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What You Need to Know About Running an Offshore Company

By Edited Oct 6, 2015 0 0

An offshore company is operated in another country to avoid high taxes and strict government legislation. Offshore companies fall in different categories. There are consultancy agencies where the owner can be the sole shareholder. There are also investment companies and property owning companies, among others. Operating an offshore company provides plenty of benefits. One of them is the low taxes that your company is required to pay. There are even countries that don't levy taxes at all. For this reason, your company is able to save money on taxes that you would otherwise pay in your jurisdiction.

An offshore company offers more freedom in terms of running the business since you will have a non-resident status in the country where your company is located. You can easily start and operate an offshore company because there is less paperwork involved. You just need to provide some basic regulations such as banking and you're done. Your business can now legally operate and your assets are also legally protected. Some of these countries offer tight protection over financial privacy. For example, the bank you are using is prohibited in disclosing account information or your assets cannot be used by a loan creditor.

Operating and sustaining an offshore company is cost-effective, so your company is able to profit more with fewer expenses. Labor is also usually cheaper, which makes your company save more on expenses while maintaining its flow of profits. You can operate your business in any way you want without having to adhere to strict business regulations. This is especially advantageous to sole shareholders. Since you are not required to disclose any information about your business, this puts it in a safer zone. Some of these countries do not carry out thin capital so you can easily operate your business on minimal equity investments. It is also possible to get cheap buildings to house your company and acquire financial aid from institutions in the country of your choice.

Investors can also profit by lending funds to businesses in the offshore company's jurisdiction. And because you are operating in a country that charges low or no taxes, you will earn bigger profit and keep the right to repatriate your earnings. This is a strategy that many investors take advantage of especially when they are working in a country that imposes strict business regulations and high taxes. An offshore company can also be used to protect the assets of an investor. This is an effective strategy that keeps your assets from becoming vulnerable to taxation, litigation, and other risks. Many of these countries are also lax when it comes to auditing and reporting requirements, giving investors free rein in how they conduct their businesses.

But forming an offshore company also has its downside. Although one of the greatest benefits of operating offshore is the privacy it provides, this could also be one of its disadvantages. It would be hard for you to attract potential partners since it will not be easy for them to gauge the worth of your company. Additionally, lenders aren't too eager to loan funds or provide financial assistance to a company that does not operate in their jurisdiction. Your offshore company may also be restricted from performing certain activities as sanctioned by your country or by the country where your offshore company is set up. You will also not be able to avail of certain trade benefits that are created to help out companies in your country. Before exploring into your offshore business, make sure that you have done your research carefully about certain benefits that might still be available to your company that is operating offshore.

The privacy concept of offshore can also ricochet when it comes to establishing ownership. Unlike the companies operating in your country, potential investors and lenders can freely look up their public records. Most offshore jurisdictions do not exercise such system. The anonymity can only be an advantage to a certain degree because when the time comes that you have to prove ownership for your benefit; you might find it hard to do so. Security is also an important factor when choosing a jurisdiction. Political and economic stability both play a very important role in having a successful offshore business. Another disadvantage is that the offshore concept is overshadowed by a shady reputation because of the way the media portray them to the public. So always exercise care and caution when incorporating an offshore company.

When you have decided to set up an offshore company, choosing the right jurisdiction is very important. Your decision should be based on your needs and the advantages that you want to avail of. Nevis is one of the most popular offshore jurisdictions because it provides ample protection and privacy of your assets and investments. It is one of the top choices because of its political stability and its ability to provide legal protection over companies' assets. Its government does not impose taxes, which makes it an ideal location for an offshore company. You don't have to be a resident of this country to be able to operate a business and the profits you earn from outside their jurisdiction will also not be imposed with tax.

Samoa is another country that makes for an ideal destination for an offshore company. In 2005, a new law has made it an offshore business center for investors from all over the world. Belize is another jurisdiction to consider because of the huge benefits it endows upon international business companies. It also has a solid international banking system and strong legal ruling when it comes to offshore companies. The British Virgin Islands also provide ample protection for your assets and privacy. It also allows transfer of assets to another jurisdiction.

Another jurisdiction that tops the list of many investors is Panama. This country is known for its tight financial privacy and reliable financial infrastructure. Through its Private Interest Foundation, your assets are well-protected. Its government does not require international investors to submit any information about their businesses and it also allows them to use bearer shares. Before you embark in an offshore investment, make sure that you have done your research and ask for assistance from the right people who would steer you to the right direction.



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