How to Launch Your Small Business in Another Country

By launching your firm in another country, you could expand into a new market, potentially increasing your customer base. But this can be daunting, especially as you will be unfamiliar with its customs and business laws. Turner Little explains how to launch your small business in another country.

Choose your country carefully 

It is inadvisable to choose your new market, without conducting extensive research beforehand. Ask yourself, where does the greatest opportunity lie for your business? It is critical that you examine factors such as language, current market behaviours, business legislation and certification, as well as competing firms, to ensure you select the most favourable market for your firm.

Survey your consumers

Your business model may be unique, making launching your firm in a new country especially advantageous, due to lack of competition. However, you must first ask yourself, whether there is a target consumer base, in a country which is unfamiliar with the products or services that you sell. Here, it is advisable to conduct market research and focus groups in your chosen territory.

You can gather consumer data quickly and conveniently by utilising online research tools like Survey Monkey. With this tool, you can communicate with different consumer groups in your new market from anywhere in the world, as users have access to specific customer profiles. You can also utilise the services of marketing groups which focus on your field, but this can be expensive. The advantage of this approach, however, is that these groups are operated by qualified individuals, who can avoid steering the group towards one specific outcome, supplying you with unbiased consumer data.

Consider your distributor

If you are not familiar with the primary language of your new market, you will need to partner with a local distributor. Contact non-competing firms in your industry, to determine which distributors they use. Ensure you get references for the distributor, to determine whether they provide first-rate services. Remember to sign a sole agreement with distributors, rather than one which guarantees exclusivity. This way, if legal issues arise, you can provide your goods and services directly to retailers.

Research regulation

It is critical that you research business regulations in your new market, so you can determine the administrative costs of expansion. With this strategy, you will be able to ensure that your firm meets all the legal requirements to trade within your new country and has the certificates major retailers will need to sell your products and services to consumers. This applies to your manufacturer, as some retailers will require them undergo ethical standards audits, to ensure they conform to regulations.

We should note that if you are planning to expand into an EU country, Brexit may have an impact on your plans. For example, Brexit could change trademark protection, requiring you to register trademarks for new products in both the UK and the EU, once the UK’s removal process is complete. As experts in this field, Turner Little can advise you on trademark registration matters internationally.

Alter your packaging

You may also have to create new packaging when expanding into another nation. Your brand name could be popular in your own market, for example, but boast completely different connotations in another, requiring you to change your name and thus develop new packaging, in order to appeal to your new consumers. If you decide to adopt a new name, you will need to trademark it within the country, to protect your brand from competitors and this is another area where we can help.

What will you charge?

Before moving your firm into another market, ask yourself, what will you charge? What may seem a fair price to your existing consumers, may be outrageous to your new customers, so by using your existing price models, you could outprice your goods, losing custom. Here it is key to research what your competitors within your new country are charging. You should also factor charges such as duty costs, which can vary from nation to nation, into your pricing, to ensure you accrue a decent profit.

Get online

You can reduce the costs of expanding your company into another market, by setting up an online presence within the country. It is advisable develop an international website with one domain, so you can handle domestic and foreign business conveniently. We supply the internet services you need, such as domain name registration, to conduct business online anywhere in the world.

Turner Little

Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agent, Registered Bank Intermediaries and Business Consultants, as well as Trust provider. You can receive our monthly newsletter by signing up using the form below.

What are some of the best countries for opening an LLC?

Investors around the world generally prefer the structure of a Limited Liability Company (LLC). This is because it allows them to only have limited liability up to the amount they’ve invested, which helps to manage risk.

There are various tax advantages and incentives offered by different countries, which are attractive for entrepreneurs who want to open a small business. Here Turner Little look at some of the most advantageous countries to consider when planning to open an LLC.

Opening an LLC in Hong Kong

Both private and public limited liability companies can exist here. While you’ll need a share capital, there is no minimum amount initially. In addition, share capital can be in any solid, major currency.

Investors from overseas who want to go ahead and start an LLC in Hong Kong face no restrictions in terms of becoming members of the management board or company directors.

Added to these advantages is the low tax. Corporate income tax is at 16.5 per cent, there is no VAT and no withholding taxes on interest or dividends. Hong Kong also holds duty free status, and has a policy to increase the number of double tax treaties on an ongoing basis.

Establishing an LLC in Ireland

Investors will find a very warm and welcoming business environment in Ireland, along with a good credit regime. There are government incentives for some investors. An example of this are investors who can provide and maintain high skilled jobs, among other criteria.

Ireland also enjoys a low corporate tax rate of 12.5 per cent on trading profits. Exemption from withholding tax on interest, royalties and dividends are also available.

