How To Set Up An Offshore Company For 2024: 4 Steps To Go

Things to do before incorporating an offshore company

Good preparation always produces good results! Before you proceed with the incorporation of an offshore company, it’s crucial to ensure proper preparation for optimal outcomes. To achieve this, consider the following three preparation steps

Step 1: Understand the “offshore” concept

Begin by gaining a thorough understanding of offshore companies and their relevant aspects. This knowledge will enable you to make informed decisions and minimize potential mistakes. Learn about how offshore companies operate and research which offshore jurisdictions align with your business needs.

Step 2: Engage a reputable incorporation service provider

When selecting an offshore service provider, opt for a reputable and dependable company that can assist you with the complexities of the incorporation process. Their services should encompass:

• Gathering essential documentation and providing guidance on incorporation forms.
• Handling the submission of company registration and acting as your liaison with authorities.
• Managing post-incorporation responsibilities such as bank account setup, accounting, tax filing, and annual report submissions.

Be sure to weigh critical factors like the provider’s experience, physical location, jurisdictional expertise, pricing structure, customer service excellence, and overall reputation when making your decision.

Step 3: Get your budget ready

Before initiating the incorporation process, establish a budget that covers essential expenses, including fees for certificate of incorporation, director registration, and document filing.

Additionally, be ready to account for potential extra costs such as bank account opening, corporate seals registration, office space rental, and any required services like apostille or virtual office rentals. Having a well-prepared budget will help you navigate the financial aspects of offshore company formation effectively.

Which offshore company structures to choose?

The first step of the incorporation process is to choose an offshore company structure that best suits your situation. Your choice will depend on factors such as your chosen jurisdiction, desired level of business flexibility, and other relevant considerations. You can consult with service providers to determine the idea structure to maximize your benefits.

Most common types of offshore company

Typically, there are top 5 offshore company structures for foreigners and investors, but in today’s article, let’s focus on a more in-depth exploration of the three most commonly used ones, which include:

• International Business Company (IBC), also known as Business Company (BC): This structure is commonly used in jurisdictions such as Belize, the British Virgin Islands (BVI), Seychelles, and the Marshall Islands.
• Limited Liability Company (LLC): Commonly found in jurisdictions like Delaware, Anguilla, or St. Kitts and Nevis.
• Private Limited Company (Pte. Ltd.): This can be Hong Kong Private Limited Company.

Key features of offshore company structures

International Business Company (IBC)

• Engages in international business activities such as trade and investment
• Benefits from a low tax rate or may be exempt from local corporate taxes, provided that it does not operate within the country of incorporation
• Can be incorporated quickly with affordable costs, particularly when considering options like a Seychelles IBC.
• Provides a high level of privacy for both banking and corporate matters
• Imposes minimal reporting requirements
• Requires a minimum of one director and one shareholder, which can be the same person

Limited Liability Company (LLC)

• Combines features of both corporations and partnerships
• Enjoys exemption from local corporate taxes on assets or income generated outside of the country of incorporation
• Provides robust protection for company members, shielding them from personal liability for business debts or liabilities
• Operates with members instead of shareholders and directors
• Imposes minimal reporting obligations, like a Belize LLC.
• Require a minimum of one member to form the company

Private Limited Company (Pte Ltd)

• A privately held business entity with a maximum of 50 shareholders
• Provides limited liability protection to its shareholders
• Can engage in contracts, acquire assets, initiate legal actions, or be subject to lawsuits under its own name
• Benefits from favorable tax rates or income tax exemptions on earnings from overseas sources
• Restrict shareholders from publicly trading shares
• Imposes stricter reporting obligations compared to IBCs

Common uses of offshore company structure

Offshore companies can serve various purposes, tailored to your specific needs and circumstances. Here are some common applications:

• Asset management: An offshore company can act as a offshore holding company responsible for overseeing and safeguarding the assets of other companies, such as subsidiaries or affiliated entities. It takes on this role without actively engaging in their day-to-day operations.
• International business and trade: If you’re considering expanding your business globally or engaging in international trade, setting up an offshore international trading company is a recommended option. The advantages of going offshore in this context include leveraging international trade networks and benefiting from favorable business conditions.
• Cryptocurrency: Offshore companies are frequently chosen as business entities in the realm of cryptocurrencies due to their strong corporate privacy, asset protection, and tax benefits, which are prominent features of offshore jurisdictions.

