Setting up your offshore business: a step-by-step guide

Starting an offshore company requires meticulous planning and a systematic approach. It is vital to get the process right, regardless of your goals — whether you are striving to optimize your tax strategy, safeguard your assets, or expand your business internationally. Thorough preparation is key before initiating the registration process. It includes analyzing the legal and tax nuances of your chosen jurisdictions and ensuring you carefully prepare all necessary documentation.

In this article, you will find a clear guide to setting up an offshore company. Read on to explore the intricacies of the process, ways to avoid common pitfalls, and tips for building a strong foundation for your business. Following these guidelines will help save the time and money invested in opening your offshore company. The key aspects of preparation covered here are critical to ensure a hassle-free and successful offshore company setup.

Selecting an offshore concept

The first step to successful registration is choosing the business structure that will most effectively solve your tasks. The structure of your future company will depend on your current economic goals and the growth potential of your business.

International Business Company (IBC)

An IBC is a widely selected company type for international business, especially in the trade and investment sectors. The structure is common in Belize, the British Virgin Islands, and Seychelles. 

An IBC offers the following advantages:

• low tax rates or complete exemption from local corporate taxes if the company’s operations are not conducted in the country of incorporation;
• high level of confidentiality;
• minimal reporting requirements;
• fast and cost-effective incorporation.

Limited Liability Company (LLC)

The feature that makes an LLC structure particularly attractive to international entrepreneurs is combining elements of a corporation and a partnership. Statistically, LLCs are the most popular choice in Delaware (USA) and Belize. 

Distinctive features:

• exemption from local corporate taxes on assets and income earned outside the country of incorporation;
• protection of corporate members from personal liability for corporate debts;
• minimum reporting obligations.

Private limited liability company (PTE Ltd.)

In some jurisdictions, such as Hong Kong, small companies with fifty or fewer shareholders use PTE Ltd. It is a sort of company structure aimed at such businesses. 

A PTE Ltd. offers several advantages:

• limited liability of shareholders;
• the opportunity to enter into contracts, acquire assets, and litigate on behalf of the company;
• favorable tax rates or exemption from income tax on foreign-source income.

However, PTE Ltd. companies have to face more stringent reporting obligations than IBCs.

Specifics of offshore operations that must be taken into account

Offshore companies are created to meet various purposes. Let us consider the main ones:

• Asset management. As holding structures, offshores execute control over the assets of subsidiaries or affiliates without being involved in their day-to-day operations. This creates opportunities for centralized management and capital protection, high confidentiality, and minimal risk. 
• International commerce. Businesses striving to enter the global market are usually interested in setting up trading companies. An offshore jurisdiction provides access to global trade networks and offers more favorable business conditions.
• Cryptocurrency. Cryptocurrency operations are particularly active offshore. Many jurisdictions provide strong corporate confidentiality, asset protection, and attractive tax conditions.

Where should you start an offshore company?

Choosing an offshore jurisdiction for your company depends on several critical factors:

• Individual business needs. If you need a local market with an advantageous business environment, consider destinations such as Singapore or Hong Kong. These countries offer high standards of business infrastructure and efficient legal systems.
• Reputation and stability. Assess the chosen country’s economic sustainability, legal system, and general political environment. Make sure that the jurisdiction can offer sustainable corporate structures that will facilitate the growth of your business.
• EU compatibility. If you hope to enter the European Union market, it is important to check whether the chosen jurisdiction is on the EU Council’s list of non-cooperative countries. If the selected destination is present on the list, that may significantly reduce your opportunities to do business and expand into new market sectors.
• Residency issues. Your residency may also affect your ability to go offshore. Some countries apply restrictions or have special residency requirements that may make it difficult to register a corporation and settle in the selected jurisdiction.
• Tax benefits. Many offshore countries offer favorable tax regimes that often include low or zero taxes on foreign-source income.

Registering an offshore company: step-by-step instructions

Registration of a foreign business offshore includes several vital stages.

Step 1. Selecting a name

A company’s commercial name must meet certain requirements:

• Being unique and having no matches among already existing or registered names in the company register;
• Containing no restricted words (Bank, Assurance, Insurance, Royal, University, Trust);
• Using corporate suffixes (Limited, LTD., Corporation, Inc., LLC, etc., depending on the jurisdiction).

Before making your final selection, make sure the name is available to avoid making mistakes and wasting your time.

Step 2. KYC compliance

The main aim of the KYC (Know Your Customer) procedure is to prevent the illegal use of offshore services. The list of required documents for KYC for inspecting individuals includes:

• passport copy;
• proof of residence address;
• description of the company’s planned activities.

In case the beneficial owner of the company is a legal entity, certified copies of some additional documents will be required:

• certificate of registration of a legal entity;
• memorandum of association;
• registers of directors and participants.

Step 3. Submitting the documents to the registry

Once all the necessary documents have been prepared, they should be filed with the Registrar of Companies in the chosen jurisdiction. The processing time depends on the company structure, complexity of business activities, legal requirements, and efficiency of the institution.

The importance of choosing a registration assistant

To simplify the registration process, contact our experts. We will help you with the following:

• Collecting all the necessary documents and filling out the incorporation forms; ensuring that your application is correct and complete;
• Completing the registration applications;
• Submitting the documents to the state authorities for review.

Once the company is registered, we will ensure that the process of opening a bank account is properly managed. We will also assist you in maintaining accounting reporting and submission of tax declarations and annual reports.

Conclusion

Establishing an offshore company requires rigorous compliance with the requirements of administrative and regulatory bodies. If you have questions or need more information about the process, we recommend consulting with an offshore expert: that will facilitate the process and increase the chances for your offshore business to be successful.