Many entrepreneurs and business owners don’t really consider forming an offshore company due to the many misconceptions surrounding this form of legal corporate entity. Offshore company formation is often linked to illegal activities, associated with trying to hide the company’s activities, and other shady things.
In reality, however, setting up an offshore company can be a good business move. When you do most of your sales online, for instance, an offshore company is a fantastic way to be an international company rather than a national business. The same can be said for the many tax benefits going offshore offers.
Setting up an offshore company is also easier than ever. There are a lot of service providers and jurisdictions that allow for the easy creation of offshore companies these days, so you can get started with setting up your own in no time. Before you do, here are seven quick tips about offshore company formation that you need to know.
Get the Right Help
While setting up an offshore company is relatively easy to do with the help of an experienced agency or corporate services provider, choosing the right agency to help you with the process is still very important. Don’t just go for the first offshore company formation service you come across. You have to be willing to invest time into comparing service providers and understanding their service offers.
Getting the right help is also a way of securing your investment. You want the offshore company to be formed the right way for it to be a valid legal entity. Only experienced service providers – especially those with experience in the jurisdiction – can help you establish a new offshore company effectively.
Choose a Jurisdiction
Speaking of jurisdiction, it is also important to choose the right jurisdiction in which you want your offshore company to be established. Popular jurisdictions like Hong Kong and Belize are famous for their relaxed tax regimes and easy company creation. The Seychelles is also popular among businesses operating globally.
You can also choose to base your company in the UAE. Over the years, Dubai and Abu Dhabi have turned into hubs for international businesses and tech start-ups thanks to their strategic location and access to investors. If you’re not sure about where to set up your company, consult with the adviser helping you or stick with jurisdictions known as offshore financial centers.
While the process of establishing an offshore company is very straightforward in most cases, there are still details you have to understand about the creation of the company and how it can operate in the future. You need to take details such as tax regulations and legal obligations seriously. Don’t hesitate to ask questions and get the right information you need to understand these details perfectly.
Any good adviser will guide you through understanding every part of the process as well as the laws governing the operations of your company. The best service providers even provide complete guides for their clients depending on the jurisdictions they select.
Learn About the Cost
When it comes to setting up an offshore company, you want to know the cost structure upfront and in details. There are a lot of fees you’ll have to absorb in order to create a company in the jurisdiction of your choice. There are also requirements in certain conditions. For example, you may be asked to invest a certain amount of money or deposit the initial investment into the new company’s bank account.
Make sure you understand every cost element and requirement before you begin the company creation process. The way to do this is by asking the service provider you engage to provide you with a detailed quote in writing. This way, you know exactly how much you need to pay to get the company set up.
Keep It Legal
As mentioned earlier, setting up an offshore company is the best option in certain situations. When you have an online business catering to international customers, for instance, you can offer those customers tax-free purchases by establishing your company in certain jurisdictions. This alone will give you an extra advantage in an already competitive market.
Before you do, however, make sure you understand the local regulations. As a legal entity, your company needs to abide by the local laws, including local business and tax laws and industry-specific regulations.
Prepare Some Time
The service provider helping you establish an offshore company will do most of the hard work for you, but it is still necessary to set aside some time to monitor the process. In general, offshore company creation takes around 4 to 5 weeks to complete. Make sure you are reachable during this period to streamline the process.
Get Your Documents in Order
Don’t wait until the start of the process to prepare required documents for your offshore company formulation. Understand the kind of documents needed to get the company established and be sure to supply all of them to the service provider or adviser of your choice. Once again, this tip will help streamline the whole creation process and will help you get your new company established sooner.
Now that you have these seven tips, offshore company formation is certainly easy. Give your business the extra flexibility it needs to stay ahead of the market by turning it into a global corporation.
If you intend to invest IRA funds into your offshore business, there will be some tax advantages. To prevent US businesses moving abroad for tax avoidance purposes, the IRS invented the “Unrelated Business Income Tax” Basically, a person is charged 35% tax on profits in a retirement account on income which is not related to the account’s primary purpose of investing. Click here to learn more about this IRA and offshore business.
Disclaimer: This is a guest post and it doesn’t represent the views of IWB.