If you plan more than occasional sales from an international base, you will probably want to start looking at local legal and business arrangements for tax minimization, liability control, sales documentation, and supply chain management. Here are some of the ways we have worked for businesses like yours:
- Doing Things The Hard Way: When a Munich, Germany based plastic film manufacturer needed to replace their North American sales agent, we organized an Illinois limited liability company (LLC) as a subsidiary of the German parent, and merged the Indiana LLC operated by the former agent into the new firm, for which the new North American sales agent serves as manager. Replacing the firm is not usually needed, but in this case there was no cooperation. We also helped retain local litigation counsel in Indiana, who worked with the federal court (and a local sheriff) to find and return $745,000 of inventory the former agent was hiding in his barn.
- Cooperation Makes Everything Cheaper And Easier: In a similar, but much less confrontational case, we were approached by the accountant for another German firm that wanted to change US sales management. We wrote up the necessary consents of managers and members for an Illinois LLC already in operation, made sure the entity was in good standing with the secretary of state’s office and had paperwork showing the new manager as a manager and agent for the firm, and shipped the revised corporate book to the client.
- Hard Goods Imports: For a Djakarta, Indonesia based manufacturer, shipment of rolls of plastic to Rhode Island was the issue. The client already had an Illinois based business entity, so choice of law was not a major problem. The Uniform Commercial Code, which governs sales of goods in most US states, provided contract terms to use in our deal form, along with “Incoterms” commonly used in international shipping to assign customs costs, shipping costs, risk of loss, etc… to buyer, seller, and shippers or warehousemen. Local counsel for the buyer had provided a long draft, most of which was irrelevant, but not problematic, once we made sure the provisions for payment and shipment conformed to what our client understood they had agreed to. The big issue was one of coordination. The buyer’s bank needed to agree to the transaction, since it was over $700,000, and so a large part of the buyer’s net worth – and the bank’s lawyer did not practice international law. We explained the risks and terms, and worked with staff at the buyer to get his agreement, and to put paperwork in place that let the goods move.
- Software as a Service: A Toronto, Canada based software company needed to make sure people who visited their website would pay them regularly for the data management product they had developed, without exposing their software code to potential competitors. We drafted a Software As A Service contract that allowed our client’s software to be hosted on his computers, with only customer data visible to the client’s customers, not source code, defined uptime and other scope of services elements, provided for regular payments, and could be used after an “I agree” button and an on-website review of the client’s contract terms and privacy policies. The host server and the contracting location could be set at the client’s headquarters site, so US-Canada tax treaties allocated taxation to that location, not to multiple states, and so there was no possible customs cost, with or without NAFTA.