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offshore company formation advice

drillbill

Offshore Agent
Jan 6, 2009
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Benefits of Limited Company Formation


The essentials ingredients required for company formation of a new limited liability company in the UK. Tax advantages are an important consideration with corporation tax changing over the next period from 2007 - 2010 while incorporation of a limited liability company carries several other advantages and disadvantages.


Limited liability company formation carries a number of substantial benefits to small and medium sized businesses effectively creating a new corporate body which is a distinct different business vehicle to the owners of the business, shareholders who are protected from unlimited personal liabilities in the majority of circumstances and can carry significant tax advantages which vary from year to year. Incorporation does carry additional legal responsibilities to that of being self employed.


Company formation requires the submission of the incorporation details to Company House which must be updated and confirmed each year through the Company House Annual Return. Audited financial accounts must be filed annually both with Company House and the Inland Revenue. And the provisions of the various Companies Acts must be adhered to by the directors responsible for the affairs of the Limited Company.


Every limited liability company must have formally appointed company officers at all times. A private limited company must have at least one director, the company articles of association may require more than one, and each limited liability company must have at least one company secretary.


While a director can be the company secretary a sole director cannot.Forming a Limited Liability CompanyStarting a limited liability company in the UK requires the submission to Company House forms, 10 and 12, plus a memorandum and articles of association to complete the company formation and registration. Company House Form 10 provides details of the first directors and intended situation of the registered office. A name check should be carried out with Company House to ensure the proposed name is available and suitable and the proposed limited liability company name entered on form 10 with limited as the last word. Also check addresses and post codes with Royal Mail to avoid the company formation registration being rejected. Company House form 10 must be signed by either by or on behalf of the subscribers to the memorandum of association.


Company House Form 12 is a legal declaration that the limited liability company formation details are true and can be signed by a solicitor engaged in the limited liability company formation or a person named as director or company secretary on form 10 under section 10 of the Companies Act 1985.


The Memorandum of Association sets out the objects and scope of the proposed limited liability company stating the company name with details of the subscribers to the Memorandum of Association witnessed. Table A is a standard format of a set of Articles of Association, a statutory document that governs the internal affairs of the limited liability company and it is recommended that Table A, Articles of Association is adopted in its entirety. Following a final check to ensure accuracy submit all 4 documents to Company House with the company registration fee and the company formation is complete.Company Corporation Tax AdvantagesSole traders pay income tax on the net taxable profit which will be reduced from 22% to 20% from 1st April 2008 on net profits earned over the personal allowance. A limited liability company pays corporation tax which is a tax payable on the company net profit.


The taxation advantages and disadvantages change from year to year as government policy in relation to tax rates and allowances change. From 1st April 2007 the rate of Corporation Tax for small businesses was increased from 19% to 20% and is set to increase further from 1st April 2008 to 21% and further to 22% from 1st April 2009. These tax changes narrow the gap between the tax payable on profits by sole traders and limited companies. The taxation balance for businesses earning in excess of ?34,840 before the owners / directors wages remains in favour of incorporation since the self employed profit is also subject to 8% national insurance in addition to the 20% tax which rises to 40%.


The scale of the tax advantage by being incorporated is dependent upon the level and expected level of net profit. Generally self employed businessman paying tax at the lower income rate of 20% would not gain a significant tax advantage the main difference being the national insurance of 8%, while anyone paying the personal tax rate of 40% would show significant tax advantages compared to the corporation tax rate of 20% in 2007 rising to 22% by 2009.Advantages of Limited LiabilityA sole trader receives no protection from the business liabilities should the business run into financial problems whereas the liability of the shareholders in a limited liability company is limited to the amount subscribed for that shareholding.


Limited liability becomes less clear in reality.


Banks and credit institutions often require directors of a small and newly formed limited liability company to provide personal guarantees against loans and credit.In addition directors should be aware when starting a limited liability company that should that company run into financial difficulties and become insolvent the directors themselves may be financially liable for any debts incurred if the company continues to trade after the directors became aware the company was insolvent. This is why administrators of companies that go into liquidation often immediately cease trading to avoid themselves as administrators being held liable for any subsequent debts being incurred.
 
Company House Form 12 is a legal declaration that the limited liability company formation details are true and can be signed by a solicitor engaged in the limited liability company formation or a person named as director or company secretary on form 10 under section 10 of the Companies Act 1985.
Very nice for one that want to start a business in the UK for whatever reasons.
 
