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How cross-border business transactions differ from domestic ones

On Behalf of | Oct 29, 2021 | Uncategorized

Operating a successful business requires a unique niche concept or the drive to succeed in a competitive industry. Those operating in a niche industry may need to connect with consumers all over the world in order to remain solvent, while those competing in a saturated industry may need to expand into international markets bad to keep their costs low and revenue high.

Whether you are about to sign a contract for services or for the delivery of certain goods, an international transaction is different from a domestic one. Obviously, you still have to protect yourself with a contract, and the goal is to benefit for your business.

However, there are several crucial differences that impact international financial transactions.

Numerous kinds of laws govern your actions

When you conduct business in the United States, you need to know the federal laws and the laws in any state and municipality in which you operate. The same is true for international business transactions.

You still need to know state, local and federal laws as they apply to your domestic operations. You will need to learn about national and local laws that affected the other party to the transaction. There will also be international laws to consider.

For example, the United Nations has rules in place about international business transactions. There are also international treaties that involve many of the major economic players around the world that address issues like business corruption. You need to familiarize yourself with those international laws before you attempt an international transaction.

A trade agreement could restrict your activities or add expenses

Many countries have trade agreements with one another that influence all international business transactions involving companies situated in either country. These agreements can restrict certain kinds of transactions or create special legal requirements for the parties involved. You need to know about any applicable trade agreements and whether they imposed restrictions or taxes on the transaction you will soon conduct.

Clearly, one of the biggest differences between a domestic and international transaction is the number of rules that apply and the degree of risk involved. Educating yourself in connecting with the right support before you conduct any international transactions can increase the likelihood of success.