Offshore Company Formations: Advantages and Disadvantages

In recent years the term "offshore company" has been a very common one in the business world. Now, who does not want to expand their business overseas! Thus, from a business perspective, it is considered to be a smart decision as it not only increase the business revenue but also improves the brand value of the Company. Although the result for going offshore Company formation could be devasted, if proper care not been taken to overcome the disadvantages it has.

Now, What is an offshore company?

As the term "Offshore" refers to a location which is in another country. Thus an offshore company is a company which is registered in a foreign country & it also performs its operations there for the sake of legal, tax & financial benefits.

Though the concept of forming an offshore company often misleads us. Many of us think that it is done so that one can evade from paying his taxes or to run some unethical businesses. But that's not true. Rather many reputed companies & business leaders are enjoying this powerful business tool to improve their business.

Now, the most obvious questions come......

Why should I go for Offshore Company Formation? How my business could get benefitted from this?

There are several advantages of offshore business formations.

Firstly...

Financial Privacy: Offshore company can give you financial privacy & protect you from unwanted hustles. High chances are there of getting leaked your details of having a good amount of money in a specified bank. Nevertheless, if you have an offshore company it deliberately adds an extra layer of protection to your financial privacy.

Tax Benefits: There are many offshoring destinations which offer special tax benefits, to attract foreign direct investments and stimulate growth. Even there are some countries where you do not have to pay tax at all. This certainly holds a significant amount of capital which is one of the best features of offshore company formations.

Asset Protection: "Own nothing, control everything" is another advantage of having an offshore company. The legal structure of offshore company offers a strong layer of protection from creditors, plaintiffs, attorneys, family members, ex-spouses, etc. You can immune your asset by having an offshore company from people who legitimately have a claim.

Banking Infrastructure: Another advantage of having an offshore company could be a better banking infrastructure. It is often found that there are some difficulties in accessing all the features of a national bank possesses. Unlike an offshore bank which gives you a better banking infrastructure & your business get benefitted.

Are there any disadvantages?

Now just like the advantages, there are some drawbacks of having an offshore company.

Cost: Setting up a new offshore company is not inexpensive. Rather it is expensive. The new registration process, legal fees & other stuff consumes a heavy amount of capital. Moreover, there are few jurisdictions where there is a "minimum investment" amount is set, which is quite a lot of money.

Obtaining Loans: The major drawback of forming an offshore company is the consequence of the financial privacy it gives. The way it protects your financial privacy also makes it impossible for the investors to determine the net worth of your company which eventually makes them reluctant to invest any further.

So just like any other business decisions, you have to be very careful while going for an offshore business formation. Choosing the best jurisdiction & a reputed bank are two major determining factors here. It is always preferable to consult with a trustworthy & expert business advisor who specializes in foreign investment before making such a move.