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Steps To Create Offshore Companies

FAS CPA & Consultants

An offshore company is a legal entity incorporated in a country or jurisdiction with little or zero taxation. The benefits that an offshore company includes zero corporate tax, flexible business laws, asset protection, and confidentiality, protection from political and economic changes and the risks, associated with them. To maintain a tax exempt, the offshore company must not trade on the territory of the country of incorporation.

 

How to Set Up an Offshore Company

Creating an offshore company can be broken down into three steps. However, these days it can take fewer days and completed online with minimal documentation.

 

The first step to open an offshore company is to choose what jurisdiction and offshore vehicle structure is right for you. There are many similarities between jurisdictions and structures, so it’s important to ask yourself what the main function of the entity would be. Since the offshore industry is continually changing one must have up-to-date information. The second question to ask is where in the world would you like to incorporate. Keeping in mind that you might want to keep business close to home.

 

Another important task is to research the tax laws since they are different for each country. Having a qualified accountant or lawyer is essential to consider laws like the Tax Information Exchange Agreement, The Common Reporting Standard and the Controlled Foreign Corporation as they will influence the company structure, location and corporate vehicle that would be used.

 

During this first stage, if your business is created to make financial transactions with customers you would need to have a personal or corporate bank account. Since the offshore banking industry is always changing more extensive background checks are needed.

 

The second step to follow is to draw the legal document for the formation of the company, which will layout the responsibilities of the Directors and Shareholders. This document is utterly important since it determines the internal structure of the business and will properly secure its assets and the privacy of the individuals. 

 

Once the legal document has been drafted you will require to file a beneficial owner, passport copy, physical address and pay the processing and governmental fee. However, the documentation might vary depending on the jurisdiction.

 

The third and final step is to send the documentation to the relevant company registry. The corporate documents will be received 6-8 weeks following the company registration.

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Jurisdictions To Offshore Company Incorporations

There are plenty of places, where you could incorporate your offshore company, which suit and serve different business needs. We recommend jurisdictions that provide the minimum requirements of zero liability, confidentiality, and asset protection. Depending on your business structure and objectives, Belize is one of the best options to choose. Other compelling jurisdictions to consider, depending on your business plan are Cayman, BVI, Antigua and New Zealand. Here are some of the best features of certain locations.

⇒ For simplicity:  Seychelles, Nevis or Belize.

⇒ For asset protection: Cook Islands.

⇒ For operating a business internationally: Panama.

⇒ For doing business in Asia: Hong Kong or Singapore.

⇒ For financial services or Forex licensed entity:  Belize, Panama or New Zealand.

⇒ For hedges funds or compatibility with U.S. regulation: Cayman Islands.

 

Operating through an offshore company allows you to conduct your business efficiently and on a level of privacy and anonymity. Holding bank accounts and assets in an offshore company, rather than in your name, maximizes security. In many jurisdictions, the company officers, shareholders, and beneficial owners are not on public record and their privacy is guaranteed by statute.

⇒ Offshore Corporation.

⇒ Offshore sole-member Limited Liability Company (LLC).

⇒ Offshore multi-member LLC.

 

Offshore Corporations

An offshore corporation, also referred to as an International Business Company or Offshore IBC,  while  Both structures provide the same level of asset protection but are treated differently the tax code.

 

An offshore Limited Liability Company is tied to its members as a pass-through entity for U.S. tax purposes. A sole member offshore LLC is treated as a disregarded entity for the IRS. This investment and asset protection structure has simplified U.S. reporting requirements and will reduce your annual maintenance costs with the IRS if selected.

 

A sole-member offshore LLC is best suited for the following:

⇒ To manage your Self Directed IRA. 

⇒ To hold an offshore bank account for a U.S. resident seeking asset protection. 

⇒ To hold an international business that is expected to generate net profits that are less than the Foreign Earned Income Exclusion.

 

A multi-member offshore LLC is also a flow-through entity for U.S. tax purposes. However, it is reported as a partnership and requires a complex tax return. Offshore LLC partnerships are primarily used in joint venture arrangements.

 

To discuss the benefits of IBCs and LLCs, click the button below and schedule a consultation. We will gladly give you more details about the offshore structures and their requirements, clarify any information and answer all of your questions.

 

Offshore Company Benefits

There are benefits to having an offshore company and several factors to consider when choosing the right place and business structure.

⇒ Financial privacy and safety. However, this can be difficult to achieve when you live in certain countries, this isn’t always an issue of hiding your money and more about protecting oneself.

⇒ Meeting legal requirements in a country you’re looking to invest in property. In many countries you’re not allowed to buy property as a foreigner and that means you must open an offshore company to be able to invest there.

