How to choose a jurisdiction for a startup?


  1. How to choose a jurisdiction for a startup: an introduction
  2. Market analysis 
  3. Political and economic environment
  4. Selection of employees and availability of infrastructure 
  5. Features of taxation and legislation on the protection of intellectual property
  6. Level of bureaucracy

How to choose a jurisdiction for a startup: an introduction

The conditions for doing business in different jurisdictions differ, and this is the main reason why Russian companies want to register their business abroad. According to the conducted research, about 70% of start-up enterprises want to enter the international market. Of course, this does not mean that all projects without exception become successful. The reasons for failure are most often the fact that the choice of the country for registering a startup was not made carefully enough. We will tell you what nuances should be taken into account when solving this issue.

Market analysis

Before registering a company abroad, make sure that your product is relevant for the selected country. Each nation has its own mentality, way of life and business culture. You may need to make some changes to the chosen business model, apply alternative marketing options to fit into existing conditions. It may turn out that the product is good for everyone, but most potential buyers simply cannot afford to purchase it due to low income and difficult financial situation.

Political and economic environment

Of course, no state is immune from crises and events that can negatively affect your business. Before you set off to conquer new markets and invest in a foreign economy, study the current situation in the selected country, note those phenomena that may negatively affect the investment climate in the future. First of all, this is a high level of social tension, the likelihood of a military conflict, an economic and political crisis, and a difficult crime situation. Due to the negative impact of the above factors, foreign companies sometimes have to leave the local market even if they have a well thought out development strategy.

Selection of employees and availability of infrastructure

The success of a young business abroad depends on the competent selection of personnel. On the one hand, in countries with low competition in the labor market, it is easier to retain key specialists, on the other hand, it is not always possible to find employees who have the necessary skills and experience. Before registering a company, make sure that in the country you have chosen there are specialists of the profile and skill level you need. If there is a shortage of personnel, it will be necessary to resolve issues with their involvement from abroad or relocation of Russian employees, and this will entail additional costs.

Infrastructure is another important criterion. Explore the potential challenges you may face when organizing and doing business abroad. Make sure your country of choice has the technical and other resources you need to implement your plans in line with your chosen strategy.

Explore the specifics of taxation and legislation for the protection of intellectual property

As a rule, this is where most potential entrepreneurs start choosing a jurisdiction for registering a startup. The specifics of tax legislation differ from country to country. Some states are interested in attracting foreign investors, therefore they offer numerous benefits. It is worth studying these nuances in advance and choosing the best option. It is better to understand everything with a lawyer who is familiar with the twists and turns of local tax laws and will help you avoid pitfalls.

Protection of intellectual property rights is another reason why many businessmen seek to register a company abroad. Until recently, it was believed that in the conditions of our country it was impossible to protect your intangible assets at the level that is available in the United States and Europe. In recent years, the situation has changed significantly due to the introduction of new laws and amendments to the Civil Code of the Russian Federation.

Before registering a business abroad, you should thoroughly study this issue. There is no single approach to it, and each jurisdiction has its own rules.

Level of bureaucracy

In the Russian Federation, it is customary to complain about bureaucracy, because of which the registration of a business can be delayed. This problem also exists in other countries, including those that are quite prosperous in terms of the economy. In some jurisdictions, you can register a business in just 1-2 days and start working, but somewhere you have to wait several weeks or months. You need to consider in advance whether you have enough time to wait.

A4 Law Firm specialists are ready to assist you in choosing a jurisdiction for registering a startup. During a one-to-one consultation, we will discuss the pros and cons of each option in order to select the best solution.


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