How this entrepreneur found the right corporate location for her international cosmetics business

Lucie is a Czech entrepreneur based in Greece and running her pure cosmetics business Phaedra Botanicals OÜ out of Estonia. Through her business, Lucie has turned her passion for natural cosmetic products into sustainably made, heavy metal-safe, multi-purpose treatment oils, creams, cleansers, and balms.

Her entrepreneurial journey started deep under the Mediterranean Sea and led her to found her company in Estonia using the e-Residency program. Now she manages her unique, scientifically-backed cosmetic business, from Greece, and distributes her products from Estonia with the support of local corporate and logistics firms. In addition, Lucie strives to raise awareness of hidden ingredients contained in the cosmetics that people use on their skin.

And if you, like Lucie, are looking for the right country in which to incorporate your eCommerce enterprise, keep reading for our top 7 key things to consider when doing so.

A Journey that Started in the Sea

Lucie’s entrepreneurial journey started deep under the sea while diving among ancient shipwrecks in Greece for her Ph.D. research on maritime archaeology. Spending hours in the sea resulted in her hair becoming more and more damaged. Lucie searched far and wide and tested many products promising to alleviate her condition. They often claimed to be ‘organic’ or ‘natural’, but upon closer inspection contained traces of impure ingredients such as heavy metals that cause further irritation.

Lucie began to investigate the laws regulating cosmetic products and discovered that under EU regulations, traces of heavy metals are allowed if they are technically unavoidable and not harmful to consumers. Lucie realized that the type of pure skincare product with traceable ingredients she desperately needed did not exist. If she wanted a solution, she would need to find it herself. She began to investigate the science of skincare and possible ingredients in collaboration with specialist laboratories.

Finding a perfect and pure product

After months of research, she identified her first ingredient, the French Ente plum, and set about creating her first product – a multi-purpose treatment oil for both skin and hair, called Ex Prūnīs. Turning Ex Prūnīs into a business took a lot of time. Selling cosmetic products is subject to intense regulatory scrutiny in the European Union and beyond. Such products must undergo testing and safety assessments. In addition, there are strict standards related to the labeling, packaging, and advertising of cosmetic products. Lucie’s advice to those considering launching a cosmetic product in the EU is to “be ready for extensive reading or paying a specialist lab a considerable amount to do it for you!”

In early May 2019, Ex Prūnīs was accepted by the safety assessor and registered. By June 2019, Lucie had the regulatory ok and pre-orders for a great, timely product. And no wonder, in a world anxious about scarce resources, unsustainable production, and obsessed with everything organic, her product had a potentially enormous, loyal, and enthusiastic market.

Fast forward to today, and Phaedra Botanicals is selling multiple products across different cosmetic categories. They sell and deliver worldwide a stunning range of cleansers, serums and moisturizers, oils and masks, and makeup. All contain fully natural ingredients and are sustainably made in small fresh batches. Lucie and her team utilize high-quality patented glass and recycled, locally-made packaging to prevent plastic waste in the seas. They also test many of their ingredients and products for environmental contaminants.

Incorporating in Estonia

In parallel with ensuring EU regulatory compliance, Lucie also spent considerable time researching a business model to suit her circumstances – an adventurous, budding entrepreneur wanting to start a location-independent business with easy access to the European market.

As a meticulous scientist herself, Lucie researched many options for selling her products. Through her network, she heard about e-Residency from Lithuanian friends based in Crete. She looked into the program and realized that it was a great solution for her eCommerce enterprise. E-Residency met her two main priorities: (1) it allowed her to run her business from anywhere in the world, and (2) it gave her the opportunity to base her company in Europe, her home.

Lucie is now living and sharing her passion for pure skincare with a little help from e-Residency. Her actions have also spread awareness among her customers of the potential for hidden ingredients in the products they use on their skin.

Perhaps eventually, traceability will be the norm and not the exception, and Lucie’s passion will also change the nature of the cosmetics industry itself.