Where to start an offshore company?

When it comes to choosing the ideal offshore jurisdiction for your company, several critical factors should guide your decision. Here’s a breakdown of the key considerations:

• Tailored business needs: The offshore company jurisdiction should align perfectly with your business requirements. For instance, if you’re looking for a foreign location known for its pro-business environment, destinations like Singapore or Hong Kong might top your list.
• Reputation and stability: The reputation of the offshore jurisdiction is crucial. It reflects the overall stability and trustworthiness of the location, impacting your business’s potential for growth. Assess the economic health, political stability, legal framework, and corporate structure availability to determine which country suits your needs.
• EU compatibility: If your business has aspirations of entering the EU market, check whether your chosen jurisdiction is on the non-cooperative list maintained by the EU Council. This factor holds significant importance if you plan to trade or expand into the EU in the future.
• Residency considerations: Keep in mind that your country of residency can affect your ability to establish an offshore company. Some countries may deem certain locations ineligible for company formation, so your place of residence is a crucial factor to consider..
• Tax benefits: Offshore jurisdictions often offer favorable tax conditions, including low or even zero taxes on foreign-sourced earnings. However, it’s essential to understand the specific taxation rules in your chosen jurisdiction, as tax systems can vary significantly from one location to another.

4 steps to set up an offshore company

The incorporation process for an offshore company can be enfolded in steps as the followings:

Step 1: Select a company name

There are certain naming requirements for your company name to get approval from the competent authority which is commonly known as the Company Registry.

In particular, an eligible company name for offshore companies should meet the basic criteria as below:

• The name should be unique and not be identical or similar to any existing or already registered company name at the Company Registry;
• The name should avoid the name in which prohibited and restricted words are included. Such words can be Bank, Assurance, Insurance, Royal, University, Trust, Building Society, Cooperative, Foundation, Casino, Fund, Securities, Pharmacy, et cetera;
• Note that an LLC company name must typically end with suffixes namely “Limited”, “LTD.”, “Corporation”, “Corp.”, “Incorporated”, “Inc.”, “LLC”, “Société Anonyme”, “S.A.”, “Gmb”, “Namloze Vennootschap”, “Berhad”, etc, depending on the corporate laws of the chosen offshore jurisdictions;
• The company name search/ Checking the name availability is always essential to save your time and avoid unnecessary mistakes.

Step 2: Fulfill KYC requirements

To curb illegitimate uses of offshore banking services, most banks need to carry out due diligence before accepting new clients.

Please be advised that the documents required to submit for your offshore company formation may be varied from jurisdiction to jurisdiction. However, in most cases, the basic documents for the customer verification that would be expected to submit are as the followings:

• A certified copy of your identification documents like a passport
• An original or certified copy of documents for your residential address verification
• A detailed description of your company’s business activities

If your offshore company has one of its shareholders being a corporate body, then you must submit additional documents:

• Certified copy of Incorporate Certificate or equivalent
• Certified copy of Memorandum of Association
• Certified copy of Registers of Directors and Members

Step 3: Submit documents to the Company Registry

After completing all the required documentation, it is essential to send them to the Company Registry of your chosen offshore location. This step is crucial as it allows you to officially register your company.

The processing time for your registration will vary based on various factors specific to your situation. These factors include the type of company structure you have selected, the complexity of your business activities, the legal and regulatory requirements in the jurisdiction, and the efficiency of the Company Registry office.

Start your offshore company with BBCIncorp

Our dedicated support team handles every aspect of the process for you, including consultation, document gathering, and submission, ensuring a speedy offshore company incorporation process that typically takes just a few business days.

Please don’t hesitate to drop a message via service@bbcincorp.com or chat with us for assistance on this matter.