⇒ You can have investment funds in tax-neutral locations. The benefit of locations like the Cayman Islands, which have lower taxation policies, allow people to access investment deals that may be unavailable to US investment funds.

⇒ Efficiency and legal framework. When you live in a country that makes setting up a company extremely bureaucratic and moving money even harder than it makes sense to search for other places. However, you must consider the tax policies from that country in case the process is easier, but the tax reforms make it expensive to have a company.

⇒ The banking infrastructure is truly important too. Having access to better banking options can lead to better opportunities regarding investment funds and taxation policies since certain countries may not accept foreign banks to run operations there.

⇒ Having an offshore company to protect your assets from creditors, plaintiffs, attorneys, family members and ex-spouses, etc. Places like St. Kitts and Nevis require other processes like posting a bond before they can sue a person.

⇒ Avoid capital gains tax. We know every country is has different capital gains tax laws. However, if you are a US citizen you can’t really avoid paying capital gains tax even if other countries allow structures that avoid this tax by indirect transfers of assets.

⇒ Having access to lower taxes is a reason some countries offer lower tax rates; they want to develop their economies. But also, we must keep in mind that there are rules on transfer pricing in most countries.

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The United States is a desirable market for many citizens of foreign countries.  People from all over the world want to utilize the numerous business opportunities available but are often not sure of the proper way to proceed.  There are several important considerations and tasks to be completed for foreign citizens who want to set up a company in the United States.

 

Business Structure And Offshore Company Registration In US

If your business will have a physical presence in the United States, it’s wise to consider setting up a business entity, such as a corporation or limited liability corporation (LLC).  Keep in mind that foreigners cannot set up an “S” corporation, because they are not citizens and file individual tax returns, and this is where S corporations would report their business income.

 

Setting up a company in US usually requires submitting articles of incorporation and registered agent to the state in which you wish to incorporate. In addition, there is usually a fee to process your application. Keep in mind, however, that while the process of incorporation is the same for U.S. citizens and foreigners, the tax consequences are not.  Depending on the structure selected, your business will be responsible for certain taxes, and failing to pay these will have dire consequences for your new business. It is prudent to talk to an accountant or business consultant about the options and what will work best for your situation.

 

A corporation is an independent legal entity that exists separately from the people who own, control, and manage it.  Corporations can enter contracts, pay taxes, and perform various other transactions in business. In addition, there is a difference between “for profit” and “not for profit” corporations – the first is formed to generate income for shareholders, owners, and employees. The latter is formed usually for the purpose of funding religious, charitable, or educational activities.  

 

When forming either type of corporation, an Articles of Incorporation is required. For-profit corporations must include the name of the corporation, street address, total number of shares that the corporation is authorized to have outstanding at any time, the name and Florida street address of a Registered Agent, who will be responsible for accepting service of process on behalf of the corporation, a signed statement from the Registered Agent, names and addresses of the parties who are forming the corporation, and the signature of at least one incorporator. Nonprofits are required to include all of these items, except information regarding the shares. In addition, nonprofits are required to submit the specific purpose of the organization, the way directors are elected or appointed, and any limitations to the corporate powers.  Nonprofits seeking Federal tax exemptions should take note of the “specific purpose” clause.

 

Legal Matters

Running a business in a foreign country means you must abide by that country’s legal rules. This requires a business owner to become familiar with the laws of the jurisdiction.  Areas of legal relevance are data privacy, labor and employment, and intellectual property laws.  In addition, you will want to become well versed in securities and any corporate regulations that apply to your specific type of business.

 

How To Open A Company In USA As A Foreigner

If you are looking to set up a company in the United States and you’re from another country, you may need to be in the U.S. for an extended period on business matters.  If you have a green card, you are free to start a business in the U.S.  Another option is to apply for either an E-2 or EB-5 visa, which usually are referred to as “Investor” visas.  The E-2 visa has several requirements, including being a legal citizen of one of the treaty countries, having invested or be currently engaged in the process of investing in the U.S., you must have invested a certain amount, usually at least $100,000, and you must plan to return to your home country once the visa expires.  The EB-5 visa has less stringent nationality requirements but requires a larger monetary investment amount of at least $1,000,000. In addition, the business must create at least ten full-time jobs.  There may also be other options being developed specifically for foreign business owners.

 

Forming an offshore company can create many advantages for your business. But the truth is some jurisdictions are better than others in general and, specifically in your unique situation. While it is best for a company that trades in the EU to be formed in Bulgaria or Cyprus, a non-U.S. citizen will benefit the most if the set up an offshore company in Wyoming or Delaware, USA.

