Frequently Asked Questions About International Business
Are you looking to expand the reach of your business overseas? Gonzalo Law provides assistance and advice for international businesses and expanding domestic businesses. Get the answers you need by contacting us.
Q: What is the advantage of hiring an attorney when I seek to import or export a product into or out of the United States?
A: Selecting a competent attorney to assist in the import or export of your product is a crucial decision. In cross-border transactions and depending on the complexity of the transaction, it is often recommended to select a U.S. business attorney who will then select local counsel in the country where the transaction will occur. Gonzalo Law LLC can navigate you through the international sales transaction process. You will be able to review and discuss options for a sales contract, letter of credit, bill of lading and contract of affreightment, as well as commercial terms under the ICC Incoterms and more.
Legal counsel will assist you in understanding how the choice of law considerations should be integrated into your international cross-border transaction or agreements. Counsel can provide advisement to deepen your knowledge of how public international laws, regional supranational laws, domestic laws, and uniform codes and harmonizing measures will affect the import or export of your product into a particular country. You can also determine if it will be necessary to obtain a federal court judgment that will assist you in the import of your product into the United States.
Q: How do I finance my small business exports, foreign investments and (or) projects?
A: In addition to financial institutions, several government and local organizations provide funding for small businesses. Although Gonzalo Law strongly recommends carefully calculating the financial investment necessary to export or import your product, sometimes additional financing is necessary. When that is the case, an individual should first research the available opportunities through grants and government funding. The small business association may also be another resource for obtaining financial assistance. The small business association cites that many small businesses are under the misconception that they are too small to be able to compete in the international market. It is noted, however, that 97% of all exporters are actually small businesses. There are several options that include loans, insurance and grant programs that assist in a business’ ability to export out of the United States. For more information on financing your export venture, contact your local small business association and follow-up with Gonzalo Law when you are ready to get started on the process.
Q: Are there any free resources that I can utilize to learn about the export process before hiring an attorney?
A: Yes. Gonzalo Law encourages its clients to thoroughly educate themselves about the export process for their export. Your initial consultation with the firm will include some complimentary hours of service in regard to learning more about the export process.
In addition, the U.S. government also offers several free resources that you can utilize as you learn more about exporting your product. The U.S. government export page cites the Customs and Border control websites, and more especially their pages on legal, trade and import/export are helpful tools. Also, the Export-Import bank of the U.S. is another resource of information on the export and import process.
Further, the Export Legal Assistance Network (ELAN) is an innovative program, established by the Federal Bar Association with assistance from the U.S. Department of Commerce and the U.S. Small Business Administration’s International Trade Program. Lawyers from the Federal Bar Association volunteer to provide an initial legal consultation free of charge to companies just beginning to export. Under ELAN, knowledgeable lawyers help export companies learn the legal aspects of international trade. ELAN has regional coordinators throughout the United States, each with three or more attorneys ready to provide free assistance on the initial stages of the process. The International Trade Administration and the Bureau of Industry and Security also offer resources for individuals seeking more information.
Another useful source for legal information is the American Bar Association (ABA). The ABA publishes numerous books on the subject of international business. Some of these publications include guides to the legal aspects of doing business in specific countries and guides to foreign law firms and law groups abroad if you would like to consider additional options for local counsel in a foreign country. The ABA’s complete catalog is available on the web.
Once you believe you are ready to begin the export process, contact Gonzalo Law for assistance when preparing your international sales documents and much more.
Q: What should I consider when making the decision to begin exporting and how do I begin?
A: There are many ways to become involved in exporting, from filling orders for domestic buyers (such as export trading companies that then export the product) to exporting products yourself. However you choose to export, the development of a detailed and thorough strategy is an important part of the planning process. Steps in developing a strategy include:
- Evaluating your product’s export potential
- Determining if you are really willing to make a commitment to international markets and evaluating whether your company is “export-ready”
- Identifying key foreign markets for your products through market research
- Evaluating distribution and promotional options and establishing an overseas distribution system
- Determining export prices, payment terms, methods and techniques
- Familiarizing yourself with shipping methods, export documentation procedures, export financing and other requirements for exporting
The Trade Information Center (TIC) trade specialists can help your company analyze its export potential. The Export Basics section of the website is also available to help you better understand the export process and evaluate your company’s export-readiness.