There are two kinds of private LLCs:

  • Designated Activity Company (DAC)
  • The private company that is limited by shares (LDT)

In the same way as in Hong Kong, there is no minimum amount for initial start-up capital for either the DAC or LDT.

Ireland has already signed a certain amount of double tax treaties. These provide one taxation point for companies that get income from both their country and Ireland.

Starting an LLC in the Netherlands

There is a strong and long-standing policy of welcoming foreign investment in the Netherlands, along with a liberal and warm corporate climate.

The country offers certain kinds of investment aids, including loans for R&D projects, premiums for investors who create jobs and a special tax schedule for shipping companies. This tax regime is worked out by tonnage.

In the Netherlands, the BV is the same as a private LLC, while the NV is a public company. An advantage of starting up a Dutch BV is that there is no minimum amount when it comes to share capital. The country also has a corporate income tax rate of 20 per cent for taxable profits up to 200,000 EUR, and then 25 per cent over that.

Opening an LLC in Spain

Foreign investors are welcome in Spain in the majority of sectors. Excluded are radio industries, air transport and strategic sectors. Otherwise, there are relatively liberal rules surrounding foreign investment.

There are incentives available for artistic industries, such as cinema production or musical performances. In addition to this, there are tax credits available for companies running R&D projects.

In Spain, the private LLC is known as the SRL, and a public limited company as the SA. Foreign investors who want to start these kinds of companies in Spain, must submit a statement to the general directorate of foreign investments and commerce.

The minimum amount for the initial share capital for the SA is 60,000 EUR. For the SRL, it’s lower at 3,000 EUR. Spain also offers corporate income tax rates of 25 per cent.

We’ve presented a rough guide to setting up in different countries and as you can see, there is a huge disparity in levels of taxation. Contact us here if you would like details of many more jurisdictions and options which may be open to you.

Why Registering Offshore is Important for Middle Eastern Entrepreneurs

Start-ups are increasingly springing up across the Middle East, but they are also increasingly conducting business via offshore havens.

Doing business offshore in places like the Cayman Islands and the British Virgin Islands (BVI) helps allay investors’ common worries. For example, many investors are concerned about the court system in the Middle East, the opaqueness of the regulations, and the unpredictability of enforcement.

A Jordanian example

An example of the difficulty that start-ups can face in the Middle East can be seen with Careem’s entry into Jordan. Last year, along with Uber, the Emirati driving service launched in the region.

Initially welcomed with open arms by consumers looking for an alternative to the country’s often dangerous and service-poor taxis, within months both companies were banned. Despite this, during the time that Careem struggled to stay in business, investors remained unperturbed. This is because Careem is registered in the BVI, and therefore investors are insulated from ramifications.

The founder of Anijad, a major e-booking platform based in the Middle East, confirms that many investors are insistent about offshore registration. Eman Hylooz said: “Investors require it. Being more stable… makes the investors relieved.

Start-up challenges in the Middle East

There has been mounting attention placed on start-ups in the Middle East over recent years. In 2016, for example, at least $815 million was pumped into investments across the region, according to data from Wamda.

The reasons behind the upsurge in entrepreneurial investment are the same as in any other start-up hub across the developed world. The region has an excess of young people, constantly increasing access to faster technology and an increase in consumers wanting to carry out business and personal transactions of all kinds online. It’s the perfect recipe for an explosion of tech start-ups.

In a region that traditionally depends on oil-based business, the new tech hubs offer diversification, job opportunities and potential for high levels of growth.

Start-ups need relative stability

Other countries in the region have fallen behind in this area, following the ‘Arab Spring’ of 2011. However, Jordan has managed to maintain the stability needed to build up its start-up scene. So much so that it’s in third place behind the impressively buoyant tech hubs of Abu Dhabi and Dubai.

Tech start-ups and entrepreneurs in Jordan have historically struggled with regulations that were designed for brick-and-mortar companies. For example, laws can force small start-ups to rent office space rather than allowing them to work from home.

It wasn’t until 2009 that registering offshore became popular as a strategic choice to avoid these regulations. There was a release of millions of pounds to invest across the region after Maktoob, the Arabic web portal, was sold to Yahoo for $164 million.

Discovering that too much red tape and too many restrictions inhibited local investments, investors turned to offshore. They agreed to pump money into the region only if the company registers elsewhere. Over the last five year, this has become the most popular start-up investment strategy in the Middle East.

Further difficulties down the line

Investors are further put off from registering in the Middle East due to the difficulty of closing a company down. There is no specific bankruptcy law in Jordan, so defaulted loans are a long, drawn out process.

