Creating a Company
Modern day companies have many diverse components that must all be operating well and working together if the company is going to succeed and be prosperous for any length of time. This idea reaches from the core aspects of the business such as production and sales, to the less tangible aspects like human resources.
Whilst this fact may seem very evident in large, established businesses with many employees, departments and offices, it is also true of smaller companies that are still in their infancy. To draw an analogy with house building, setting the foundations is the most crucial stage of the building process since everything else depends on them being laid correctly.
Setting your business off on the right foot is incredibly important, and is especially crucial during times of financial instability. By creating your company in an intelligent and forward thinking manner you will be able to reap the rewards long into the future.
Why get help creating a company?
As previously mentioned, the creation of your business is a highly important process and should not be taken casually. It can also be a complex process that can easily go wrong without the right level of suitable knowledge and experience.
If a complex part on your car were to break, or if a safety critical system such as the boiler in your house were to fail, you would hire an expert to undertake the required work. It makes sense to spend funds on your most valuable resources to ensure they operate correctly.
Perhaps the most problematic aspect in setting up a new business is the level of paperwork that is necessary in regards to legal issues. Not only do you have to take into account the legal boundaries of the marketplace you will be working in, but also any specific legal requirements of the geographical area you will be operating in and any specific needs of your employees. It can be a legal minefield, but an expert will be able to help you navigate through.
It is also becoming more involved and complex to setup an organization. As new markets emerge, new trade links are forged and new legal clauses are defined you need to keep up-to-date with the relevant requirements.
From start to end the system of offshore incorporation can end up being swift since companies can be purchased off-the-shelf.
Company Distinctions
Before you begin to setup your own enterprise you should understand the different types of company that can be created and the key distinctions between them. Whilst almost all businesses operate on the premise of bringing in more money than they expend, the structures that exist underneath the surface are fundamentally different.
These corporate set ups exist to fulfill the broad scope of circumstances that cover the business world. Businesses vary a great deal, in terms of the number of employees, the industry they work in and also their sales setting, so different business models have been created to cater for this broad assortment.
A few corporate structures are outlined below.
Limited Liability Company (LLC)
A Limited Liability Company, abbreviated as LLC, is a form of business where the owners have only limited liability. In very basic terms, anybody who has total or partial ownership of an LLC can only be held financially liable for a fixed sum which usually reflects the amount they have invested in the business. An LLC is sometimes referred to as a WLL, or company With Limited Liability.
A Limited Liability Company shares characteristics with both a partnership and corporation business structure. It provides its owners with restricted liability (like a corporation) but allows for pass-through income taxation (like a partnership).
There is also much less paperwork called for in running an LLC than a corporation, where required levels of management and record keeping are incredibly high. It is worth noting however that the levels of limited liability security offered by an LLC do not cover all possible circumstance. In cases where the law has been broken, for example fraudulent business activities, a court retains the right to hold the owners personally liable beyond their liability limit.
Limited company (Ltd)
A Limited company is similar to an LLC as a business entity, however it is restricted to use in certain nations due to the variations in national laws. Limited companies can be created in the United Kingdom, the Republic of Ireland or Australia.
A limited company offers limited liability to its shareholders by making them personally accountable for only the unpaid amount remaining on their own shares if the business were to go bust. This amount relates to what was unpaid on the shares when they were issued rather than any funds exchanged when shares were exchanged.
Information about creating offshore companies can be found at this website as well as via regional business advice centres and workshops.
International Business Company (IBC)
An International business company, abbreviated to IBC, is a form of offshore company that isn’t allowed to trade inside the country or jurisdiction where it was registered. The specific rules that govern an IBC will depend on where it was incorporated, although they generally share certain characteristics, such as greater flexibility of operation and relaxed trading laws.
Offshore Companies
One idea that you might consider when choosing what type of company you are going to launch is choosing to create an offshore company. An offshore company is one that is incorporated in an offshore financial centre, or one that is incorporated in a region where it does not carry out its main functions.
Benefits of creating an offshore company
Offshore companies are typically used as one element of an overall tax planning strategy. Taxation rules differ between the different offshore financial centres out there, although organisations will usually pay tax as a fixed annual sum that is inconsequential in relation to the levels of taxation applicable in other parts of the world. This possible tax planning makes them an amazingly attractive business proposition.
These tax discounts can be offered by the governments of offshore financial centres since the businesses that benefit from them are not trading within that area. This means there is not the same demand for administrative support and commercial infrastructure that would be needed by onshore organisations.
There are other advantages to establishing an offshore company, such as the levels of anonymity that can be enjoyed. Business procedures can be carried out under the company name without needing to release the names of the key members in the company. Offshore companies are normally not required to submit the amounts of paperwork that domestic companies do, and as such are less difficult to run. This doesn’t apply to regulated businesses.
Because the regulations for offshore companies are easily available, it gives potential new business owners the chance to select which rules they want their enterprise to be governed by. Certain types of business may be better suited to incorporation in a particular region.
Typical Uses
IBC or other offshore companies will be typically used by businesses where tax is a primary concern. These may include property companies that are hoping to avoid capital gains tax and inheritance tax, or by investment companies that do not want to pay tax on investment interest made. They can also be advantageous when hiring expatriate staff since tax can be avoided at source.
You can use the services of any solicitors firm to register company information for new businesses or you can tackle the procedure by your self.
Possible locations for offshore companies
There are many parts of the world that can be defined as an offshore financial centre due to the ambiguous nature of the expression. However, there are a certain few that stand out above the others, including Bermuda, The British Virgin Islands, The Cayman Islands, Luxembourg and The Seychelles.
Two of these locations are briefly profiled below:
British Virgin Islands
The British Virgin Islands, also known as just the Virgin Islands or BVI, is a British overseas territory in the Caribbean Sea. They shouldn’t be mistaken with the U.S. Virgin Islands. Whilst a large portion of residential income is powered by tourism, more than fifty percent of the governmental income of the territory is derived from licensing agreements for offshore corporations. It is thought that around 40 percent of the planet’s offshore companies were incorporated in the British Virgin Islands.
Seychelles
The Seychelles is a modest territory located within the Indian Ocean, off the Eastern shore of mainland Africa and to the North of Madagascar. Seychelles is the richest nation in Africa in terms of GDP and this is largely driven by the record setting offshore industry in this region.
Off-the-shelf companies
Another option to consider when creating your own company is to not create it at all! It is possible to actually buy a new company “off the shelf” and become incorporated very quickly. You do not get to pick the name of your company, but if that is not a critically important factor then there are great benefits to buying a company in this way. Due diligence must be carried out, and payment must be made, but if that goes smoothly you can be in business instantly.
Establishing a company like this may also reduce the difficulties that are sometimes encountered when registering a new business. Using a reputable corporate services provider to handle the paperwork required will get around this problem.
Creating a company in the UK
If after looking through this article you do not feel that the formation of an off-shore company would be beneficial to you and your business then you can still get assistance registering a company in the United Kingdom. You might not be able to take advantage of the tax benefits and privacy afforded by an offshore company, but you may feel far better having the company registered onshore.
There are legal proceedings that need to be undertaken, and the amount of paperwork needed is likely to be a lot greater than registering an equivalent offshore company. The workload alone may be daunting but there are plenty of corporate services firms that are experts in this field and can be of use. They should be part of your planning when setting up a new business.