What can you suggest as a good setup for my business?

[Gamblerio]

Hi,
I've been browsing the forum for a while now to get some info and what should my next move be, but I really got confused,

I'm a developer living in an African country,
I'm working with many individuals & companies as a Freelancer and I'm receiving money directly in my local bank account OR PayPal,
I've been working lately on some personal projects (Multiple SAAS and an eLearning website).

So, I started looking for a good offshore setup (Company & Business Bank Account),
I found many options like US LLC, UK LTD,
But when I searched the forum I found most members talking about Cyprus,
I've checked and found that my country doesn't have a treaty with Cyprus which I believe a good thing, also Cyprus is working with major payment processors (Stripe, PayPal...)
But what I don't understand about Cyprus is the Taxes & how I should handle the VAT for purchases...
So says that you don't have to pay any taxes, some says that you should pay 12%,
Also, I really don't understand how the VAT system is working for Cyprus, when should I charge VAT and do I need an accountant to do all the stuff?

Also, can anyone give me an estimate of the costs:

• Cost of forming Cyprus Company?
• Cost of opening a bank account remotely?
• Monthly / Yearly maintenance cost for the bank account?
• The yearly cost of Maintaining the company?
• If an accountant is needed, how much it's going to cost me?

I'm not projecting a big revenue for the first 1-2 years, which means I don't want to spend a lot on this setup, but I think for the long run it will worth it, especially if I'm going to pay full taxes for an LLC or LTD.

Thank you for your time.

 

[justnew]

New Mexico or Delaware company will do it, if you can travel again then go to the USA and open a corporate account with the help of your agent for the company. That can work well for you.

Otherwise go for Georgia Personal account that can work well too, I can't understand why they refuse to open a corporate accounts in Georgia latly but otherwise Armenia and Romenia may be next stop as well Bulgaria.

 

[Mr Pavlos]

Cyprus companies are obliged to submit audited accounts. So, you need to appoint an accountant - auditor to prepare the FS of the company. We are ASP in Cyprus, but I would like to be honest... accounting and audit fees are not very cheap and it will depend on the number of transactions that you have. Our firm assist the clients and explain how to charge the VAT in their invoices. The VAT return normally is submitted by the Accounting firm that you appoint and the forms needs to be signed by the Secretary or the Director.
The Corporate Tax is 12.5% on the benefits, but Cyprus companies have a lot of Tax benefits. We can get the VAT number really fast....
The fees for the accounting and Audit will depend on the number of transactions that you have, the activity of the company etc.
Let me know if you need further information and I hope it helps!

 

[Gravity]

It really depends on how much money you earn. If we are talking about 4 digits a month, Cyprus might not be for you due to the costs.

If we are talking about offshore, companies might face problems with your invoices.

If it should be a simple and cheap option, a US LLC, UK Ltd or UK LLP should be the way to go. Though you will have to keep in mind that you will still be a tax resident in your country, thus being taxed there in case you don't decide to leave the country.

Finding the right company shouldn't be an issue - if you are in need of a real bank account, that's a different story. Given you are most likely from a high-risk country, almost all banks will refuse you.

 

[Gamblerio]

New Mexico or Delaware company will do it, if you can travel again then go to the USA and open a corporate account with the help of your agent for the company. That can work well for you.

Otherwise go for Georgia Personal account that can work well too, I can't understand why they refuse to open a corporate accounts in Georgia latly but otherwise Armenia and Romenia may be next stop as well Bulgaria.

Cyprus companies are obliged to submit audited accounts. So, you need to appoint an accountant - auditor to prepare the FS of the company. We are ASP in Cyprus, but I would like to be honest... accounting and audit fees are not very cheap and it will depend on the number of transactions that you have. Our firm assist the clients and explain how to charge the VAT in their invoices. The VAT return normally is submitted by the Accounting firm that you appoint and the forms needs to be signed by the Secretary or the Director.
The Corporate Tax is 12.5% on the benefits, but Cyprus companies have a lot of Tax benefits. We can get the VAT number really fast....
The fees for the accounting and Audit will depend on the number of transactions that you have, the activity of the company etc.
Let me know if you need further information and I hope it helps!

It really depends on how much money you earn. If we are talking about 4 digits a month, Cyprus might not be for you due to the costs.

If we are talking about offshore, companies might face problems with your invoices.

If it should be a simple and cheap option, a US LLC, UK Ltd or UK LLP should be the way to go. Though you will have to keep in mind that you will still be a tax resident in your country, thus being taxed there in case you don't decide to leave the country.

Finding the right company shouldn't be an issue - if you are in need of a real bank account, that's a different story. Given you are most likely from a high-risk country, almost all banks will refuse you.

Thank you all for the replies,
The problem I found with the UK is that your company is taxed on any income you receive, and I think that's not a good thing,
In the US I found that you're only taxed on the income you receive from US clients, so that's a plus,
And there's a tax treaty between my country and the US & UK, but I don't know if I really need to pay any taxes here (Everyone seems to get away with it),
Also, do I need an accountant if I'm going with the US LLC route?

Thank you.

 

[Gravity]

That is not entirely true. LLPs for example can be 100% tax-free in the UK.

And if you don't bother (,,everyone seems to get away with it'') then you can basically go anywhere. But you won't sleep good at night.