Many developed countries offer regulation that’s more user friendly, in addition to reliable court systems. This again encourages registering in other countries. For example, Delaware in the US is enticing to investors thanks to the easy registration process for businesses. The BVI tends to edge out the US as first choice due to the latter’s complex tax system.

Bringing companies home

Some Middle Eastern countries are sufficiently disturbed by the increase in offshore registration that they have begun launching initiatives aimed at pulling companies back home.

For example, Jordan introduced a 0% tax rate for some online-only companies in return for Middle Eastern registration. The initiative has had mixed results as start-ups follow the rules to obtain the tax break in the early stages of set-up and then move abroad.

Lebanon also tried to keep start-ups local when it announced a $400 million funding boost from the central bank for entrepreneurs. However, this made investment far more complicated in the country, increasing valuations and leading investors to get less for their money.

Incorporation of UK & Offshore Companies

Turner Little offer a variety of company structures both UK and offshore, while also providing other services such as company secretarial support, registered office facilities and banking arrangements in the UK and Overseas.

Onshore Companies

Turner Little are a company formations agency with years of experience. We can help you set up a company in the UK or abroad. The following types of company are available for incorporation in the UK:

  • Limited Companies
  • Limited Liability Partnership Companies
  • PLC Companies
  • Guarantee Companies

Offshore Companies

Turner Little can help you set up an Offshore company in many countries abroad. The countries that are available for incorporation are in the following offshore jurisdictions:

  • Aruba
  • Belize
  • Bulgaria
  • British Virgin Islands
  • Cyprus
  • Delaware
  • Dominica
  • Gibraltar
  • Guernsey
  • Hong Kong
  • Isle of Man
  • Madeira
  • Nevada
  • Nevis
  • Panama
  • Seychelles

Our range of offshore companies are also available with an offshore company bank account. A member of our banking team will be able to advise on a suitable bank account.

Please consult the Turner Little offshore companies page for details of the offshore jurisdictions in which we regularly incorporate.

Turner Little

As part of our complete company registration service, Turner Little also provide UK ready made companies and offshore ready made companies. Besides the provision of company secretary and registered office, we also offer a wide range of company services including VAT registration and the change of company name, etc.

Please contact us should you need any further assistance with this subject. One of our team will be happy to discuss options available to you.

Turner Little asks: Why Choose Cyprus for an Offshore Company?

Cyprus is an attractive location for the setting up of offshore company (IBCs). Here Turner Little look at Cyprus and its rewards.

Offshore Cyprus has traditionally been a reasonably attractive location for the setting up of international business companies (IBCs). Certainly before entry into the EU this was the case. Whether joining the EU made it more or less attractive is debatable. An offshore jurisdiction within Europe and having the benefits of a genuinely offshore jurisdiction in terms of confidentiality and so on, would undoubtedly prove very attractive of itself. However, Cyprus being part of the European Union undoubtedly cancels out any of the benefits, certainly in terms of confidentiality, that one would normally try to attain when setting up “offshore”. The exchange of information resulting simply from Cyprus being a part of the EU has effectively destroyed it as an offshore jurisdiction for most. The more recent events experienced by Cyprus own financial difficulties a couple of years ago and more recently the well-publicised and still current difficulties between Greece and the EU make Cyprus, arguably, even less attractive.

Notwithstanding that Cyprus is an independent state at least as far as any other in the EU, the fact is that it was formerly part of Greece and its banking sector is still to this day, with one or two notable exceptions, inextricably connected to Greek banks. The current solution between Greece and the EU is at best a sticking plaster on a very deep wound and the patient, Greece and, vicariously Cyprus, is unlikely to tend to its dressings in the longer term. Therefore the wound will and must eventually re-open and we shall be back at square one.

Does this mean it is unattractive in terms of incorporating there? That depends upon the person incorporating and what they are trying to achieve. Certainly there can be tax benefits though again in the longer term these are likely to be eroded as the Cypriot Government are forced by pressures from within the EU, to raise taxes. If you did incorporate there, would you put your banking arrangements there? If you don’t have much money there and you trust the government to abide by its own bank guarantee scheme, you might. However, there is huge evidence to suggest that the bank guarantee scheme in Cyprus is not worth a jot (to see why read the article at “FBME v The US Treasury” – well worth a read).