 

The U.S. turned into the new tax haven for many wealthy individuals from around the world, successfully replacing well-known offshore account destinations like Bermuda, Switzerland, and the Cayman Islands. Here’s what and how it happened in a nutshell:

 

In 2010, the U.S. Congress passed FATCA (Foreign Account Tax Compliance Act), requiring all foreign banks to disclose personal and financial information about U.S. taxpayers who hold offshore accounts with them. Just a handful of countries refused to comply.

 

The U.S. has also refused to become a part of the Common Reporting Standard agreement, signed by over 100 other countries, which effectively turned the States into the new tax haven.

 

Several financial organizations like Rothschild & Co. and Trident & Co. have thousands of offshore accounts registered in the 3 most favorable states – Nevada, Wyoming, and Dakota.

 

Offshore Company Registration In USA

 

List Of Offshore Company Jurisdictions In USA

 

How  To Open an Offshore Company in Wyoming

Wyoming is Great for an eCommerce Offshore Company.

 

The absolute best choice for an eCommerce startup would be to form an offshore company in Wyoming. The main reasons are these:

⇒ You can choose the business structure for your company (most often the best option is LLC).

⇒ You can set up an offshore company and a bank account in one place.

⇒ You can access your bank account online.

⇒There’s no minimum capital requirement for opening a business bank account.

 

Setting Up an Offshore Company in Wyoming is Fast

Wyoming is one of the fastest jurisdictions when it comes to business structure formation. It usually takes just 3 working dates for the company to be set up and then another 3 weeks for the business bank account. However, this process is highly dependent on the documentation you can provide and how fast you do it.

 

Having an Offshore Company is Wyoming is Stress Free

Apart from being able to set up a company quickly in Wyoming, running it also seems like a piece of cake, at least in terms of less paperwork and additional commitments. It is a good place for small businesses and startups because:

⇒ Charges less annual fees.

⇒ No obligation to attend annual meetings.

⇒ No requirement for an audit report.

 

The Tax Rate in Wyoming is Zero

In fact, the tax rate in Wyoming is zero. That alone is a good enough reason to set up your offshore company here and nowhere else. When we add the benefit of the U.S. strong economy and political climate, you wouldn’t even be thinking of forming your business structure in any of the ever so popular Caribbean tax havens.

 

How  To Open an Offshore Company in Delaware

The best places to open an offshore account or a company to protect your wealth is Delaware. This has spiked the interest of many international investors who are constantly looking for ways to find more privacy for their finances. Certainly, one of the ways to do that now is bringing your wealth to certain states in the U.S. Having read that, naturally you would want to know how to open an offshore company in Delaware and we will give you the answer.

 

Benefit to Open an Offshore Company in Delaware

 

The benefits of opening an offshore company in Delaware are many. Here’s just a small list:

⇒ The Director, Officer and shareholder could be the same person and a non-U.S. citizen.

⇒ No limitations over where you would keep your company books and records.

⇒ Personal liability of directors and shareholders is limited.

⇒ Low franchise tax.

⇒ No tax on foreign earned income.

⇒ No sales tax (VAT).

⇒ No tangible property tax.

 

When is it not a good idea to open an offshore company in Delaware:

⇒ If you have employees or physical presence (office) in other states. This does not apply to your international offices or remote working.

 

Procedure to Open an Offshore Company in Delaware

The procedure of opening an offshore company in Delaware is not complicated at all. As a foreigner you have the right to form and own a company in the U.S. unless you have been specifically prohibited by law. This would apply if you are:

⇒ A minor.

⇒ A resident of a country, continuously providing support for terrorist organizations.

⇒ A resident of a country that does not conduct diplomatic relations with the U.S.

⇒ A resident of country whose government is not recognized by the U.S.

 

If none of these applies to you then the procedure for creating your offshore company in Delaware will be pretty straightforward. There are many companies whose main purpose is to help you form your own organization in Delaware. In general you will need:

⇒ Your proof of identity (passport).

⇒ Chosen name for your company (must not contain words like university, insurance, bank or lottery).

⇒ Contact details.

⇒ Payment for the formation of the company.

 

The process also doesn’t take too long. Delaware will process your application within 2-3 working days, which is quicker than waiting times in other states, where the same process takes 5 to 7 working days.

 

Something very important to take note of is that not all companies that offer incorporation services online are legitimate. You wouldn’t want to become a victim of an online fraud. The best policy is to consult with an attorney or certified accountant who will be able to tell you the exact requirements and point you at the right direction to complete the process of forming your offshore company in Delaware.

 

Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services.  This article cannot serve as a substitute for such professional services or advice.  Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation.  This article is subject to change at any time and for any reason.

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