Many people have good reasons for looking into registering an entity offshore, which mostly relates to minimizing bureaucracy, reducing tax and diversifying assets. OffshoreCorpTalk is a hub of information and expertise that digs a little deeper into how it all works.
There are a range of offshore entities that can be useful to people who want to manage their personal wealth, or their business affairs. From offshore company formation and offshore bank accounts, to tax planning and web hosting, offshore options are varied and important in different ways.
For those looking towards offshore entities, it can be difficult to find the right information and advice to support this. Long-established websites such as OffshoreCorpTalk are usually the best places to source relevant and accurate information, as sites like this are popularly used meeting places for professionals working in offshore field.
So what is an offshore company exactly? Essentially, it is any business that an individual or group of individuals registers or establishes outside of their country of residence. There are a number of well-known offshore locations for doing this, such as islands in the Caribbean and the Bahamas. Technology, investment in superior financial systems and the internet have all made offshore solutions easier and more viable for an increasing number of individuals and businesses.
When you’re looking into establishing an offshore company, you’re likely to hear the terminology ‘controlled foreign company’ – often just referred to as CFC – used a lot. CFC is a little different from an offshore company, and is a concept that has been introduced by a number of countries to reduce the number of people using offshore entities for tax evasion. Depending on your reasons for wanting to register an offshore entity, it’s important to know more about some of the apparently subtle differences in offshore companies. For those who are serious about this route, it is always beneficial to gain some guidance from experts in this particular area of finance and wealth management. Advisor fees may require some initial financial outlay, but once you have your offshore entity up and running, it will pay for itself.
So what exactly are the key reasons to register an entity offshore?
Privacy and Protection
Many business owners make the decision to register their business offshore so they retain a level of privacy in their transactions. An offshore corporation is a legal entity in which business transactions can be made, which gives business people confidentiality in their business dealings. The offshore organization essentially acts as a middleman that shields an individual or business brand from too much public scrutiny.
An offshore entity can also give an individual or a business a greater level of protection legally and in terms of their assets, as their name is not publicly connected with the offshore corporation. Going offshore is a way of diversifying and thus protecting assets.
More Reasonable Taxes
Many individuals and businesses who register entities offshore are seeking a place with more reasonable taxes than the high taxes they are subject to in their home country. It is absolutely legal to have a business in another country to your home country, and many individuals simply want to work inside of fairer terms. If this is a key reason for you wanting to register an entity offshore, it is important to research offshore locations that do not have CFC rules in place. Or make sure you understand the specific CFC rules of the country you are interested in.
For example, some countries with CFC rules define a difference between controlled companies and operating companies. Some only apply their CFC rules if a director owns a certain percentage of shares. You may find that having some kind of physical presence in the country you want to work with on an offshore basis can be a good solution to finding reasonable terms.
Reducing Administration
There is a significant difference in the amount of paperwork that has to be filed in different countries in order to run a business. In some countries, the high volume of paperwork and administration can have a direct impact on business success. Compliance with a raft of sometimes confusing, and often time-consuming bureaucracy, can be a real issue for some businesses. Ultimately, it takes yet more investment in personnel and external advisors in order to meet all requirements, and this can become costly for businesses.
The simple fact is that there are some countries that have cut down a lot of the administration and bureaucracy in order to be more attractive locations to set up businesses. This way of working not only makes life easier and companies more focused on the actual business side of their work, it also means less time waiting for paperwork to be processed. All of this is conducive to better business success. Entrepreneurs and seasoned business owners alike appreciate simply being able to get on and do their work.