Despite all these caveats, what ifs and cautions, it may still be worth considering Cyprus for both company and banking and, having dealt with the negative aspects here are the plus points:

  • Cyprus is a relatively safe jurisdiction for the keeping of assets through IBCs.
  • Double Taxation Treaties providing ample opportunities for international tax planning.
  • Tax incentives created to attract new foreign investment through IBCs. The corporate tax rate is the lowest in the EU.
  • No currency restrictions or exchange control regulations.
  • Strategic location of Cyprus and good infrastructure.
  • Highly skilled human resources and strong pro-business attitude of the Cyprus people, high level of linguistic skills.
  • Cyprus offers stability and security.
  • Cyprus abides by the Transparency Initiatives such as Tax Compliance Act (FACTA) and the OECD requirements.
  • Regulatory regime for fiduciaries and service providers, licensed under the Cyprus Securities and Exchange Commission.
  • Companies tend to be of substance as opposed to mere shells.
  • Legal System of Cyprus

The legal system of the Republic of Cyprus is a blend of common law and statute with stemming historically from the fact that that Cyprus was controlled and administered by the British from the late 1870’s through to 1960, before it gained its independence. The Republic of Cyprus acceded to the European Union in 2004; since when EU law is given supremacy over conflicting legislation of Cyprus as with all other member states of the EU.

Company Law

The Companies Law, Cap. 113, as amended is the legislation which governs and regulates all Cyprus companies. This is mostly a reproduction of the UK 1948 Companies Act, though amended to comply with the requirements of the EU as well as market forces. The Law applies to public and private companies; it contains a set of model articles of association, the so called “Table A” Regulations common for so long in the UK, which can be fully or partially adopted by public or private companies. All newly incorporated companies are required to register with the Cypriot Tax Authorities immediately after their incorporation or at the latest within 60 days from their incorporation. Additionally, Anti Money Laundering legislation imposes Know Your Client requirements in relation to the incorporation of a new corporate entity in the Republic of Cyprus.

Incorporation of a Cyprus Company

Any one or more persons in the case of a private company (or seven or more in the case of a public company) may establish a limited liability company.

A company (with Cyprus interests) or an IBC may be either:

a company whose member’s liability is limited to the nominal value of the shares subscribed for by that member and its articles restrict the right to transfer shares (a “limited liability company by shares)”; or
a company whose member’s liability is limited to the amount that such member has undertaken to contribute to the assets of the company in case of its winding up (a “limited liability company by guarantee”).
A company limited by shares is the most common form of a Cyprus company, whether of local or foreign interests (IBC); there is no distinction between them as there used to be at a time when the companies were called ‘offshore’ and ‘local’.

Name

The proposed name of any company must be approved by the Registrar of Companies whose examination and approval or rejection of the name takes approximately three to six business days from the day of filing of the relevant application.

Objects and Articles of the Company

Each company must have a Memorandum of Association setting out the objects of the company, and Articles of Association, that is to say, the regulations by which the company will be managed in relation to decision making, administration, transfers of shares etc. A company can operate and be active in any legal form of trade or business provided that it does not act outside the scope of its objects; Once the name is approved by the Registrar, a hard copy of the Memorandum and Articles of Association, satisfying the relevant legal provisions, signed by the first shareholders of the company along with forms indicating the company’s registered office address, directors and secretary, is filed with the Registrar.

Share Capital

There are no minimum or maximum share capital requirements for a Cyprus private company. A Public Company however must have a minimum share capital of €25,630; the share capital may be denominated in any currency.

Shareholders

A private limited liability company must have at least one and a maximum of fifty shareholders. A public company must have at least seven shareholders. Shares can be held by trustees/nominees in trust for the beneficial owners, thus safeguarding anonymity. However, the identity of the owners is made known to the lawyers or service providers administering the company for the purposes of the anti-money laundering legislation.

Directors

The directors are responsible for the day to day running of the business and operations of the company. The minimum requirement for private companies is one director, whereas for public companies it is two. There is no restriction as to the nationality of the directors and both physical and legal persons can be directors of a Cyprus company. It should be noted that the residency of the directors is one of the key factors determining the residency of the Cyprus company. For this reason, it is recommended that the majority of the directors of the company are Cyprus residents.

Accounts

Directors are obliged to ensure the proper keeping of books of account necessary for the preparation of financial statements according to the Law. The accounts must be audited by qualified auditors and submitted to the Income Tax Authorities attaching a copy thereof to the Annual Return filed with the Registrar. Consolidated financial statements on the basis of International Accounting Standards must be presented in the case of a group of companies with subsidiary companies.

Public Record

The Cyprus corporate regime allows transparency for all company members, entitling them to inspect the corporate registers of the company. Any interested party may also inspect the company public records kept by the Registrar, upon payment of a prescribed fee.

Registrar of Companies

The completion of the registration procedure normally takes up to ten business days from the day of submission of the appropriate documentation. The procedure of incorporation of a Cyprus company is then considered to be concluded and the Registrar issues the relevant corporate certificates, i.e. Certificate of Incorporation, registered office, directors and secretary, share capital, certificate of shareholders and a certified original copy of the company’s Memorandum and Articles of Association.

