The Benefits of Offshore Company Formation
You might hear people say that it is a good move to form an offshore business because of its benefits. However, before your company makes a move on this you need consider it carefully. Remember that starting a company even in your own country is not that easy and can be tough, so if you want to start one overseas, you will realize that there are many things to consider. You need to really be convinced that this is the right move and the smartest move to make. You also need to decide what country you will form your offshore company in.
The problem with forming an offshore company is the negative impression that people have with it. You can hear people denouncing offshore companies as companies that do shady business and those that don’t want to pay their taxes. These comments could be far from the truth while there may be a few companies reported by media to be doing so. There are many legitimate businesses that are using offshore locations as a leverage tool that would not be possible if not for their location.
Good reasons for forming an offshore company are given below.
Your business can be protected legally in an offshore location. In a typical business, your assets are tied to your name, if you are the owner. But this is not true with offshore companies. This then makes your offshore assets immune to lawsuits and other legal judgments.
You can form an offshore company if you want to keep your business a private matter. You cannot have the same level of privacy that an offshore business offers in a local business. You cannot keep your company assets anonymous in your own country. In an offshore business, you get the anonymity that you desire.
You gain huge tax savings with an offshore company. However, this will depend on what jurisdiction your business is in. You get huge savings in some jurisdictions. There are even places where there is no tax at all. Since there are different tax policies in every jurisdiction, you need to do careful research in finding the place where you get the best tax benefits.
Offshore companies are formed for these reasons and more. But there are also disadvantages to it.
The privacy that you enjoy will prevent potential investors or financial partners from determining the actual worth of your business. And lenders will not be comfortable granting financial assistance to a business that is not within their reach.
You can experience restriction in business activities if restrictions are place don your jurisdiction. You may not be eligible for trade benefits given to US companies.
The negative publicity on offshore companies can affect you as well. And media is to be blames because they only carry negative stories on offshore companies.
So, if you plan to form an offshore company, do it with great care and privacy.