Avoid These Mistakes of Foreign Startups and Run Your Business Smoothly
In every major move you are intending to do, make sure to always back it up with much-needed preparation. This is also the same for when you are venturing into a business.
If you are a foreign startup in Indonesia, you need to do your research, especially if you are not yet familiar with its market and business processes. In doing so, you will start your business in the right direction.
You can avoid making the common mistakes of foreign startups in Indonesia if you have the proper knowledge of relevant business rules and regulations. This includes securing the appropriate licenses, registration of permit, visa application, and many more.
Here are some of the common mistakes of foreign startups. Avoiding them can save you time—and money.
Choosing a Temporary Office Address
When you are registering for NPWP (Nomor Pokok Wajib Pajak), your company must submit proof of office address. NPWP refers to the tax identification number or TIN in Indonesia.
Submitting a temporary address might cause you trouble in the future. After some time, you will need to change this to a permanent one. This means you will need to revise other related documents as well to reflect the changes. It is counter-productive and time-consuming indeed.
With this, it is advised to decide on your location carefully so you will not have the need to change it later on. You can consider registering a virtual office, however, if you do not have a permanent office at the moment.
Not Deciding Right Away
Before starting your business, you must be able to decide your corporate structure and the industry you are entering.
Registering a PT PMA (Perseroan Terbatas Penanaman Modal Asing) is much more complex than applying as a local company. PT PMA is a limited liability company created following the Indonesian laws. This type of company allows foreign investors to have ownership in the said business.
PT PMA is also subject to the Negative Investment List—foreign entities not allowed to invest locally—and can demand more effort, depending on your chosen industry.
Once you have considered these matters and you have chosen your business activities, it will be easier for you to do the rest. Again, it won’t hurt to seek professional advice.
Failing to Secure the Requirements of Your Employees’ Living and Working Permits
As you focus on the legal process of setting up your business, you might overlook and forget to secure the living and working permits for your workforce. It is one of the common mistakes of foreign startups.
You can ask these permissions for the Ministry of Manpower in Indonesia. Remember that without the proper authorization, you might lose your business, pay penalty or be deported.
Failing to Seek Professional Help
While it is necessary to do your own research, it is for the best if you have a local consultant in Indonesia to help you start your business.
Remember that corporate law in Indonesia might have differences from your prior knowledge on the matter—and that is why an advisor is preferred. Better change that mindset if you believe that you must do everything on your own. A consultant can actually offer you more options in deciding certain matters of your business.
Hiring Unqualified Consultants
Hiring an unqualified consultant is probably one of the worst mistakes of foreign startups. It might be better for you to do things on your own if that is the case.
So, it is important to make sure that your consultant is credible and has extensive knowledge of starting and running a business in Indonesia. Your consultant must be able to guide you in every step of the way.
Before engaging a consultant, verify first if they are legitimate. After that, check out their reviews and ask your fellow investors for the services your potential consultant has provided before.
Why Choose Indonesia?
The middle-class population with disposable income is on the rise in Indonesia. This means that the purchasing power capacity of the public has increased, allowing them to purchase additional products and services. With 19.6 million middle-class households, Indonesia is an attractive market for foreign investors.
Contact 3E Accounting Indonesia and our excellent team of business setup experts can help you make your dream business into a reality.