The Department of the Registrar of Companies has recently launched an electronic system through which any filings or registrations may be made electronically in order to avoid unauthorised changes in the structure of companies. Further, the filing of Annual Returns can now only be done electronically.

Corporate Tax

A Cyprus tax resident company is taxed on its worldwide income and although net profits are taxed at company level with a 12.5% corporate tax rate, as mentioned above, dividends, interest income, royalty income and profits, from a permanent establishment abroad, are taxed under special rules.

Exempt Income

The profits, which the tax resident Cyprus Company may have from a permanent establishment outside Cyprus, are fully exempt from any taxation, subject to some wide anti-abuse rules.

Any profits or gains made by reason of re-organisations, or the transfer of property and the transfer of shares in exchange for shares in another company are exempt from income tax.

There are no withholding taxes on payments to non-residents in respect of dividends and interest. There are also no withholding taxes on royalties arising from sources outside Cyprus. Royalties arising from the use of an asset in Cyprus are subject to 10% withholding tax.

Conclusion

Cyprus’ status as an international business centre is regaining its reputation and trust after having been severely wounded by the banking crisis of 2013. The country is recovering at a surprisingly fast pace following major restructuring in the banking sector, the creation of new tax incentives attracting foreign investment and other reform which is underway. The Cyprus companies are gaining greater popularity over other jurisdictions and will be preferred by international serious organisations and foreign investors.

Turner Little

Turner Little can assist with the formation of a Cyprus Company and the arrangement of Banking in Cyprus. Contact us for further assistance on +44 1904 783101 or via www.turnerlittle.com.

Reasons to Incorporate an Overseas Company

Turner Little have helped many companies form both in the UK and overseas. Here are their reasons to look to incorporate a company abroad.

Privacy

Personal privacy has been eroded dramatically in recent years to the point where individuals feel that privacy, the right to which is enshrined in the human rights act, no longer exists. Whilst the media would have us believe that anyone using offshore structures such as companies must be up to no good that is simply not the case. Offshore structures in an appropriate jurisdiction which does not readily share information with other countries can be effective in providing both individuals and companies with a level of privacy not achievable in any other way.

Some countries to consider

Belize
Hong Kong
Dominica

Asset Protection

In a world becoming smaller and more litigious by the day, people are finding their hard earned wealth whatever the form it takes, cash, property, vehicles, shares or even intellectual property, more at risk due to the increasingly litigious nature of individuals and companies alike. The correct and appropriate structure offshore can provide both a legal and effective protection to any asset.

Consider structures using:

Belize
Seychelles
Hong Kong
Dominica
British Virgin Islands

International Businesses

Clients from around the world take advantage of reduced red tape and legislation when operating globally by incorporating in the appropriate offshore jurisdiction which offers simplified accounting requirements and which have no restrictions on trading globally. Large Corporations have long ago seen the benefit of moving their international operations to the right jurisdiction, now it can be done by even the smallest international operator. The benefits and savings arising from reduced annual accounting obligations, low or zero corporation tax, maintaining privacy as well as the international flavour derived from being overseas are just some of the things to consider.

Countries to consider include:

Hong Kong
Delaware USA
Nevada USA
Gibraltar

Tax Savings

There are still lots of legal ways in which tax liabilities can be minimised and minimised legally at that. An increasing number of individuals and companies are coming to realise that tax savings can be had by operating through a legal and carefully created offshore structure that offers long term financial benefits to them either as individuals or corporate entities. The precise structure and jurisdictions can only be properly determined following detailed discussion which might involve referral to a specialist tax advisor.

Banking

The time is long gone when the only good bank was a UK bank. Nowadays, banks in the UK and Europe are becoming ever more slaves to anti-money laundering legislation, know your client rules and potential reputational risk which might arise from accepting accounts in certain industries or sectors or from certain individuals. Many times, a bank’s fear of doing something wrong or being involved in something which might be seen by some as not quite right and perhaps at some time in future causing them a problem will lead to clients who have operated accounts perfectly well for many years, having those accounts closed for no apparent reason.

Organisations and individuals finding themselves in this position are increasingly turning to using banks overseas many of whom provide an excellent level of service at similar costs as in the UK and in most cases operating under control of a Central Bank providing similar levels of protection to depositors as can be found in the UK.

Countries worth considering are:

Belize
Seychelles
Gibraltar
Dominica
Malta
Caribbean

Turner Little

Finally, offshore structures or banking are not for everyone. It is well worthwhile taking advantage of an absolutely free confidential discussion with a member of Turner Little staff to ascertain whether there may be benefits for you or not. Contact them on 01904 783101 and speak to one of their consultants.

