Off-shore companies have been a synonym for dishonest business and tax evading, but in the time of fast technological advancement, when successful business can be run from anywhere in the world, founding a company in countries that ask for less taxes and provide better conditions for startups sound like a very logical thing to do.
Before you decide to start your own off-shore company in some of the tax havens around the world, you should ask yourself a few basic questions:
- Is founding an off-shore company going to cut my business cost?
- Will it provide all the benefits I have in my own country, as a company owner?
- Will off-shore company incorporation alert tax administration in my own country?
First two questions mainly depend on your business niche and how lucrative it is, so it is hard to provide an answer that will satisfy all entrepreneurs who are interested in moving their business abroad. Third question is one of the prime concerns for most honest entrepreneurs and it is possible to form an off-shore company without tax administration attacking your assets at home.
Key to forming an off-shore company that won’t alert tax administration is in creating structure that clearly shows that foreign directors are free to exercise control over its activities.
Company needs to have a big management structure in the off-shore land, without being directly connected to the owner that’s residing in a foreign country. One of the ways to make this structure is by forming a trust. Trust is structure in which foreign company management holds property as its nominal owner therefore being a trustee, and working for the good of beneficiaries, one of whom is the real company owner. Accept trust off-shore company founders can also create a foundation. Foundations are similar to trusts, but little bit more formal.
These types of associations can be created in some of the off-shore centers that use company formation as their prime business. These centers don’t tax or audit company’s accounts and their services can be used by all foreign nationals for as low as $1,000 per company formation and from $500 to $2,000 for running costs.
Centers supply the company with a director’s board, but it is also possible to form a company in one center and hire directors from another one, if you think they have more skill and expertise in company management. Different tax havens have plenty of company formation centers and when choosing, entrepreneurs need to look for an affordable one that provides lots of extra services, and has skillful management for hire. When it comes to prices, most of the South-East Asian and the Caribbean tax havens have similar prices, while Switzerland and some other European countries and regions, like Jersey or Monaco became a little bit too pricey, for most small business entrepreneurs.
Here are a few tips that will help you to form your first off-shore company:
Make an Elaborate Business Plan
Planning is a key to success and elaborate business plan is a must when trying to form a trust in some of the tax-havens around the world. You should arrive to off-shore destination ready with a lot of bargaining chips in your sleeve. This way the board of directors, provided by the center will start with implementing your plan and running your company’s business immediately after incorporation.
Always Have Your Legal Advisor on the Line
Don’t sign any contract without consulting with your legal advisor. There are plenty of lawyers and agencies that you can ask for business legal advice. Founding an off-shore company by yourself is not an option, unless you have a law degree and you closely studied local rules, regulations and customs. Choosing the right legal advisor with extensive knowledge of the local legislature is crucial for the success of this process.
Discuss Centre’s Costs Early On
Not a lot of off-shore centers list their prices publicly, and that’s why it is important for you to ask about incorporation costs as early as possible. It doesn’t mean that companies that do this are dishonest, but they offer wide array of options and extra features that might look little bit confusing if they put everything online. Plus in company incorporation centers there’s always a chance for making a deal, which can save you a lot of money.
We hope that in the future off-shore companies won’t be exclusively connected with tax evading, and that the public will realize all the benefits this form of incorporation brings to aspiring startups and their owners.