Even before going into details on how an offshore company is formed, we first need to understand what an offshore company is. In layman terms, offshore companies are the companies outside of their country of operation. Offshore business incorporation can make for easier business transactions between partners in different countries.
Starting an offshore company is an effective and legal way to protect your income from any greedy mouths. Apple, Microsoft, Google, Starbucks are some of the businesses who use offshore corporations to save much money and grow their businesses on their terms. Saving money with low tax rates means more money to reinvest in their businesses.
The ‘Why’ Behind Offshore Business Setup
A prevailing image of the offshore business industry is one of money laundering, drug money, gangsters, and villain wearing white linen suits. But in reality, offshore companies are the business entities that people create to take benefit of the global tax market legally. The advantages of an offshore company can include protecting assets from impending litigation, shifting from tax burden levied upon the company, and protecting the company from political unrest and economic instability within the country of the owners.
The benefits are listed as under –
- Protecting Assets – Frivolous lawsuits, ex-business partners, money leeches are everywhere. You never know when they will come gunning for your assets. Incorporating an offshore business can provide increased protection for your assets against the crazy people who want to sue you for them.
- Confidentiality – In a few countries, non-resident corporations are not obliged to publish financial information or the director’s and shareholder’s details. Most offshore financial jurisdictions do not reveal any of this information to third parties unless they are suspected of criminal or terrorist activities.
- Decreased Administration - The legal obligations of any board members or directors of an offshore company are often small. The need for accounting, other employees or a physical office can also be overcome with cost-effective virtual office facilities – saving time and money.
- Low Maintenance Cost - The process of creating an offshore company can be relatively quick and straightforward, which can be translated into lower costs, both in the establishment and in the maintenance.
- Low Requirement of Capital - Register, an offshore company, may require a minimum of capital; however, in certain jurisdictions, there is no capital needed for the record at all.
- Anonymity – An offshore business requires higher levels of anonymity for the business owners. Many offshore jurisdictions do not publish the details of business owners, and many do not even require the publications of financial information from the company owners.
Top Offshore Tax-Free Jurisdictions
There are many different offshore jurisdictions available globally who will provide you with benefits as mentioned above. Some of them are listed below –
Types of Offshore Company Structures
Apart from setting up an offshore business, you need to know the different types of business structures in an offshore company.
- International Investment Company – An offshore investment company is the perfect vehicle for investing in various countries tax efficiently. Starting a foreign company, for this reason, will allow the investor to freely move cash in and out of the different countries legally while managing the local investments there.
- Trading Company - An offshore trading structure can offer many benefits to an import and export company. By moving to offshore jurisdiction, the trading firm can accept orders usually but has the opportunity to ship them direct from the producer’s warehouse. This way, the offshore company includes itself as little as possible with the physical goods, but it gets to keep the profit.
- Holding Company - An offshore business setup can be used to make a holding company which has subsidiaries in many different countries. The advantage to be obtained in this way is that the subsidiaries can receive tax deductions on interest paid. This is not withstanding that the interest paid on the capital investment came from, and is going back to, the parent firm.
We at Business Setup Worldwide can help you set up an offshore company. Our services include business incorporation, business license, accounting and auditing, corporate functions etc. Contact us today to know more.