There are many legitimate reasons to set up an offshore company but for many companies the main reason is to take advantage of tax laws that are more partisan than those in the United States. Setting up an offshore corporation is a great way to keep your taxes low and more of your company profits fluid. Setting up an offshore corporation does not alleviate the need to pay taxes in the country where the income was derived however.
The other benefits of incorporating an offshore company are; the ability to trade internationally, financial confidentiality, asset protection, business and land ownership in a foreign country, increased financial flexibility and privacy.
You may also find that offshore companies offer a higher quality of asset protection than setting up your company in the United States. Most offshore destinations will let you form an offshore company in such a way that earnings are fully shielded from all future liability.
In jurisdictions such as Panama a person can incorporate an offshore company without using their real name. This type of arrangement can provide a level of privacy that is not possible in the U.S. system of business. This type of corporation is known as an anonymous bearer share corporation. In today’s banking world very few places outside of Panama still offer and enforce, through banking secrecy laws, this level of privacy.
Business owners can also form an offshore company with a minimum amount of cash equity in the business. Different countries have different rules for this, but overall upfront costs are much cheaper to set up an offshore company in a jurisdiction like Panama as opposed to Switzerland for example. Each offshore destination should be carefully researched and an asset protection lawyer consulted prior to making a jurisdiction selection.
There are many countries where you can incorporate an offshore company. Some of the most popular are; Switzerland, the grandfather of offshore banking, the Isle of Man, which has favorable tax laws, Singapore, which has excellent investment potential and the Republic of Panama which is extremely favorable to incorporated companies.
After a time, you may choose to move your company from one location to another. You will need to set up your company in a country that allows movement of corporate entities to other jurisdictions. If you file the proper paperwork utilizing the services of an asset protection lawyer, you will not lose your incorporation charter, no matter how many different jurisdictions you move your offshore company to.