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Don’t miss 3 must-do steps in the preparation stage
Good preparation always makes good results! Below are 3 important steps to prepare for incorporating your offshore company:
Understanding based knowledge about an offshore company and its relevant issues is needs. Then, it can fuel you to minimize the potential of any wrong move. Likewise, it would really help if you can answer questions like “how do offshore companies work?”, or “which offshore jurisdictions should you first put in your consideration list regarding your business demand?”.
Hiring a good offshore service provider is one hassle-free and effective solution for most new business players. To clarify, the service firm will collect the required documents and paperwork, then register and incorporate your offshore company. Moreover, this firm is also able to facilitate the management of administrative tasks for you after the incorporation. Examples of post-incorporation duties include making renewals, filing financial reports, annual tax returns, and so forth.
Please keep in mind, not all offshore service providers can be your ideal partner. There are some parameters that should be taken into account, prominent among which include:
- The experience/business history of the firm
- The physical location of the firm
- The number of jurisdictions that the firm may cover (if you choose universal providers)
- The cost of the firm’s services
- The customer service of the firm
- Especially, the reputation of the firm
Last but not least, in your very first stage, you should be well prepared for associated payments. Once you have selected your ideal partner for offshore company formation, you actually know how much you need to pay for your basic incorporation. Typical payments are fees for certificate of incorporation, the register of directors, or document filing. Having said that, there can be other additional fees that you should plan in advance. Such extra payments can arise from the following activities:
- Bank account opening
- Corporate seals registering
- Corporate offices renting
- Together with a couple of possible needed services like apostille, virtual office, etc.
Company structure: IBC, LLC, Pte Ltd – Which to choose?
The next stage is to consider a suitable offshore company structure.
An offshore company is a very broad term. Depending on the jurisdiction you have selected, the flexibility of the business structure you expect, and some other factors, the offshore service provider can suggest the best-suited type to make the most of your benefits.
Normally, there are 3 offshore company structures widely chosen by business players moving offshore. They are:
Main features of International Business Company/Business Company (IBC/BC)
- Allow engagement in international business activities like trade or investment
- Enjoy a very low tax rate (or be exempt from local corporate tax), if the IBC does not conduct business within the jurisdiction of incorporation
- Offer fast incorporation
- Offer banking and corporation privacy
- Offer minimal reporting requirements
- Require at least 1 director and 1 shareholder (both can be the same person)
Recommended offshore jurisdictions: Belize, BVI, Seychelles, Marshall Islands, UAE
Here is an example to let you explore more about this type: Seychelles International Business Company (IBC): A Go-to Guide
Main features of Limited Liability Company (LLC)
- Be a hybrid of the corporation and the partnership
- Be exempt from local corporate tax on assets or income-generating outside of the jurisdiction of incorporation
- Offer strong protection for the company members. Members are not personally liable for debts or liabilities of the business
- Only have members in place of shareholders and directors
- Offer minimal reporting requirements
- Require at least 1 member
Recommended offshore jurisdictions: Belize, Cook Islands, Nevis, St. Vincent & Grenadine
Main features of Private Limited Company (Pte Ltd)
- Be a type of privately held business entity with the number of shareholders not exceeding 50
- Offer limited liability to shareholders
- Can enter into contracts, acquire assets, sue or be sued under its own name
- Enjoy low tax rates/tax exemption from income earned from outside
- Restrict shareholders from publicly trading shares
- Subject to more reporting requirements than that of IBCs
Recommended offshore jurisdictions: Hong Kong, Singapore
Want to know about Hong Kong Pte Ltd in detail? This blog gets you covered: All you should know about Private Company in Hong Kong
Some factors may affect your decision on determining a structure for your business such as company size or business sector. Take a look at our recommendations, you may find your situation and get an appropriate solution:
- If you need a structure to manage and hold assets of all of your existing companies but don’t take part in day-to-day business operations, an offshore holding company is the perfect fit. A holding company is usually registered under a corporation or an LLC and acts like a parent company.
- If you are confused about which business to choose for your company, an offshore international trading company is a recommended option. Thanks to the nature of international trading and the development of free trade networks, going offshore with this type of business can take many advantages.
- Offshore Company for Cryptocurrency has become popular in recent years due to the emergence of virtual currency. An offshore company is an ideal choice of business entity with a high level of corporate privacy, asset protection, and tax advantages as key features of an offshore jurisdiction.
Decide on an appropriate offshore jurisdiction
The offshore location is of an important impact on either advantages or challenges of your incorporated company in that place. There is a range of parameters that should be taken into consideration when making a decision.
Most importantly, offshore company jurisdiction should be an excellently tailored option that can meet your business needs. For example, if entrepreneurs are seeking a reputed location with highly pro-business for foreigners to incorporate, they tend to think of Singapore or Hong Kong as their first ideas.
The reputation can also reflect the offshore jurisdiction’s soundness and stability, which can result in the feeling of trustworthiness, and the potential for your business growth. It is advisable to look at the health of the economy, politics, legal framework, and even corporate structure availability to know which country suits your business.
If you are a big fan of EU markets, when drafting your consideration list, find out whether your intended place to incorporate is in the non-cooperative list by EU Council or not. This element is greatly significant in case your company has a plan of trading or expanding to the EU playground in the near future.
Don’t feel surprised if knowing that your country of residency may be the reason for your failure of setting up an offshore company. Some countries can be named in the list of being ineligible for company formation. Hence, where you are living is an important factor to take into account as well.
The ability to support businesses for tax minimization is another factor to consider. Most offshore company jurisdictions offer a favorable low tax or even free tax for foreign-sourced earnings, reducing the tax burden they must suffer in high-tax countries. Note, however, that understanding the taxation rules is relatively crucial due to the fact that each jurisdiction may impose different tax systems on your offshore business.
How to set up an offshore company: Incorporation Procedure
The incorporation process for an offshore company can be enfolded in steps as the followings:
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.
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:
Basic documents for due diligence obligations:
- 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
Deliver documents to the Company Registry
Once you have done all the needed documents, please send them to the Company Registry of the offshore location that you opted for and proceed to register your company!
Let BBCIncorp be your ideal partner!
We hope this article serves as a helpful guide for setting up your offshore company. The process can be relatively straightforward if you are well-prepared and aware of the necessary steps. However, opting for an offshore service firm can be a wise choice, saving you time and resources.
At BBCIncorp, we take care of everything on your behalf, from consulting to document collection and submission. Our efficient online offshore company formation services ensure quick incorporation within just a few business days. Don’t hesitate to reach out to us and discuss your desired offshore company with our support team.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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