What type of US business is right for me?

In this article, Turner Little highlight the similarities and differences to help you make your decision, should you acquire an S corporation, or a LLC.

Similarities

Each are pass-through entities with the income/loss taxed on the individual shareholder or member’s personal return. Whether you purchase an LLC or an S Corp, you won’t be responsible for the debts or liabilities. They are also separate entities legally, so no tax is paid at business level. If there’s any tax due then that’s paid at an individual level.

Differences in taking ownership

The Internal Revenue Service restricts ownership of S Corps – they can have no more than 100 shareholders who must all be US residents. They cannot be owned by C Corporations, other S corporations, multiple member LLCs, partnerships or most trusts. Therefore, there is more freedom of ownership than with an LLC whose members may have different distribution rights and classes of ownership.

Differences in management

Owners of an LLC can choose to nominate other members to manage the LLC. LLCs run in this way will closely resemble a corporation, meaning other members won’t be involved in daily business decisions.

S corporations have both directors and officers. In many closely held businesses, the owners serve on the board of directors, overseeing corporate affairs. The owners may also be involved in daily managerial activities.

Other differences

S corporations may have fewer self-employment taxes than an LLC as the owner can still be treated as an employee and therefore paid a reasonable salary. FICA and Medicare taxes are dependant on salary level. . The IRS is actively scrutinising situations where S corporation shareholders minimise their salaries and make distribution in an effort to avoid self-employment taxes.

LLC members who are actively involved in the business must pay FICA and Medicare tax on their earnings. Typical payroll withholdings are not taken out of these payments. Instead, LLC members must pay estimated taxes based on their projected tax liability.

The Medicare surtax will also apply when income exceeds certain thresholds, so S corporation owners only pay the surtax on wages outside of the income threshold. LLC members who exceed this threshold may be subject to the surtax on all income from the business.

There isn’t one rule that is guaranteed to work for you. A CPA or tax attorney can assist you in choosing your most suitable structure, but it’s important to consider the above operational, legal and tax aspects of each structure and apply them to your own situation.

Turner Little

Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agents, Registered Bank Intermediaries and Business Consultants, as well as Trust providers.

Six Pitfalls to Avoid When Forming an Offshore Company

Turner Little are experts at helping you set up an offshore company. Here are 6 pitfalls all companies should work to try and avoid:

1. Don′t buy cheap…

It is true that some incorporation agents offer very cheap offshore company formations and the saying ‘You get what you pay for’ is very true when it comes to company formation.

Cheap companies are invariably missing something over their more realistically priced counterparts, whether that is:

  • Vital Documentation
  • Ongoing Support
  • Banking Arrangement
  • A lack of expertise from the incorporation agent

Buying a correctly structured and priced company will ensure that you receive everything you need, with no hidden extras or surprises after purchase.

2. Don′t use an Unregulated Agent…

Company Formation Agents are nowadays required to be registered with and licensed by HMRC. If using an agent in the UK do make sure that they are Regulated as this affords you a considerable degree of comfort as to their methods of working and the legalities of what they do.

3. Corporate Nominee Directors or Shareholders…

Some incorporation agents take the cheap option when providing Nominee Directors or Shareholders to their clients. They do this by incorporating an offshore company themselves on which they act as Shareholders and Directors and then appoint this company on all of their client companies, calling it a Corporate Nominee Service.

There are a number of downsides to this approach, including:

  • If the Directors of the Offshore Nominee Company are resident in a high tax jurisdiction then your offshore company could be liable for taxes in the Nominee Directors country of residence.
  • Incorporation agents using these practices are often unwilling to identify themselves to banks and other organizations who will invariably need to ID all parties in the company structure which means that your company is then unable to open a bank account or enter into agreements etc.

Using local jurisdiction based individual Directors and Shareholders will offer considerably greater privacy and you will find most individual Nominee Officers understand a need to be identifiable.

4. Banking with Major Banks…

One of the most common reasons for incorporating an offshore company is a desire to maintain your privacy. Banking with major international banks who appear on the high street worldwide can significantly reduce your confidentiality as these organisation are generally leading the way in sharing client data either internally or with external organisations. Private banks tend to offer greater confidentiality and are less likely to share your information with all and sundry.

5. Don′t be Fearful of Anti Money Laundering and Know Your Client Regulations…

We have all noticed the dramatic changes in anti-money laundering and know your client legislation in recent times and fully identifying yourself to an offshore company formation agent may seem to defeat the object. In reality, by identifying yourself you are showing a willingness to comply, showing that you are not ‘up to no good’ and this in turn protects the information that you share with the agent as they can be confident that you are a legitimate client. Once accepted as a client, regulated firms such as Turner Little will do their best to protect and maintain your privacy.

