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Working Overseas: Be Your Own Boss
By Debra Thompson, Local Employment Adviser (LEA) Canada
Whether you call it being self-employed, running a home-based business, acting as a contractor or consultant, or having a portable career, the problems you experience as a Foreign Service spouse living overseas are similar. It is difficult to obtain clear-cut information, regulations, or guidance; yet, a few spouses are succeeding in their self-operated endeavors.
According to the Family Liaison Office, there are approximately 718 Foreign Service spouses working on the local economy worldwide, which is only 12% of the total number of spouses overseas. Of the overseas total, only 3% is self-employed. The numbers are low, but the variety of businesses spouses have started is impressive. From offering home computer consultations to providing self-empowerment and life-craft workshops, Foreign Service spouses have demonstrated their talents and ambitions.
Are you an entrepreneur?
You too possess skills that others are willing to employ. However, before considering starting up your own business, it is important to discover your propensity for self-employment. It is not for everyone. Here are the web addresses of just a few of the many self-administered quizzes and surveys you can take to gauge your entrepreneurial suitability.
http://www.midwest-brokers.com/quiz.html
http://www.savvychicks.com/entreprofile.html
State Department regulations:
The only Department of State reference of interest to spouses considering starting a home-based business is in the January 10, 2000 cable #4193 from the Director General of Human Resources. The DG stated that "conducting a business will normally require that a bilateral or de facto work arrangement is in place. A local business would also be subject to local taxes." He quotes the changes to 6 FAM 720 that govern the use of government housing. According to 6 FAM 725.7, "spouses and family members of employee occupants of U.S. Government-held or LQA/OHA housing may use the housing for the conduct of a private business for personal financial gain, provided that such conduct conforms to the provisions of"…certain restrictions. However, generally speaking, with the required Chief of Mission approval and no increased cost to the government, most businesses would be allowed.
Any type of employment outside of the mission, including home-based businesses and self-employment, requires the approval of the Chief of Mission. Also, using the mission mail or pouch service for personal gain is not allowed. Therefore, you must make arrangements to use local postal or international delivery services. Finally, you may be responsible for U.S. income taxes if your revenues are at a certain level. Consult a U.S. tax expert or the IRS website at http://www.irs.gov/businesses/small/international/index.html. The Transition Center at the Foreign Service Institute offers a class entitled Tax Seminar MQ 117 that provides relevant tax information for family members living and working overseas. The center also maintains contact information on tax experts. For more information, email FSIOBCInfoCenter@state.gov.
Host country check list:
More important are the restrictions of the host country government. Each foreign government has its own regulations, tax laws, licensing laws, and policies concerning home-based businesses.
- You must determine through your HR officer at post whether you need a work permit to start a business. If your HR officer is unfamiliar with this information, he/she will need to check with their contacts in the Foreign Ministry. Generally, if there is a bilateral work agreement or a de facto work arrangement, you will be allowed to conduct business. However, work permit requirements vary from country to country. There are several cases of spouses maintaining home-based businesses without work permits.
- You will also need to explore the tax and licensing laws. Most governments will be able to provide you with a website or expert to advise you on what is required in your host country. If your HR officer cannot lead you to the appropriate government office or agency, review host government websites.
- You should also determine if special insurance is required. If you are not employing anyone other than yourself, this may not be required. Depending on the size of your business, its growth potential, and who your clients/customers are, many host country regulations may not apply. Start with the Foreign Ministry for information governing self-employment of diplomatic visa holders.
Questions that continue to plague Foreign Service spouses concern the regulations governing spouses who own a business that either restricts it services or products only to other diplomats with tax-free status or businesses that are conducted exclusively online with no client/customer from the host country, no bank account in the host country, and no host country currency exchanged. Several spouses around the world are assuming they do not need a work permit or permission from the host country government to conduct these types of businesses. Until we obtain a definitive ruling from the Office of the Legal Adviser of the Department of State we cannot say. For those spouses who wish to go ahead with these endeavors, you are doing so at your own risk.
With planning and preparation, Foreign Service spouses can maintain a career through self-employment. Although the frequent moves encountered by the Foreign Service lifestyle will continue to be disruptive, spousal employment does not have to cease. Most businesses developed by the Foreign Service spouse can be restarted in each new post of assignment. Once you have proven to yourself that you can operate a business, restarting it will not be quite as daunting as the original start-up. Remember, you have valuable skills to market and you can be successful if you are willing to take some risks and work hard.
For more information:
The Family Liaison Office offers tips on starting a home-based business at http://www.state.gov/m/dghr/flo/12490.htm.
Check with the FLO's Employment Section for any newly released materials or changes in regulations by emailing FLOaskEmployment@state.gov.
Another useful publication is Chapter 8 of Employment Options for Foreign Service Family Members, found online at http://www.state.gov/m/dghr/flo/rsrcs/pubs/2059.htm.
The Small Business Administration's government website, http://www.sba.gov/, explains how to start and finance a business and offers management guidelines and new business opportunities. You can also obtain the services of retired business owners who are interested in assisting new business owners.
AAFSW member Debra Thompson lives in Montreal and is the Local Employment
Adviser in Canada. She is one of the main architects of FLO's SNAP program.
As a career consultant, educator, and Foreign Service spouse, she has
experienced local economy employment and home-based business ownership
on three continents. She is the Local Employment Adviser in Canada and
can be contacted at ThompsonD3@state.gov.