Any online business is the amazing consequence of a digital era that has revolutionised business communications. You can run a business from any corner of the world; however, for security and compliance reasons, you need to experience the process of setting up a company with perfect documentation and banking account.
Let’s understand with an example. If you’re into exporting goods to the UK while based in Peru, at a certain point, you need to consider opening an offshore company in the UK for smooth functioning of the business and to comply with UK taxation laws.
Here is a brief guide for setting up an offshore company.
What is an Offshore Company?
An offshore company, essentially, has two meanings:
- Opening a branch of an existing business in another country.
- Registering a new business in an offshore financial centre, aka, a tax haven nation like Cayman Island and British Virgin Islands.
Few benefits of having an offshore company include asset protection, confidentiality, and exemption from certain tax laws. With an offshore company, you get an offshore banking account which offers certain benefits like more investment opportunities, higher interest rates, and a stable jurisdiction.
Do you need to incorporate abroad?
Yes, if you meet any of these three conditions.
- Overseas Trading – Overseas trading companies often have offshore companies in countries like the UK for doing businesses in nearby territories.
- Regulations – If the business requires foreign currency exchange, asset protection and estate planning, you should have an offshore business presence.
- Multinationals – Apart from the headquarter, it is necessary to have branches in the city of operations for a better business stability and authority.
Opening an offshore company isn’t always about saving tax but it’s about practicality. If a particular country is generating higher revenue for your business, it’s a practical decision to setup a base there.
Tips to Choose the Right Incorporation Agent
Here you go:
1. Create a Plan of Action
Be clear about the purpose of creating an offshore company and the number of people who would be involved in running the business. You could choose a partner based locally or transfer certain business rights to the person. You would also require a virtual office space and given the rise of coworking spaces, that shouldn’t be difficult. Most importantly, if things don’t move as planned, what would be the exit strategy?
2. Choose the Advisor & Jurisdiction
Do you have the required knowledge and experience to run an offshore setup. You have to take a well-informed decision and you need the right advisor to guide along the way. In what jurisdiction do you want to setup the business? The rule of thumb is to choose a reputed jurisdiction in a stable country that offers partial or full tax exemption possibilities and is known as a reputed offshore financial centre, like the United Kingdom.
Incorporation agencies like Rapid Formations help to form companies in the UK. It is presently the #1 rated company formation agent in the UK and digitally, it’s highly valued on Yell, Facebook, Google and Trust Pilot. It offers various packages suitable for all business needs. All you need to do is search the company name to see its availability, choose the right company formation package, checkout, and leave the rest on the Rapid Formations team.
3. Be Clear about the Costs
Agencies like Rapid Formations display the costs of incorporating the company clearly on their website while others choose not to reveal the fees upfront. It doesn’t mean that such companies aren’t trustable. Just confirm the cost of incorporation beforehand. The fees for incorporation includes setup costs, renewal fees, government documentation fees, and other business operational addons.
4. Ensure Legality
Have prior knowledge of the rules and regulations governing the country of offshore business setup. Your offshore setup is a legal entity and you need to comply with the relevant regulations. The offshore company setup agent should be able to apprise you with the governing laws.
Setting up an offshore entity is a preferred option for operating businesses on a large scale, to protect business assets, and to fuel business growth.