is a single test, a bounded project, or a permanent move, because each calls for a different start. If the goal is to see whether the market is worth entering before anything is registered, a missions request covers a single scouting trip without any of the structural questions above attaching to it. If the decision to open is already made and the work ahead is registration, banking, premises and hiring over several months, that is closer to hiring someone to run the project for you than to a single trip. Either way, settle the structure and the authority questions before the clock starts, not partway through month two. Members of the Republic of Investors community who have run this process in more than one country tend to agree that the companies that plan the bank account and the registration in parallel, rather than one after the other, are the ones who come closest to their own ninety-day estimate.

Need someone on the ground? Hadri takes on missions: meetings, trade shows, conferences and site visits in any city, quoted per trip. Request a quote.

Common questions

How long does opening an office abroad actually take? There is no single answer, because it depends on the country, the bank and the structure chosen. Most of the first ninety days is taken up by two things that run largely in sequence, registration and bank account approval, and the account is usually the slower of the two.

Do I need to register a local entity before I can legally start work there? Not always. Registration is usually triggered by actual physical presence, a branch, an office or local employees, rather than by intending to open one. A single scouting trip or an employer of record arrangement can let a company start work before, or instead of, registering anything.

What is the real difference between a branch and a subsidiary? A subsidiary is a separate local company that you own; it is taxed and held liable in its own right. A branch is legally the same company operating under a local registration, so the parent reports the branch's local income as its own and carries the liability for what the branch does.

Can I open in a country without setting up any entity at all? Yes, within limits. An employer of record can employ staff on your behalf without you registering anything, and a single mission can test the ground without any entity question arising at all. Both suit testing a market rather than running one indefinitely; a business that intends to stay generally ends up needing a registered presence of some kind.

Who should actually run the opening process? Companies typically use a relocated employee, a local hire, or an external project manager retained for the length of the project. Our guide to what an international project manager does, linked above, sets out how to choose between them and what written authority they need from day one.