Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Nair: Handling The Complexities Of A Global Business

Posted by Tom Foremski - October 28, 2010

Nair & Co has built a thriving business in offering services that handle the incredible complexities of employing staff in different countries. This Silicon Valley headquartered company works with local tech companies to manage the HR functions, and the many tax and regulatory issues governing employees abroad.

I met with founder Shan Nair. Here are some notes from our conversation:

- We make it possible for companies to focus on their core business rather than having to deal with the myriad details you have to know about before employing people in other countries.

- There is an incredible amount of work that has to be done before you employ anyone. Each country has different payroll taxes, employment laws, and other regulations.

- We provide the HR and accounting functions so you don't have to. Employees overseas feel better taken care of, and we answer any questions they have in their time zone. Also, we know how best to terminate employment, how to transfer employees between overseas offices, and all the other HR issues.

- We have an R&D team that constantly checks into changes in employment laws, taxes, etc. For example, did you know that the Chinese government made a change earlier this year that if you are doing R&D in China, unless you have a specific agreement, your employee owns the R&D work. Also, the UK has made changes in its laws that provide a tax incentive if you base your Asia-Pac holding company in the UK because of tax agreements the UK has with Asia-Pac countries.

- We have consulting practices that help companies choose the best places to base their overseas holding companies, how to avoid tax problems, how to comply with accounting regulations, and all the regulatory issues to come with doing business abroad.

- Even companies that sell products through their web sites have to be aware of the legal and tax issues. For example, if you have a web site in the US and you sell to someone in the UK, you have to charge the right VAT (Value Added Tax) and make that tax payment on time.

There are many revenue recognition issues, and also shipping issues you need to know about. For example, it is best to ship products through Holland and Belgium because you can declare VAT and claim it back on the same form. In other countries it takes several steps and that will affect your revenues.

- I started the company in Bristol (UK). I'm a nuclear scientist by training but I needed to get out of that profession and so I became an accountant. I spotted this niche because my first client was a guy I met who had just been hired to run EMEA for a Fremont (California) based company and he was hiring other sales people and needed employment contracts, set up the infrastructure for payroll, banking, etc. The 11 people that worked there went on to other companies and hired us, and that's how we grew.

- We have 740 clients, operating in an average of four countries each of which there is a core group of 29 countries. Most of our clients are mid-sized companies with 200 to 5,000 employees.

- I have teams of specialists in Bristol, India, China, Japan, Singapore. And we are looking to expand into Brazil. Brazil is interesting because if you aren't careful, your tax rate can be more than 100%.

- We have a lot of knowledge about taxes and incentives around the world. For example, Belfast (N. Ireland) has the best R&D tax credits. If you want to ship product to Japan it is often best to go through Hong Kong because of tax agreements. If you do business in Mexico, you need to be aware that 10% of your profits there have to be distributed to employees at the end of the year, we can structure your operations to avoid such payments. If you are doing business in Europe it is sometimes best to create a Dutch coop organization because of tax benefits.

- We can help in M&A. For example, a client company acquired an overseas company and we handled all the transition in employment contracts, tax issues for about 200 staff. Also, there is all the paperwork around closing down a business, this can take 18 months in Europe.

- If there are payroll tax disputes we can often negotiate down claims by as much as 90 per cent. But not in the US or in Canada where there is no possibility of negotiations, if you are late you get an immediate penalty.

- We provide all the HR functions and paperwork, plus we send you all the monthly financial reports, etc. We can also help structure your overseas operations so that your business is a better acquisition candidate.

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More info:

Nair & Co. : Global Integrated Solutions


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