Q: What are the most important considerations when I am preparing to import my product, and how can an attorney assist you?
A: Gonzalo Law believes it is important that clients understand that there are different considerations required when importing a product into the United States. These concern how a product is classified, whether the proper valuation process was employed, whether the rules of origin have been reviewed and whether the product has the proper markings.
Q: What is the individual income tax liability for a U.S. citizen living and working abroad?
A: The answer to this question will vary largely depending on the facts of the specific client case. Please contact our legal counsel or CPA to best understand your specific situation. However, in general, the U.S. requires its citizens to file tax returns with the Internal Revenue Service (IRS) regardless of the source of income and regardless of where in the world the U.S. citizen resides. A U.S. citizen is taxed in the United States based on their worldwide income. However, U.S. citizens who live and work abroad may qualify for the IRS’s Foreign Tax Credit or the Foreign Earned Income Exclusion.
The Foreign Tax Credit (IRS Form 1116, Foreign Tax Credit) allows U.S. citizens to obtain a foreign tax credit for foreign taxes that are imposed by a foreign country. This tax credit applies to foreign taxes imposed on individual income. If the U.S. taxpayer takes the credit as a deduction, the foreign individual income taxes reduce your U.S. taxable income. If the Foreign Tax Credit is taken as a credit, the foreign income taxes reduce your U.S. tax liability. According to the IRS, it is generally to a U.S. taxpayer’s advantage to take to take the Foreign Tax Credit as a tax credit rather than a deduction. On the other hand, to qualify for the Foreign Earned Income Exclusion (IRS Form 2555), the individual must be a resident of a foreign country for an uninterrupted period that includes an entire tax year, and his tax home (i.e. place of employment) must be in a foreign country. If qualified, an individual may exclude foreign income up to an amount that is adjusted annually for inflation ($107,600USD in 2020).
One example of this is a U.S. Citizen living and working in China. The U.S.-China Tax Treaty provides relief from double taxation for up to three years in the aggregate for U.S. citizens who are in China for the purposes of working at educational or scientific institutions. If the tax treaty exemption is approved by the Chinese government, the U.S. taxpayer must file a U.S. income tax return and pay U.S. taxes on these China-source earnings. Alternatively, if a U.S. citizen is unable to obtain tax treaty exemption in China on his China source-income and is thus required to pay Chinese taxes, he or she may seek relief from double taxation in the U.S. by filing either a Foreign Earned Income Exclusion or Foreign Tax Credit with the IRS. However, one must work with their legal counsel and CPA to confirm the details of their particular matter.
Q: Under what circumstances will foreign judgments be enforceable in the United States?
A: Foreign country orders are usually recognized in the United States as long as they have been fairly judged, and the defendant was aware of the claims. The foreign country judgment must be proven valid and authentic with a certified copy issued by the court and a certified document translating. The document will be conclusive after proving the validity and authenticity of its decision only if: (1) the foreign court has jurisdiction over the subject, (2) the defendant is a resident of the state during the time, and (3) the foreign court must be impartial and offer due process of law.
If all of the above circumstances apply to the foreign country judgement, the federal court in the United States will most likely be able to convert the foreign judgement into a U.S. judgement. The domesticated judgement may then be enforced in the United States. It is important to keep in mind that some states, like the state of Ohio (under code section 2329.91) requires the principal of reciprocity in order to enforce foreign judgements. This means that if the foreign jurisdiction that first issued the judgment would not recognize a judgment from the specific state (like Ohio), then the state will also not recognize a judgment from the foreign country. To understand how this will apply to your particular legal matter, talk with our legal counsel about your questions.