There is a misconception that having an offshore company is illegal and unethical. In reality though, setting up an offshore company is a 100% legal way of structuring your business to minimize your tax burden.
This article will explain to you the benefits of having an offshore company.
Why Setting Up an Offshore Company is So Beneficial
Apart from the benefit of minimizing your taxes, offshore company formation offers you a host of other advantages. These include:
- Asset protection
- Ease of reporting
- Lower capital requirement.
Here are the 6 main benefits of offshore company formation:
BENEFIT 1: Minimizes Taxes
For most business owners, the primary reason to register an offshore company is to legally minimize their business tax burden. This is because in most low/zero tax jurisdictions, income derived outside of the country where your company was formed, is either not taxed at all, or taxed at a very low rate. Examples of such locations include Seychelles, British Virgin Islands and Belize.
However, taxation matters between your offshore company, and where it actually operates can be complex. It is important to get expert advice to ensure that there are no conflicts with the country that your business operates in.
BENEFIT 2: Enhances Confidentiality
One of the benefits of most offshore locations is the anonymity and privacy they provide. Information regarding the shareholders, directors or beneficiaries of a company are not disclosed by the registrar’s, nor are they publicly published.
As long as there are no suspicions of criminal or terrorist activities, you can conduct your business in complete anonymity.
BENEFIT 3: Provides for Better Asset Protection
If you have business interests that span across the globe, an offshore company can be invaluable in protecting your assets. It can be used to hold your valuable assets, such as real estate or intellectual property.
BENEFIT 4: Eases Reporting
When compared to most onshore jurisdictions, the reporting requirements of most offshore locations are very simple. In most cases, you will simply need to make payment of a flat rate annual fee, or make a simple declaration. You do not need to formally file financial records annually.
BENEFIT 5: Lowers Operating and Maintenance Costs
Since the reporting requirements for offshore jurisdictions are relaxed, there is less need to hire staff or office space for compliance reasons. In fact, a virtual office can suffice in some places.
This reduces your administration costs for compliance considerably. You will not need to pay for auditors, accountants and legal advice, as extensively as you would in your onshore location.
BENEFIT 6: Lowers Capital Requirements
A minimal amount of capital is required to register an offshore company, in comparison to onshore locations. In fact, in some jurisdictions there is no capital requirement at all.
As we’ve learned, registering an offshore company can provide your business with many benefits in regards to minimizing tax, providing anonymity and protecting assets. It is important to seek professional advice to find an offshore location that is suitable for your specific business and location to avoid complications with tax authorities. If done correctly, however, offshore company formation can give you considerable financial advantages in the long run.