(FORTUNE Small Business) – It's a small world, and it's getting smaller. Everyone is looking for new markets abroad. Even the local pizza shop, it seems, is taking Internet orders to ship its special sauce all over the world. But what does it take to sell overseas? What about your federal taxes? Some general advice, and then some reader questions. First, treat international issues like any new venture--with your eyes open and your shields way up. Seek legal and tax advice from professionals who already have--we repeat, already have--experience doing business overseas. Finally, ask them a slew of questions. Which U.S. labor or trade laws apply? What about laws within the foreign country where you're hoping to do business? How about exchange rates? Also, what legal protection do you have if someone in another country fails to honor an agreement with you? How do you recover costs or damages?

--I'm considering setting up a business that focuses on trade with Latin America. I'm also considering an LLC (limited liability company) structure because it's more open to foreign investors. What are the practical steps in arranging for foreign investors?

--LLCs are today's entity of choice because they provide for one level of taxation instead of two (like partnerships and unlike C corporations), are flexible for getting money into and out of the business, are less complicated than partnerships, and can have foreign owners (which S corporations cannot). LLCs are pass-through entities, meaning the owners, not the entity, pay taxes on profits. How to get capital into the company? Easy: (1) form the company and set up a bank account, (2) give your investors a disclosure document saying what you're going to do and what interest they'll get for their dough, (3) get them to sign an agreement to invest, and (4) take their checks or wire transfers. Beware: You're offering securities just like the big boys in the dot-com IPO world, so get a lawyer.

--Our consulting firm, based in the U.S., wants to work with independent contractors in Europe. Are there any guidelines for paying them, such as 1099 regulations?

--Here's a homework assignment: Take a long look at some of the good government publications outlining the responsibilities of a business with regard to using those foreign independent contractors. They include--and please stay awake here--IRS publication No. 334, Tax Guide for Small Businesses, and No. 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations. As a general guideline, No. 515 will tell you, "If the income is for personal services performed in the U.S., it is from U.S. sources. The place where the services are performed determines the source of the income, regardless of where the contract was made, the place of payment, or the residence of the payer." This is just another way of saying that services performed outside the U.S. would not be subject to U.S. tax even if you are located here. It is the location of the people providing the service--in your case, the European subcontractors--that dictates who collects the taxes. You are liable for U.S. taxes only on your net profits. Still awake? We have another homework assignment: Hire a good tax expert to wade through this with you. Neither we nor anyone else can give you abridged advice on domestic and overseas tax laws.

Martin is a New York lawyer; CPA/consultant Levine is based in Newton, Mass. Write to them at FSB, 1271 Avenue of the Americas, Room 4272B, New York, N.Y. 10020, or by e-mail at answermen@pathfinder.com.