7 Key things to consider about the location before incorporating

Are you searching for the right country in which to incorporate your eCommerce enterprise like Lucie? There are many variables to consider, from costs to trade access, and taxes to ease of business administration. So, before taking the plunge, read these 7 key things to consider before incorporating a business:

#1 Ease and cost of company set-up

The first things to think about when incorporating are the speed and costs of company formation. How long will it take to register the company? What are the fees?

In some countries, like Estonia or the UK, you can open a company within a day. In others, it might take a few months before you have your official company seal. Costs might also be important for you if you’re new to the business and bootstrapping your first endeavor.

#2 Level of bureaucracy and regulation

If you’ve ever faced any form of bureaucracy, you’ll know how it drains your resources, including time, money, patience, and sometimes even relationships. 

That’s why it’s important to investigate the regulatory environment in the country you’re considering incorporating in. Ask around and listen to business people. Do they complain of drowning in red tape or paperwork? Research whether the market is renowned for long, complicated forms or the need to visit government offices to deal with endless compliance.

If a country has complex business laws and procedures, it’s possible you’ll need to spend a lot of money on expensive notaries, lawyers, or compliance fees.

#3 Availability of services

Banking and payment services are essential for eCommerce businesses to pay and get paid. So make sure that the country in which you incorporate your business has a range of these services available. But don’t stop there. Think about other services you might need: accounting, tax consulting, marketing or recruitment. Before you incorporate, check to see if there are a range of suitable providers of these services to help you start and manage your business. 

#4 Digital or paper administration

It’s shocking that in the 21st century, there are still countries that deal in paper – whether it be signing contracts or submitting forms. Especially when there are other countries that have shown how the digital world makes things quicker, efficient and more trustworthy. So, you should definitely make this a key consideration before you accidentally incorporate your eCommerce business in a country requiring paper and relying on snail mail. This could be especially bad if you’re the type who prefers being location independent and not keeping a steady base. Which brings us to the next point…

#5 Remote management

If you’re a location independent entrepreneur, you’ll need to incorporate in a country that allows you freedom and flexibility to manage your business affairs remotely and securely. Some countries require you to show up at government offices in person to make changes to the company. Others deal in paper, which could make your preferred international jetsetting lifestyle difficult and constantly interrupted by trips to the post office. 

There are a few countries however that have developed secure digital business infrastructure that is accessible remotely. Business owners can do bookkeeping, declare and file taxes, or make banking and payment transactions safely from anywhere in the world.

#6 International trade access

When registering an eCommerce company, one of the primary objectives for choosing a country will be its relative trade access. Where is the country situated geographically, economically, and politically? Is it a member of any trading blocs that could support future growth? What currency does the country use? Is the country the subject of any sanctions, subsidies, or tariffs that will affect your business? Any or all of these factors could make or break your business plans for geographic expansion.

#7 Tax considerations

Tax is another important point to consider for any business founder. Consider how complex or simple the tax laws are, and the compliance burden they will have on your enterprise. What are the tax rates? How often are taxes declared and paid? Are there good schemes for deductions, business expenses, and/or gifts? How many double-tax agreements have the country joined?

Also, and importantly for eCommerce, are there sales taxes you need to be aware of? In the EU for example, the accrual and collection of VAT usually occur where goods are consumed or services rendered. Recent new One-Stop-Shop (OSS) and Import One-Stop-Shop (IOSS) schemes however have lessened the administrative burden for EU traders.

Consider e-Residency of Estonia for your eCommerce business

If you want to take your small eCommerce business international like Lucie, e-Residency of Estonia is an attractive option. It lets entrepreneurs circumvent the often-complicated bureaucratic procedures involved in setting up overseas. 

E-Residency is a digital identity that allows people from outside Estonia to start and run a company in Estonia from anywhere in the world. The key advantages of e-Residency for eCommerce entrepreneurs include that you can: 

  • Register a limited liability company quickly and easily
  • Enjoy easy digital business administration remotely 24/7
  • Access and trade within the EU Single Market
  • Avoid paperwork and bureaucracy
  • Find numerous service providers for banking, payments, accounting, tax, and logistics to support your business
  • Enjoy streamlined VAT rules and processes 

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Plus, meet the e-Residency team at the E-commerce Berlin Expo at Booth F2.3!