Challenge Number 1: Creating an Offshore Business Entity
Depending on where you would like to bring your investment, this step may prove to be the most difficult. You will need to do extensive research on the jurisdiction where you would like to start your company to ensure that you are:
1. Working with the correct offices and that the information you provide will be secure.
2. Prepared with all of the necessary paperwork to produce a legal and legitimate filling for your business.
It’s important to be sure of the structure of the business you are bringing overseas and ensure that the country and jurisdiction you choose for your business will support your business plan. It’s not uncommon for certain jurisdictions to require a business plan and extensive background checks when requesting to open a business within their domain.
Challenge Number 2: Creating Your Offshore Bank Account
Creating your offshore bank account is a gravely important step for not only legitimizing your business, but for the functionality of your business. Most banks will require you to finalize the bank account in person. In many instances fingerprints may be required to open an account.
Because of changes to the offshore banking industry, you may find yourself in a situation where the required information to open your bank account is extensive. Many areas may require you to have a local business in place before you can open your account, and this will require more paperwork.
It is not uncommon for an offshore bank to ask for verification of the legitimacy of your deposits to discourage fraud and money laundering. Bear in mind that depending on the jurisdiction and account set up that you choose, you may have to provide additional documents than you’re used to in regard to your business income.
Challenge Number 3: Learning the Tax Codes
Not adequately preparing for this step of your business could ultimately be the failure of your offshore company. Like all countries and jurisdictions, the tax laws and corporate structure for paying taxes is subject to change.
By not structuring your offshore company correctly during set up and not thoroughly researching your desired jurisdictions tax laws beforehand, you could sabotage your investment and end up paying as much as 50% of your earnings in taxes.
In contrast however, if this step is done in careful consideration and with adequate knowledge, moving your company offshore could potentially maximize your investment. It’s also important to know where or if you will move the money out of your offshore account and how this will translate in terms of taxation and your home country.
Finalizing your tax registrations is another instance where you may have to be present. This is for identity protections purposes and will depend on the type of formation you choose for your business.
Challenge Number 4: Legal Representation
A huge component of building your offshore business entity is ensuring that you, your company, and your earnings are fully protected. By investing in adequate legal representation in the jurisdiction of your choosing, you will gain knowledge and insight that you wouldn’t be able to find on the internet.
Your legal representative should be well-versed in business and their local jurisdiction and should be able to give you great insight into what you can expect with your offshore company. This will be everything from what privacy laws are afforded to your business, how your assets will be protected, and what insurance you will require to limit your liability.
Your legal representation will be an invariable asset in ensuring the legitimacy and protection of your company.
Not one of the challenges listed above are more important than the other and they all will go hand-in-hand. Building a business domestically is a maze – building a business internationally is an obstacle course.
You cannot create your business entity without being aware of the tax codes and international laws and you cannot open your offshore bank account without having built the necessary entity. This web of challenges is so fluid within the workings of one another that it will take big picture vision and tedious attention to successfully join the global market.