Tax efficiency
You can legally reduce your tax burden by operating through an offshore company…
In these days of rising costs and out of control government spending it’s more important than ever to reduce your tax liability. That’s true for both individuals and businesses. And a big part of that is carefully planning where you get taxed and how much. Bear in mind that this doesn’t mean offshore companies are tax free. They are just the opposite! Offshore companies aren’t tax free. But crucially they only have to pay taxes in the jurisdiction where they are incorporated if they do business within the jurisdiction
Asset protection
In the event that your company is sued or goes bankrupt, an offshore company can offer you added protection by owning and operating your business for you. This means that any assets contained within this offshore company are protected from creditors. The same goes for your personal assets, as well as assets left for family members. Offshore companies can help ensure that any debt incurred is limited to the business, and does not affect your personal property or future finances.
Diversification
Diversification is the key to a successful investment portfolio. Diversification further reduces your exposure to risk by ensuring that no single investment, no matter how carefully selected, can make or break you. In other words, diversification spreads your risk.
An offshore company provides several diverse opportunities for investors from all over the world. If you want to diversify in the stock market through mutual funds, bonds, money market instruments and forex trading, an offshore company will allow you to do so at a very low cost while protecting your privacy and keeping tax on such investments at zero or minimal levels.
Offshore companies also provide sophisticated entrepreneurs with unprecedented access to e-commerce investments and business opportunities around the globe today. The Internet has spawned several niche markets where demand is high but suppliers are few. Economic growth in these areas is often explosive because of their lack of infrastructure or their small populations and limited resources have created businesses in which it is difficult for larger companies to participate. A well-timed investment can yield extraordinary profits for early adopters of new products and services that meet unmet needs in these underserved markets.
Enhanced security
An offshore company gives you enhanced security and protection as an entrepreneur.
How? You can incorporate in jurisdictions with strong privacy laws (i.e. no public record of ownership of the company), strong asset protection laws (i.e. creditor claims are limited), strong legal systems (i.e. clear and enforceable contracts) or jurisdictions that are not politically unstable (i.e., low risk of political or economic collapse).
Reduced red tape and bureaucracy
Offshore companies are easier to set up than most people imagine. In fact, most offshore companies take a day or two to set up. You can apply for an offshore bank account at the same time as your company is being created. Offshore banks are more willing to work with offshore companies than onshore banks are.
When it comes time to open a bank account for your company, you’ll find that offshore banks offer many advantages over their onshore counterparts. For one thing, they usually don’t require you to visit their country in person in order to do business with them. You can do everything via phone or email. Secondly and more importantly, they allow you a greater degree of freedom when it comes to opening accounts in different currencies. In many cases offshore banks let you hold funds in multiple different currencies at the same time—something almost unheard of at onshore institutions!
Increased confidentiality
The first reason to form an offshore company is that it gives you a high degree of confidentiality. This is achieved in a number of ways. First, the process of forming an offshore company requires minimal information and usually does not require the business address to be provided (although some jurisdictions do). This means that no one will know where your business is located or who your bank has as its signatory. The only person who will know this information (and only if you choose to tell them) is the person you have appointed as a signatory for your corporate bank account.
Most offshore companies are formed through intermediaries such as lawyers and accountants who can help keep your identity confidential.
Bank account diversification
Having bank accounts outside your home country gives you extra security and peace of mind. Having all your assets and bank accounts located in one country exposes you to the political risk of that country. Bank accounts being frozen because of litigation or arbitrary actions by government departments is more and more common. They can only freeze bank accounts in your home jurisdiction. Any accounts held outwith your home jurisdiction are safe from seizure. This can quite literally be a life saver.
Increased flexibility and reduced costs
- One of the biggest benefits of establishing an offshore company is increased flexibility and reduced costs.
- Let’s say you’re in the business of selling chinchilla fur coats online. If your business is based in New York City, you’ll have to pay a very high salary to your secretary and salespeople, which can be very expensive. But if you set up an offshore company in Seychelles or Belize, you can pay yourself in dividends instead of a salary while paying much lower wages to your employees.
- You’ll also have more freedom to choose where you want your company to be based and expand globally. Say that you decide that having a presence in London could be beneficial for your business—you’d have fewer legal hurdles with an offshore company than with a traditional one.
Enhanced credibility
Certain jurisdictions such as Hong Kong and Singapore offer enhanced credibility for trading worldwide. This makes it easier to do business with counterparties around the world. This is especially important if you are operating in a country where your language and culture are not dominant. Offshore businesses can also take advantage of this increased credibility by selling franchises or licensing their company to other people for a small fee, as well as selling products across international borders that may otherwise be unavailable.