Reasons to Form an Offshore Company
In social circles, the talk of forming an offshore company is considered a smart move. The benefits might be attractive but it still needs great consideration before you should form your own offshore company. It is not easy to start a business even in your own country, what more in an offshore location which you are not familiar with? Whether it is the right or the smartest move to make should be answered with great conviction. You also need to decide what country you will form your offshore company in.
Many people today think of offshore companies in a negative way. Many think that this type of company is formed to hide shady business deals or to avoid paying taxes. These comments could be far from the truth while there may be a few companies reported by media to be doing so. You can be a legitimate business and use this location as an advantage and nothing is wrong about that.
Here are some reason why people form offshore companies.
The first reason why you should form an offshore company is for legal protection. In a typical business, your assets are tied to your name, if you are the owner. But this is not true with offshore companies. So if you are facing lawsuits and other legal judgments, your offshore assets are safe.
You can form an offshore company if you want to keep your business a private matter. If you have a local business, your level of privacy is low compared to an offshore business. You cannot keep your company assets anonymous in your own country. But this anonymity that you desire is provided in an offshore business.
You gain huge tax savings with an offshore company. The jurisdiction where your business is in determines the savings that you enjoy. You can have significant tax savings on certain jurisdictions. If you are lucky, you can find a jurisdiction that does not impose taxes on your business. However, it take research and due diligence to know which jurisdiction provides the best tax benefits since they vary for every jurisdiction.
These are just a few of the reason why some form offshore companies. Offshore companies can also be put at a disadvantage.
You will have a problem getting a financial partner or investors if they are unaware of the actual worth of your offshore business. And lenders will not be comfortable granting financial assistance to a business that is not within their reach.
Sometimes restriction are placed by the US on some jurisdictions when it comes to activities. You may not be eligible for trade benefits given to US companies.
Furthermore, many people do not regard offshore companies highly as we have mentioned above. This is all because of the negative publicity media gives to offshore companies.
if you plan to go ahead and form an offshore company, be sure to do your due diligence and research on finding the best jurisdiction for it.