If you are looking to internationalize your business and protect your assets against risk, an offshore company business plan will create a strategy to ensure your future by taking advantage of local laws in overseas jurisdictions.
An offshore business plan isn't only for large corporations. Pensioners, online businesses, small companies, entrepreneurs, digital nomads, and any individual with a growing interest in global lifestyle can also take advantage of internationalizing.
What that means is instead of keeping your business local, you create an entity in a country that gives you some added benefits that are found in other countries. This is all done by incorporating a separate structure from you in a country other than where you reside.
An offshore business company involves using a corporate entity that allows you to take advantage of local tax laws in overseas countries, which can reduce your taxes, diversify your business, simplify your responsibilities and ensure your financial survival. Globalizing your company gives you several distinct advantages.
Let's take a look at 5 reasons why your company should consider venturing offshore.
1. Reduction of taxed income
Having a company overseas means that you will generate income outside of the residence of where you live. If you live in a country with territorial taxation laws and does not tax worldwide income, then any income generated by the company is considered non-taxable.
Incorporating a company in a country overseas, the structure exists as a non-resident in terms of its tax obligations. Revenue grossed will be placed in a corporate account because the structure does not conduct any financial or business transactions locally; the company may not be obligated to pay any taxes.
Many countries around the world offer tax incentives to foreign companies to attract businesses. These benefits are widely known in places like Switzerland or the Caribbean. However, this type of business structure is even found in places like the United Kingdom and the United States.
2. Reliable banking systems
Using a banking system overseas is likely to be more secure, provide better interest rates, and generate more investment possibilities than an account in your local domestic bank. Overseas banking jurisdictions usually have higher liquidity ratios, have more stable banking policies and have a higher capital reserve ratio than any of your standard US or UK banks.
Opening an offshore bank account is likely the first most important aspect of any financial diversification plan. Having a corporate account in a separate jurisdiction other than where you live provides a security and protection layer that otherwise would not be possible if you banked locally.
Banking overseas spreads the risk that is inherent in any banking institution. Having multiple accounts holding multiple currencies in different countries ensures you are protected from fluctuation in the markets, currency or economy.
3. Currency Diversification
Holding multiple currencies helps by spreading your assets across different denominations. Spreading your assets across several currencies reduces the risk of being influenced by any single currency fluctuation or economic market.
If you are bound to any single currency or economy, any fluctuation puts your assets in jeopardy. To ensure your security, it's best to be freed from any single institutional and monetary authority.
4. Asset Protection
Diversifying your assets by having your accounts in separate countries other than where you live provides extra layers of asset protection. It makes it harder for your accounts to be frozen in case of a legal suit.
Having a second set of laws found in a foreign jurisdiction protects you in case of creditors trying to break into your account. Local court orders that seek to break open an account in a foreign country will find it almost impossible because the court can not infringe upon another country's legal sovereignty and laws.
Any probe that is made must be filed within the country where the account or structure is located. This makes it much for difficult for frivolous lawsuits and creditors to go after your assets.
Having a company that is located overseas gives you an added flexibility as most low-tax countries have minimal reporting and financial auditing requirements. In an attempt to attract capital, many countries have reduced the amount of red tape to make it easier for small businesses to set up within the country.
Reducing onerous financial obligations creates a business environment that is more business-friendly, allowing businesses a liberalized environment to conduct their operations.
Let's now take a look at 3 steps to internationalize your structure and materialize your ambitions.
1. Selecting your company structure
The nature of your business or venture will likely determine the most appropriate structure that will suit your situation. Depending on your citizenship, tax and reporting obligations will likely determine the tax reduction possibilities and which country would be most preferable in incorporating.
There is a wide range of business structures that can be used. The most widely used is a Corporation, LLC or Trust/Foundation.
2. Registering your company
Registration is the process of drawing up the Articles of Agreements and bylaws, which will state the obligations of shareholders and directors. Once all the documents and fees have been gathered, they are sent to the company registry, where it can take upwards of a few days to a few weeks for the documents to be verified.
Depending upon the jurisdiction, background checks such as Know Your Customer KYC, Anti Money Laundering AML verification are done.
3. Company Incorporation
Confirmation of your incorporation is received by mail and comes a few days/weeks after the due diligence and incorporation documents are accepted. Some jurisdictions require more proof which many include: proof of finances, background checks, banking references or appropriate business plans.
Yearly requirements are dependent upon the jurisdiction that you incorporate but usually require a yearly registration and government fee to keep the business active.
Forming a company structure overseas is not as difficult or complicated as it all sounds. With a few clicks of a button, you can get started on your international journey.
Author's Bio: Alisha Hill is working as a marketing consultant at an award winning software development company RSK-BSL. Her article has been published in many national and international publication. She has been a spearhead in many content marketing campaign for RSK-BSL