If you have a handsome amount of money to protect, it may be to your financial benefit to set up an offshore company to protect your assets. In other words, an offshore company is a company that is incorporated in a country other than the one it does the majority of its business in.
There are many valid reasons to set up an offshore company but for many companies, the main reason is to take advantage of tax laws. Setting up an offshore corporation is a great way to keep your taxes low and more of your company profits fluid. Setting up an offshore corporation does not escalate the need to pay taxes in the country where the income was derived, however,
there are other benefits of setting up an offshore company and those are; the ability to trade internationally, financial confidentiality, asset protection, business and land ownership in a foreign country, increased financial flexibility and privacy.
You may also find that offshore companies offer a higher quality of asset protection than setting up your company in the United States. Most offshore destinations will let you form an offshore company in such a way that earnings are fully covered from all future liability.
In jurisdictions such as Panama a person can incorporate an offshore company without using their real name. This type of corporation is known as an anonymous bearer share corporation. In today’s banking world very few places outside of Panama still offer and enforce, through banking secrecy laws, this type of privacy.
Business owners can also form an offshore company with a minimum amount of cash equity in the business. Different countries have different rules for this, but overall upfront costs are much cheaper to set up an offshore company in a jurisdiction like Panama as opposed to Switzerland for example. Each offshore destination should be carefully examined and an asset protection lawyer consulted prior to making a selection of destination.
In addition to the benefits, there are some disadvantages to setting up an offshore company that you should be aware of. If a person incorporates an offshore version of their company there is a chance that they won’t be able to have employees on a payroll for that company’s American counterpart.
There may also be restrictions on the type of company that a person may form in some countries. For instance, a person may not be able to open a bank, insurance company, lottery or another entity in a strictly controlled industry.
Another drawback of going offshore is the necessity of putting your estate through a protracted probate process if you die suddenly. Even if you have a will, foreign countries will still scrutinize everything before they release your assets to your heirs.
There are many countries where you can incorporate an offshore company. Some of the most popular are; Switzerland, the grandfather of offshore banking, the Isle of Man, which has favorable tax laws, Singapore, which has excellent investment potential and the Republic of Panama which is extremely favorable to incorporated companies.
After a time, you may decide to shift your company from one location to another. You will need to set up your company in a country that allows movement of corporate entities to other destination. If you file the proper paperwork utilizing the services of an asset protection lawyer, you will not lose your incorporation charter, no matter how many different jurisdictions you move your offshore company to.
If you want to start an offshore company you need to research the jurisdiction in which you will incorporate and be comfortable with the advantages and disadvantages offered.