Forming a company offshore has been considered a smart business move among a lot of interpersonal circles. Just remember that starting your own business is a huge ordeal to begin with, so when you consider an option like this one, you need to make sure it is not only the right decision for you to create, but also, is it the smartest decision? Will it be wise to form an offshore company under the jurisdiction of say Belize, Panama, or Switzerland? Unfortunately, the concept of offshore incorporation carries with it a negative mindset. So many individuals have been led to believe that this type of entity is created to hide shady business deals or to dodge paying one's taxes. By no means has this been farther in the truth, when in reality, many genuine businesses are using offshore location as a leveraging tool that would not be feasible were it not for their place.
Why should I form a company just offshore? There are three major reasons before all the others and they are definite advantages where this concept is concerned.
Advantage #1 Lawful protection
This ought to be the first reason for considering an offshore operation. Typical business expansion operations link the assets protection of the business to some name, usually the owner's. This is simply not the case with an offshore corporate structure entity. The benefit to this is that your assets are now defense to lawsuits and other legal decision.
Advantage #2 Privacy
Most businesses do not take pleasure in the level of privacy that is provided by a good offshore business. It's difficult enough to try and determine a company's assets protection, much less keep them anonymous. The just offshore concept provides the anonymity that is oftentimes desired.
Advantage #3 Tax Benefits
The potential tax savings are huge, not to mention enticing, and depending on whose jurisdiction you form your business in, these savings could be of significant proportions. In a few cases, there is no tax whatsoever. You will need to put in some time performing due diligence and research on this benefit, because the benefits vary widely from on jurisdiction to the next.
What are the drawbacks of forming a company offshore? Once again, there are three major issues to think about when looking at setting up a company in an offshore corporate structure setting, but then again, you can't possess the advantages without some disadvantages.
Disadvantage #1 Appraisals plus Financing
The offshore idea provides you with privacy, but assets protection the major problem with this benefit is that it also makes it difficult for the potential financial companions or investors to determine what your company is actually worth. In addition to this, lenders are more likely to be hesitant in approving or granting financial assistance to a business that is away from their "reach".
Disadvantage #2 Limitations
Some offshore companies may be limited in their activities due to restrictions that are placed on all of them by the United States as well as other jurisdictions. Industry benefits that are designed to help US companies may not be available to you due to your just offshore registration. Again, research this issue as possible a drawback depending on your sector.
Disadvantage #3 Perception
As had been mentioned above, the offshore corporate structure concept is not always held in the highest respect due to the media only reporting poor cases so incorporate with care and privacy.