A popular method of expanding a company internationally involves setting up a subsidiary in your country of choice. Establishing a subsidiary brings its fair share of benefits but also requires a hefty investment of time and money. Globalization Partners is here to help you avoid the subsidiary process. By using our existing entity, you can start working in Micronesia right away without any worries about compliance.
How to Set Up a Micronesia Subsidiary
The first step in setting up a subsidiary involves determining the type of company you’d like to build. The country is open to various types of operations and does not require local citizens to share the ownership of companies coming from abroad. The primary company structures include:
- Sole proprietorships. Register as the sole owner of your company without the need for any local shareholders or co-owners when you choose a sole proprietorship.
- Partnerships. Two or more persons or companies share the ownership of a local subsidiary with a partnership.
- Limited liability companies (LLCs). Registering a LLC in this country offers exemption from corporate income taxes and provides protection.
After deciding what type of subsidiary best meets your needs, goals, and budget, you’ll start by reserving your unique company name with the Registrar of Corporations.
Next, you must formally notarize any company documents and file your incorporation request with the Registrar. The required articles of incorporation typically include your company name, intent, and duration, as well as your number of shares. You will also need to provide information regarding your company’s address and the contact information of your directors.
After you submit these documents, you’ll need to:
- Pay your registration and license fee at your state government’s finance office.
- Obtain a certificate of incorporation.
- Request a business license from your local municipality.
- Register for social security.
Preparing documents and requesting approvals typically takes at least two weeks.
Micronesia Subsidiary Laws
Micronesian subsidiary laws vary according to the nature and ownership of the company. A company that is fully owned by a noncitizen, or a company with more than 30% nonnational ownership, must obtain a foreign investment permit. Applying for this permit entails filling out the required paperwork, paying a fee, and submitting a complete application to the Department of Resources and Development. This foreign investment permit must be renewed annually, for a fee ranging between $50 and $250 depending on the state where your subsidiary is located.
Benefits of Setting Up a Micronesia Subsidiary
Choosing to set up a subsidiary comes with plenty of benefits. Because a subsidiary is considered a separate entity from your parent company, you’ll have the freedom to adapt your subsidiary to meet local workplace and cultural norms.
When you work with a global PEO, also known as an employer of record, you can experience all the benefits of establishing a subsidiary without taking on the burden of legal compliance. Globalization Partners can hire your employees through our existing subsidiary in-country. Instead of going through the time-consuming and costly process of setting up your own subsidiary, you can start benefitting from our global PEO services right away. We can recruit, hire, and onboard your new employees immediately, so you can get your international expansion underway.
Other Important Considerations
Setting up a Micronesia subsidiary requires time and capital. While you are not required to pay a deposit at a local bank, you will have to pay several licensing and registration fees throughout the process. If you decide to work with a local attorney to ensure compliance, you will have to factor legal fees into your budget as well.
Let Globalization Partners Help With Your Expansion
Working with Globalization Partners can help you experience greater confidence and peace of mind, allowing you to focus on the most important aspects of building your company. Are you ready to learn more about our subsidiary outsourcing services? Contact us today to get started.