Seven Compliance Challenges Companies Face When Growing Globally

Taking your business international is a big deal. You open yourself up to unlimited potential and a whole new realm of possibilities. But, as you look into international expansion, you will also have to delve into the complex and dynamic labyrinth that is global compliance.

Whether it’s hiring and onboarding, tax and finances, or data protection, complying with internationally differing rules and regulations can quickly become a big obstacle in your efforts to take your company to the next level.

However, being aware of these potential roadblocks can help you prepare for your global extension. Here are 5 of the most common compliance challenges companies face when growing globally – and their solution!

International compliance and regulatory challenges
When looking toward international expansion, compliance complexity multiplies. Here are the top five challenges every company has to face when expanding internationally.

  1. Hiring abroad
    If you are planning on expanding your company internationally, you are probably also looking into hiring some local talent to support your growth. But in order to hire workers from abroad, you need to have the right contract in place to match local requirements in regards to working hours, employment termination, payment and benefits, pension schemes and more.

This can quickly become a huge undertaking, eating up not only your time, but also valuable resources.

  1. Payroll & benefits
    As mentioned before, local labor law differs greatly around the world. This includes regulations concerning minimum wage, statutory vacation pay, and other compensation requirements. It is your responsibility as an employer to comply with these country-specific regulations.

Furthermore, an international workforce also means a more complicated payroll setup, including wages being paid in several different currencies. Depending on the number of countries you are hiring from, this may result in substantial payments of exchange fees as well as major administrative efforts.

  1. Taxes & social security
    Another aspect when hiring international talent is making sure you are paying all locally required taxes and providing the appropriate social security to your employees. Again, these regulations differ greatly from country to country, and there is no such thing as a one-size-fits-all solution.

Understanding all these varying requirements is essential in order to not break any rules or risk penalties.

  1. Data protection
    Data protection has become a big focus point for companies over the last years. The General Data Protection Regulation (GDPR) within the European Union has led to a new surge in data security. Companies are legally required to protect sensitive information – including client and employee related information- and make sure that such data is encrypted and only shared via a secured network.

This is especially challenging for businesses with a remote workforce and the need to exchange sensitive information internationally. The use of VPNs and encryption software should be mandatory in those cases.

  1. Penalties causing slow growth
    To ensure that companies comply with new rules such as the GDPR, the EU has put some big fines in place. A single data breach can result in fines of up to 10 million Euros, or 2% of your annual turnover.

And that is considered a lower level penalty. In fact, in 2020, global players Amazon and Google were hit with $42 million and $120 million penalties for noncompliance with the GDPR on their french websites.

Such fines can be crippling to any business, and considerably slow growth at the least. Therefore, ensuring you are complying with all relevant regulations before, during and after a global expansion is crucial for international success.

Overcoming hiring challenges with an employer of record
Meeting local requirements when hiring internationally is an incredible challenge. But you can simplify this process by engaging Lano as an employer of record. In this position, we ensure that all requirements are met, including contracts and other legal documents.

As an employer of record, Lano will hire the employees on your behalf, saving you the cost and time of setting up a legal entity and ensuring compliance with local laws.

Engaging a local payroll partner
When opening an office abroad,our local payroll providers will help you set up everything in accordance with local laws. This includes benefit payments and ensuring every international employee is paid in the right currency.

In addition to that, Lano offers an automated global payment process, allowing you to approve invoices and issue global payments quickly and easily. Also included in our payment solution are automated plausibility checks to reduce manual errors as well as the ability to process mass payments to contractors in over 150 countries with the lowest exchange rates.

Ease of mind with local legal partners
Compliance, regulations and local requirements are ever-changing. In 2020 alone, there were 51 regulatory changes across 12 countries, including regulations concerning paternity leave, working time, pensions, gender equality, and minimum wage – and it is your responsibility to comply with these changes.

But we don’t want you to spend hours and hours of research to stay on top of legal changes around the world. Our experienced local legal partners ensure that your contracts are up to date and compliant with local requirements, leaving you with enough time to sustainably scale your business in a new market.

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