While most reading this will think this is unique for the UK it applies almost also for offshore companies in most jurisdictions. I would like to add a few things or shall we say correct something. If you're looking for a offshore company that offers the same benefits as a UK company does or maybe comes close to, then you will want to look in the direction of low tax jurisdictions like:

  • Cyprus
  • Malta
  • BVI
  • Jersey
  • Gibraltar
If you are looking for privacy, anonymity, asset protection and no one to report anything to then you may rather look into real offshore jurisdictions like:

  • Seychelles
  • Costa Rica
  • Isle of Man
  • Panama
  • Belize
  • Caymans
There are many more offshore jurisdictions and real considered tax havens around, below is an illustration of the same for inspiration and your interest. Not all of them are recommend to use.


/IMG/tax_havens_franch_zone.png


What is important before you proceed is to make it clear for yourself and your business what exactly it is you are going to use the setup for and what exactly your business activity looks like and if it is accepted by the jurisdictions around and more important the offshore banks.


Here is an overview of the major tax havens around:

/IMG/tax-haven-map2.jpg​
 
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You are mentioning only a few of the offshore jurisdictions that are actually accepting total privacy when it comes to the formation of a offshore Company! What I think is that to be able to get total anonymity you need to either be able to get a 3rd party to setup the Company for you or you need to be able to avoid to provide any passport copy and utility bill. The latter would be against 99,9% of all Agent's policy around so it's not a option.


On the other hand, if you are looking for total privacy in terms of own privacy towards customers, nominees will be the answer to your goals, they will protect your personal identity to be revealet when doing business contracts or other dealings on behalf of the Company.
 
You won't find any Agent who is willing to setup a offshore company nor any banking for you without to see a copy of passport and a utility bill! Most will even require thus to be certified and they will require a bankers reference letter to even get started! Internationa eyes are monitoring all this stuff closely and everyday from now it get's more and more difficult to get anything setup. It's still not impossible and we don't believe it at any time to be, but it is going to be more difficult than what we have seen so far!
 
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You won't find any Agent who is willing to setup a offshore company nor any banking for you without to see a copy of passport and a utility bill! Most will even require thus to be certified and they will require a bankers reference letter to even get started! Internationa eyes are monitoring all this stuff closely and everyday from now it get's more and more difficult to get anything setup. It's still not impossible and we don't believe it at any time to be' date=' but it is going to be more difficult than what we have seen so far![/quote']
And if you do you don't want to form a offshore company nor open an offshore account with this agent since he is either already on the hot spot by various governments or it is a honeypot!
 
What is a honeypot? I was looking for an offshore company formation agent that didn't require such documents to stay 100% anonymous. Actually I'm in touch with some offshore advisor who claims that he can do this and you say it is not a valid agent?
 
It is a TRAP that an authority could have setup to catch illegal activities and tax evaders, More... that's the best info I found explaining it very well.
 
It is a TRAP that an authority could have setup to catch illegal activities and tax evaders' date=' [url']More...[/url] that's the best info I found explaining it very well.
Ahh, why does any government want to spend time on this? you sure in exists in real?
 
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Ahh, why does any government want to spend time on this? you sure in exists in real?
You would wonder what governments do today if you knew about it. Make sure you have your privacy in place and use some of the many tools available for it before you register any offshore company or bank account!
 
curtlee you know much about the offshore company formation from reading your posts. Why is Amsterdam / Netherlands on this list? it's not an offshore jurisdiction it is Europe?
The Netherlands are one of the major stops in Europe in the past to incorporate a International business. During the years it has changed a little and the UK, Cyprus, Malta and a few other European countries have been more attractive to these businesses.
 
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The Netherlands are one of the major stops in Europe in the past to incorporate a International business. During the years it has changed a little and the UK, Cyprus, Malta and a few other European countries have been more attractive to these businesses.
I read that already. There are some main countries in Europe supporting the import and export of goods to the rest of the world.
 
You are mentioning only a few of the offshore jurisdictions that are actually accepting total privacy when it comes to the formation of a offshore Company! What I think is that to be able to get total anonymity you need to either be able to get a 3rd party to setup the Company for you or you need to be able to avoid to provide any passport copy and utility bill. The latter would be against 99,9% of all Agent's policy around so it's not a option.
On the other hand, if you are looking for total privacy in terms of own privacy towards customers, nominees will be the answer to your goals, they will protect your personal identity to be revealet when doing business contracts or other dealings on behalf of the Company.
If you look at the Seychelles and all the offshore jurisdictions that actually allow to insert other corporations as director and shareholder you can slowly get a picture of how the level of privacy increase each time. The same for nominees, everytime you put an additional layer on your offshore company you increase the strenght of anonymity.
 
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