6. Don′t panic when banks ask you to evidence transactions…

Nobody wants to be party to money laundering or terrorist financing and proving that financial transactions are genuine is now part and parcel of everyday life. Banks need to get to know you just like any other business partner and one of the ways they do this is by trying to understand your methods of trading and financial requirements while at the same time satisfying themselves that your transactions are for a genuine and legitimate purpose. Doing this not only means that the bank will help to protect your personal data because you are a valued and reliable client but it means that they can also ensure they provide you with the best possible service.

Turner Little

Turner Little can assist with the formation of companies around the world. For assistance or to discuss your requirements, please feel free to contact us on +44 1904 783101 or visit our Offshore Company Formationpage.

Avoiding Disaster When Using Offshore Companies

Turner Little Ltd look at whether going offshore is the right thing for you as it is not suited to everyone or to all circumstances.

Manifest are the stories of people setting up offshore entities be it for trading or asset protection or simply confidentiality only to find that when they tried to crystallise those assets or draw down any profits they had already disappeared or had become enormously expensive to resume control of. If going offshore is the right thing for you, and it is not suited to everyone or to all circumstances, then here are a few simple tips to avoid you being ripped off or to avoid you making the wrong decision:

The Do’s

  1. Do use a reputable and regulated firm and discuss with them at length your ideas, your aims and your future plans. They should be trying when talking to you to glean as much information as possible about you, your work, your family and your circumstances generally. They should want to know everything about your business and personal circumstances if they are to guide you properly on what you do next. Clearly this involves in-depth and confidential discussions and many firms will charge for what is after all a heavy front end workload. Turner Little Limited will not charge you for this initial consultancy work no matter how long it takes; only once you have agreed precisely what structure you want will any price be quoted. Up to that point you can still walk away without it costing you anything.
  2. Do use a firm which has been about for a number of years. The fact that they have been around for a while should of itself give you some comfort. Be wary of new firms with new web sites. Check that they are Regulated; if not and they are a UK firm be very wary as they are either very tiny firms with extremely low turnover or they are acting illegally.
  3. Do use a UK firm particularly if you are UK based. They are nearer at hand if anything goes wrong and you have a much better chance if it does in resolving any dispute to your satisfaction. Even if you are not UK based as a client it would still be prudent to use a UK agent. This is simply on the basis of the high level of regulation in the UK as well as the information available in the UK on businesses and therefore your ability to check on the firm you have chosen in advance.
  4. Do consult with more than one firm. There are not that many around who specialise in the Offshore-World but they do range from relatively small specialist businesses to huge International accounting practices; needless to say prices vary accordingly. You would be well advised to choose the specialist firm unless you have very deep pockets.
  5. Do compare what you are being offered by different firms and at what cost on a like for like basis. The firm which seems cheaper may not in fact be cheaper. It is very easy in complex structures to be given a basic cost which seems low and attractive only to be surprised by the “add-ons” which may not only be essential but are expensive if any recommended structure is to work as discussed. Try to get an all-inclusive price and be careful that you are not asked to pay for “extras” which you really do not need.
  6. Do make sure that you understand fully all the implications of what you are doing and bear in mind that if the structure you are setting up involves financial transactions you need to be especially careful that what you are doing does not cross the line from tax avoidance to tax evasion. Tax avoidance is legal whilst tax evasion is a criminal offence. A good agent such as Turner Little should be able to tell you if what you are doing is the latter and indeed will refuse to deal with you if it is clear that this is what you intend to commit.
  7. Do make sure that you obtain independent advice on the tax implications of your plans. Turner Little although knowledgeable on taxation in both the UK and several overseas jurisdictions, are not qualified accountants and will refuse to give you tax advice recommending always that you seek independent advice in this area.
  8. Do make sure that you obtain solicitor’s advice on the legalities of what you are doing. Again, Turner Little, whilst experienced and specialist in Company Law, are not solicitors and will not give advice in this area. It is especially important if you are considering a structure for asset protection of property or other assets that you have made sure that you know the implications.
  9. Do expect there to be an annual cost to maintaining an offshore structure.
  10. Do get an indication in advance of what the annual costs will be. These will often vary slightly due to the vagaries of exchange rates or changes in costs abroad but generally speaking they are fairly predictable.
  11. Do make sure that you fully understand any tax implications both at home and in the jurisdiction you choose for your structure. Your agent should be able to give you a lot of information but remember the recommendation to seek independent tax advice.
  12. If you are UK resident do remember that you have a legal obligation to disclose your income derived anywhere in the world to the tax authorities.
  13. If you are trading an offshore company do keep proper records, do make proper agreements even if these are between your company and yourself. You never know when you may want to produce them as evidence of your good intentions in what you were doing to counter any suggestion that you were simply trying to save tax.

