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Factors to consider when you incorporate offshore company
Currently, there are numerous entrepreneurs who want to incorporate offshore company. This has been an excellent and much profitable option for several companies that have invested money internationally and made large profits. However, before making a final decision it is vital to consider some very important factors. Company formation or expansion in international destinations can be a complicated process and the entrepreneurs need to ensure the procedure is completed smoothly while adhering to all the rules efficiently.
Why?
The first thing entrepreneurs need to consider is why to incorporate in an offshore destination. There are several reasons for choosing this option, which can be to protect assets, identity, or excessive tax burdens. The destination you choose to incorporate the offshore company and how it will be structured will greatly depend on your objective and reasons for incorporation. This may not be a simple question to answer and seeking guidance from an experienced consultant can be helpful.
Know your budget
When you want to incorporate offshore company, you need to incur certain upfront costs. These include incorporation fees and equity infusion. An additional amount will have to be incurred annually to sustain the validity of your offshore entity. Some destinations like Seychelles, Cyprus, and Belize provide thin capitalization norms where companies can be incorporated with minimum equity making it an affordable option. These locations also charge lower incorporation fees, which again reduces the costs. Determining the available financial budget will help you make an informed decision.
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Sorting offshore banking
Some people may only need to form an offshore company without needing a banking account. However, a vast majority of people seeking for such route will need to open an offshore bank account. The account will be held in the name of the offshore company and is used for move around your money freely. Although, this is not essential it is much preferred. Otherwise, you may end up with an offshore company that cannot be used while creating large holes in your financial availability.
Choosing the location
This is one of the toughest issues for investors from high-taxation economies and is often tough to answer. However, following some guidelines can be useful in arriving at an appropriate option. Avoiding incorporating in tax havens that still depend on high-tax countries by US, UK, and EU companies is advisable. These include Cayman Islands, Anguilla, Turks and Caicos Islands, Channel Islands, Aruba, and BVI and Netherland Antilles. These countries have withholding tax or information exchange agreements with the EU and the situation is expected to deteriorate further. This is why choosing independent jurisdictions without tax and information exchange treaties must be chosen to protect your assets and privacy.
Purchasing an offshore company
The easiest way to create an offshore presence is to acquire an already registered entity within the jurisdiction. This can also be cheaper if you have already decided and know precisely what use you want to put the offshore entity to. However, this is not an ideal option for entrepreneurs who still need to answer the above mentioned questions.
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