 

[Caporaso and Partners]

Wallis Island, a new option for offshore companies, in France

Wallis Island is located in the Pacific Ocean, at 22,000 from Paris; however, it’s part of France, since it belongs to what is known as the “French overseas community” or FOC. In this territory, with a total surface area of barely 96 km2, no taxes are applied, and it has become one of the most advantageous sites for establishing offshore companies and bank accounts, since the company and bank account are domiciled in France (Europe), without being subject to high tax burdens.
French offshore companies registered on Wallis Island
Wallis Island is benefited by a special tax regime. This territory isn’t subject to French tax laws, for which it has become a very attractive place for registering offshore companies and offshore bank accounts.
No type of income tax exists there, since the citizens aren’t subjected to the Generalized Social Contribution (GSC), or to contributing to the reimbursement of the social debt (CRSD). Nor are taxes on added value, inheritance, and fortunes. Actually, the tax system is based on indirect taxes, especially customs (tariffs and entrance taxes, taxes on internal alcohol consumption, hydrocarbons, tobacco, special weapons, etc.)
The offshore companies registered on Wallis Island must pay the “tax on inactive businesses”, since they are domiciled there, however, without exercising an in loco activity, which is known in the offshore world as the Annual Franchise Tax.
It’s also convenient for shipowners to register their ships under the flag of Wallis and Futuna, so they can benefit from a more flexible work legislation and zero taxes.
Costs:

SARL company incorporation:	3999.00 EUR
Bank account opening:	1500.00 EUR
Head office:	2400.00 EUR/year
Director:	1200.00 EUR/year
Curriers:	600.00 EUR
Total:	9699.00 EUR

History of Wallis Island
Wallis Island doesn’t even reach 10 thousand inhabitants. It was discovered in 1767 by Captain Samuel Wallis, who navigated the ship HMS Delfin. In 1886, it became a French protectorate and, in a referendum held in 1959, the citizens decided to become part of the French Republic under the condition of “overseas territory”, through which they could preserve their customs and beliefs.
Then, in 2003, after France’s constitutional reform, this territory passed to the state of “French overseas community”, one of the five recognized by Paris. Among the elements that stand out from the modification is that, now, Wallis Island can determine its own fiscal matters.
This island is one of three parts of the Kingdom of Wallis and Futuna, shaped also by Sigave and Alo, in the Futuna Islands. The King of Wallis is the most important political figure of the territory, although he has a Prime Minister and five ministers to support him while leading.
In Wallis, it’s possible to enjoy high speed internet, thanks to the Tui Samoa cable, so that during the last five years it has become the home of more than a few businessmen who choose this paradise on Earth to live in, since they can manage their businesses from there, online. On Wallis, health and education are completely free, for the whole world. Up to now, it hasn’t been affected by the New Coronavirus pandemic. The climate is tropical, with year-round temperatures that oscillate between 25 and 30 degrees Celsius.
The currency used in Wallis and Futuna is the Pacific Franc, which is the second used in the French Republic. This currency has a conversion rate set to the Euro, which facilitates accessing the markets in the Euro zone without the risk of exchange rates. The Pacific Franc is issued by the Overseas Issuing Institute and, these days, 1 Euro equals approximately 120 Pacific Francs. However, bank accounts can be in EUR, USD,CAD and AUS and the destination will appear as France without arousing the suspicions of the tax authorities,

 

[JimBeam]

Cyprus can be good if you have clients in EU(rope) and you need access to SEPA. Company setup was easier before as you could get away without renting an actual office (establishing actual presence there) but it's becoming more strict, but I guess it's still possible. It's not a cheap solution and I guess it's more a better fit for companies trading goods or services than for a freelancer (one man show). The setup price can probably range from 2 - 5k. The company needs accounting and auditing and it will cost you another 1.5 - 3k /year (depending on the volume or number of invoices). If you need nominee shareholder that can be another 0.5 - 1k/year. In that case they'll charge you like 100 - 200 for every thing that the nominee needs to sign + courier costs (DHL). Banking (with BoC) is also not cheap: we pay 50 EUR/month + all kinds of other fees (so it's actually more than that). Also, can't claim many things as expense (for eg. trips if you can't prove these were business trips, restaurant meals etc...). Also, you have CIT that's 12.5% but if you don't pay it in advance, then you pay 1% extra on the amount so the actual CIT will be 13.75%.

You should look into other options:
1. Checking out Xolo Go or Xolo - as that can get you up and running fast and cheap. The setup cost is basically nothing compared to Cyprus, you have SEPA access, no CIT and it's made for freelancers.
2. UK or US companies are much cheaper to setup than the Cyprus but the problems is banking but if you can use TransferWise, Payoneer or PayPal it might be a good solution. Don't know about taxing in this case.
3. UAE company or maybe a freelancer visa - it's also not a cheap solution, but UAE/Dubai is probably more open to people from Africa than in Europe. You'll be able to stay/live in Dubai/UAE if you like. It's can also be tax free. It's not cheap but again, depends what you need.

Banking is the real issue - not the company setup. It's really hard to open a bank account these days and can take months and being from Africa doesn't help at all.

 

[Mr Pavlos]

If you are from Africa and you consider Cyprus company, I will recommend renting and office or space or generating an utility bill. Even though, the fees provided for JimBeam are accurate, You might be able to find firms which them will provide you very competitive fees and very good service: if you expect having agreeements to signed you can negotiate a flat fee...
Also, for USA company an alternative option is to open a bank account in USA. It is quite easy.... but they need physical presence, and you need to request info about how outgoings will be authorized. Requirements change from bank to bank.

 

[JohnLocke]

I would look into a Cyprus company (costs roughly 3500 euro in total) or a UK Ltd (costs roughly 500 euro in total) and an EMI from any of the providers in the list available here List of Banks, EMI's, Payment processors and BTC to FIAT institutions.

That's one of the most simplest setups and also possible to setup quickly. If you have time you can contact several of the providers from this forum and also Google some others and see if they are able to help you with a real bank account opening for one of these entties.