Many people would recommend against setting up or investing in a business in the current economic climate – the conditions are just too risky. However, with all the benefits that come from opening an offshore company, the chances of your business succeeding are that much greater. These are just some of the reasons why opening an offshore company is a great way to give new businesses the best start possible or to help existing businesses grow and thrive.
1) Lower your tax bill
The rights of individuals and businesses to arrange their affairs in order to pay as little tax as possible – as long as it’s done legally – has been well established in this country. If you want to invest in your business to help it grow, you may need to provide capital that simply isn’t there after your annual tax bill. Setting up a legitimate offshore company is a completely legal way to significantly reduce the tax you have to pay in the UK. Tax arrangements will differ depending on the jurisdiction your company is based in and what your business involves – you could, for example, avoid having to pay tax on any foreign income, whether that be from renting, trading or investing. Just bear in mind that since you will want to stay on the right side of the law and corporate tax rules can be very complicated, it’s always advisable to seek expert advice when it comes to tax.
If you want your business affairs to remain private for whatever reason, then establishing an offshore company is one of the best ways to achieve this. Depending on the jurisdiction, much of the information regarding your business, such as the beneficial owner, any shareholders, and company officers isn’t kept on any incorporating documents and may not even be accessible through public records. Often, the only time an offshore financial centre will give information about clients is if it suspected the business is associated with terrorist or criminal activities.
3) Easier to set up and maintain
Establishing and maintaining an offshore company is easier than setting one up at home, for a number of reasons. Firstly, there is often a lower capital requirement for setting up an offshore company compared to registering an onshore company – in fact, some jurisdictions may not require any capital for registration at all. Then there is the fact that setting up an offshore company is a quick and simple process, while maintaining it is also hassle-free because of the reduced legal obligations of company officers and directors. Less time spent managing this aspect of your business means fewer administration costs and more energy put towards making your business as profitable as possible.
4) Asset protection
There are many reasons for protecting your assets through an offshore company. For a start, it’s impossible to know what problems may arise in the future, so protecting yourself and your assets from potential future liabilities today is vital. By putting any trusts, bank accounts, investments, or property in the name of your offshore company, not only is your ownership of such assets protected, but it is also kept private, which is perfect for individuals who don’t want to advertise their wealth.
5) Tax-free royalties
Intellectual property is another asset that can be placed under the name of an offshore company. Everything from trademarks to copyrights, and technical knowledge to patents can be assigned to your offshore company. These rights may then be franchised or licensed to companies all over the world. In certain jurisdictions, the use of double tax treaties can withhold taxes on these royalty payments.
Choosing the right offshore jurisdiction
With so many different jurisdictions offering attractive options to entrepreneurs looking to open an offshore bank account, it’s worth taking some time to consider which one is best for your needs. It’s also vitally important that any offshore company is set up properly and legitimately – you’ll want a reputable company with years of experience helping you to set up an offshore company that you can be confident in.