Incorporating Your Offshore Company

An offshore company also referred to as a nonresident company is a firm that is incorporated in a jurisdiction foreign to that in which it will be operating. The international business company (IBC) is the most frequently used structure for offshore companies. Entrepreneurs that establish companies offshore often do so for privacy, asset protection, tax savings and reduced incorporation fees offered by various nations often specifically to attract foreign investors. Countries commonly used by American firms when establishing offshore companies are Panama, Belize, New Zealand, Isle of Man, Dubai, Cyprus, Hong Kong, the Bahamas, Jersey and Guernsey. Offshore establishment procedures will differ depending on the jurisdiction of incorporation.

Register your articles of incorporation also referred to as articles of association with the appropriate agency. The articles of incorporation detail the name, location, mission, general operation and structure of the company. Memorandums and bylaws, giving further details about the governmental structure of the company, may also be required. Articles are to be signed in the presence of a notary who will authenticate the documents; some nations require the use of an attorney for this step. Find out the details of the procedures for the nation in which you are incorporating.

Register for taxes. Most nations require companies to file for federal taxes with either a department of revenue or a department of taxation. As with the previous step, the requirements and procedures will vary according to jurisdiction. The initial registration for taxes is generally free of charge in most jurisdictions. Some nations have minimal and sometimes no tax requirements for companies, which makes them attractive for entrepreneurs establishing offshore companies.

Register with the municipality in the offshore jurisdiction of incorporation. It is usually a requirement for new companies to submit some form of registration to the local register or appointed agency designated to handle business registrations, in the state or province that the company is incorporated in. A business license or other form of certification is usually issued upon registration. Inquire about registration requirements with the local government in the nation of incorporation.

Register your company in the jurisdiction it will operate within. Once your business is established in the foreign jurisdiction offshore, it must be registered in the jurisdiction it will be operating in your domestic nation’s state jurisdiction. This is referred to as filing a foreign business registration.

Maintain your status in the incorporating country. Once you have established your business in the overseas jurisdiction, you must adhere to any tax or other annual registration or filing requirements of that jurisdiction to remain in good standing. Failure to remain in good standing with the nation of incorporation will invalidate your company, and your company’s official status will be lost.

Five good Reasons to Incorporate a Company Offshore

Incorporating a company offshore was once upon a time known only to wealthy individuals. With the advent of globalization and the increased economic activities in different countries, ordinary people and business owners have come to discover how incorporating a company offshore can be a viable option for them. “Offshore” in the context of company incorporation generally refers to any jurisdiction other than one in which the company incorporated will conduct the majority of its activities or simply put a country other than where a business entity or an individual resides in.

A jurisdiction offers some degree of commercial advantages in the form taxation and reportorial conveniences which make it attractive to company owners. Incorporating a company offshore will bring about at least one of the following benefits to a business owner:

1) Ease of Operations – this usually comes in the form of lower operating costs and amount of time saved when company directors file forms and reports. Depending on the jurisdiction and the type of business activities the company to be incorporated will be involved in, operating restrictions, reportorial requirements, accounting and auditing requirements and standards are far less restrictive offshore than onshore. This means that officers and employees of the company can focus on what they do best – run the business efficiently and effectively. This condition may not be true for financial services companies as they are strictly regulated for the protection of their clients.

2) Reporting simplification – as mentioned in the first benefit, company activity reporting requirements are far fewer and less complex as business activities being entered into by the company to be incorporated will be conducted in the offshore jurisdiction. In addition, personal information of company directors and shareholders need not be exposed or in cases where personal information is required it will still be far less intrusive than what is considered standard in other countries.

3) Taxation reduction/negation – this is by far one of main benefits in investing offshore, opening a bank account offshore or incorporating a company offshore.

If a company is incorporated in a low or no tax jurisdiction, it can potentially save a substantial amount legally. It works in a way that if the incorporated company does not derive income from the local economy it can operate virtually tax free.

4) Asset Protection – operating a company offshore affords certain protections against liabilities typically by positioning assets away from the reach of any potential legal claim or litigation. In addition, the company is shielded from the ever prying eyes of competitors.

5) Personal Privacy Protection – as mentioned in the second benefit, the level of exposure of personal information of company directors and shareholders are quite limited and far less invasive offshore. It is possible to appoint nominee directors and secretaries in an offshore setup in many jurisdictions that result in the shielding of the identities of true company owners and key stakeholders.

The information in this article cannot be construed as advice as every situation or circumstance for offshore incorporation will vary and will be unique so it is still best to seek professional advice to come up with the best approach.