The Do Nots

  1. Do not go direct to an offshore jurisdiction to put your arrangement in place – it is very difficult to assess who you are dealing with and whether they have integrity and are honest can be incredibly difficult to judge. It is much too late to find out when you cannot recover your money or do anything else with the structure because you are dealing with the wrong person. A reputable UK agent knows many overseas agents and knows who and who not to engage with in many jurisdictions.
  2. Do not use a jurisdiction where it is mandatory to use a local person as director on your company or as a signatory on any local bank account. Getting things changed or getting money back out just gets much more difficult.
  3. Do not put your company and banking in the same jurisdiction.
  4. Going offshore is not the right thing for everyone or for every purpose – do not do so without first exploring all the implications. If a reputable agent says “it is not for you…” trust him; he is turning money away.
  5. Do not make the mistake of thinking that an offshore structure will save you oodles of tax – it may do but must be correctly legally structured and operated legally to do so. It is very easy to save tax by cheating but that is criminal, the trick is to do so, absolutely legally.
  6. Do not be tempted by cheap fees or deals or offers of massive discounts if you, “do it today.” All firms need to make a profit – a reputable firm not only needs to make a profit but to retain their position in the market place. As for most things in life, “you get what you pay for.” Having said that, there is just the odd occasion particularly approaching deadlines for annual renewals to get a bit of discount from virtually anyone.
  7. Do not expect an extremely high level of confidentiality in all jurisdictions – some now share some information particularly with the USA, UK, and other EU countries. Listen to your Agent in this respect. If he is up to date and au fait with what is happening in the world, he will know what will and will not ordinarily be shared or disclosed.
  8. If placing assets in offshore ownership DO NOT make the mistake of not covering the annual cost and your exit strategy. Again a good agent such as Turner Little Limited, will know how to structure you so that this will not be a problem; they will also be able to advise you on the expected costs of given scenarios even the most unlikely ones.

Finally, tread carefully, take the right advice, stay legal and enjoy becoming an international entrepreneur.

What Are The Benefits of Establishing an Offshore Company?

You should consider all company formation options when starting a new business. By taking this approach, you will ensure that you choose the right creation model for your circumstances, enabling success. You may want to consider setting up your firm offshore, which provides multiple advantages. Turner Little asks: what are the benefits of establishing an offshore company?

Safeguard your assets

You can use an offshore firm as a vehicle to hold a range of assets, from real estate investments to intellectual property (IP). Your company’s IP is important; it gives you the edge needed to succeed in a competitive marketplace. It is essential that you safeguard your business’ IP comprehensively. As well as setting up your firm offshore, you may want to legally shield your IP e.g. by trademarking your branding materials. Turner Little provides the trademarking services necessary to protect your IP.

Reduce administrative duties

If you create a limited company, as its director you will have to handle a number of responsibilities. This includes key administrative tasks such as completing filing obligations and handling tax matters. However if you decide to set up your company offshore you could reduce your administrative duties, as there are often less legal obligations for directors or officers of offshore companies.

Minimise tax obligations

As a UK small business owner, you will be required to pay a number of taxes. By establishing your business offshore, you can minimise your tax obligations. Depending on the territory, you will either pay fewer taxes or enjoy tax-exempt status. Make sure that there are no tax obligation conflicts in the countries you operate in, to handle this matter effectively. Corporation tax can be difficult to navigate, so you may want to employ the aid of specialists such as Turner Little to handle this issue.

Keep information confidential

Setting up an offshore company can prove beneficial if you need to keep certain information confidential. Depending on the jurisdiction, as a non-resident business you may not be required to publish financial information or the details of firm’s shareholders and directors. In the majority of cases, offshore financial jurisdictions will not share this information with third parties unless absolutely necessary e.g. in connection with criminal activity, so it will be very secure.

Streamline establishment costs

It is faster and easier to set up a company offshore, than it is to do so onshore. This means that by pursuing this company creation model, you could benefit from lower set up and maintenance costs. You will only require minimal capital to register your enterprise offshore and in some jurisdictions you can register your firm free of charge.

In other words, if you set up your company offshore, you could position your firm to be more successful. But the process of establishing your venture away from UK borders can be complex, so you may want to enlist the aid of experts to ensure you receive the benefits that adopting this company creation model can provide. As company formation agents with more than 25 years of experience, Turner Little can supply you with excellent offshore company formation services.

Turner Little

Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agent, Registered Bank Intermediaries and Business Consultants, as well as Trust provider. You can receive our monthly newsletter by signing up using the form below.