In today’s business environment, an increasing amount of business people decide to make the move abroad. Starting a business abroad doesn’t come without any risks and often mistakes are being made.
Do you feel hesitant or unsure about the move?
Fortunately for you, I’ve created a list of biggest common mistakes for people who move abroad for the first time.
Let’s get started.
1) Bank Account
When moving to another country, you most likely want to keep your current bank account in your home country. However, when you change your residential address to a foreign address, it might cause issues and difficulties to keep your bank account.
There’s a very simple but effective way to prevent that from happening. Simply change the address within your banking details to your parent’s or friend’s house. Doing so means that it’s easier to hold on to your bank account and receiving notifications that can be forwarded to friends or family, or simply receive it by email.
Make sure to check local banks in order to create a new account for your business and in particular the exchange rates. If possible, you might want to consider opening an online payment account such as PayPal or Transferwise.
2) Credit Cards
It depends on where you live but especially for US citizens, it’s best not close out all your credit card account at once. If you close out all your credit card accounts in good standing at once, it may seriously harm your credit score, which you clearly want to avoid.
In addition, it’s better to keep at least one or two cards open so you can use those whenever you decide to travel back to your home country. Make sure to notify your credit card company prior to departure, if not, you might risk your card getting blocked due to suspicious activities.
3) Health Insurance
When deciding to start a business abroad and move, alone or with your family, it’s important to have proper health coverage. Don’t spend too much on exclusive packages that cover everything from A to Z but also don’t spend too little. Be aware that, normally speaking, local health care providers don’t cover medical expenses when you live abroad, you’ll have to look for an international health care provider.
Before departure, you should’ve figured out what expat health insurance or international health insurance to get. Also, you want to make sure your national health insurance ends on the day of your departure to avoid double insurance costs.
4) Preparation & Research
Prior to departure, it’s essential to have all your important personal documents printed and packed in a designated folder. Think about certificates, proof of birth, college papers, university degrees and grade list, etc.
Spend time doing research on local property in case you need an office, are you going to rent or buy it? Do you need to hire any employees? What about important legal documentation?
These are all questions you need to have answered before moving out.
Furthermore, you want to learn the local language. You don’t have to be fluent before arriving but at least have basic language knowledge. It’s valuable networking skill but even more importantly, it’s usually a sign of respect to the local culture and its people, often leading to a positive impact on your local business.
5) Financial Missteps
A lot of people struggle with tax reports in their home country, however, this might get even more complex abroad. It’s important to conduct sufficient research on personal tax filing but also for your business.
Outweigh the pros and cons of hiring a third-party agency to take care of your financial reporting, both personal and business wise. It might cost you a small investment but it’ll save you a lot of time and struggles to follow local regulations and requirements.
Next to regular tax reporting, you need to think about financial reporting as an expat in regard to investments and foreign bank account statements. Failing to properly report your financial situation might get you in trouble and ultimately lead to penalties.
6) Realistic Budget
I saved up quite a lot of money before moving to Asia to start my business abroad, probably like most of you who are planning to move. However, it can be super tempting to spend massive amounts of money in the first few weeks or months.
Try not to do that!
As an expat, financial stability and security are not as certain as in your home country. Spend your money wisely. Aim to create a realistic budget based on daily life spending, insurance, permits, rent, car or motorbike rent, trips or short getaways, public transport, etc.
Track your daily spending on your mobile phone with an application or simply in your notes. Daily spending such as food, drinks, and other daily essentials might be hard to calculate before flying out but try to calculate an estimation and adjust if necessary. Once you’ve established an average daily spending, use it as a benchmark for future spending. If you don’t have a local bank account, calculate exchange rates too.
About Marcel de Jong:
Marcel is a lead content writer for Now Health, Digital Nomad, and entrepreneur. In his free time, he loves to do outdoor sports such as wake boarding, climbing, or snowboarding. If not, you might catch him hanging out with his friends or travel and enjoy the beautiful countries in Asia.