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Offshore Formation

offshore company formation and licenses

Why do Startups Prefer to Offshore Business?

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As a startup, being advised to go offshore might sound like offbeat advice. However, offshoring is actually becoming a legitimate way to scale results and optimise resources for those who follow a lean startup mindset.

Simply put, offshoring refers to when a business operates in a jurisdiction other than its own. While it can be difficult to get into the nitty-gritty of local laws, accounting and procedures, there are many expert professional agencies that can assist you in the process.

Offshore can be an opportunity for startups

When your business is offshore, you pay fewer taxes, build your brand internationally and can even reach the break-even faster. Despite those benefits, we recognise that startups come with their own risks and moving offshore can be a tough decision to make. In this article, we explain how being offshore can bolster and support your startup in such a way that your business takes off quicker.

The global market is slowly consolidating as needs and behaviours of consumers are becoming more universal. Startups these days are looking to expand out from local markets, which is exactly what an offshore location provides. Moreover, relocation isn’t even necessary, as most businesses perform just as well with remote teams constantly engaging with each other through video conferences and email exchanges.

Here are some reasons why startups prefer offshore sites:

#1 Offshoring is cheaper, and allows you more time to start-up

Sure, starting-up in Silicon Valley can seem like a dream come true. But realistically speaking, the cost difference of setting up there compared to a location such as Hong Kong or Singapore can be drastic.

When you’re spending lesser on office leases and saving on taxes, your capital will last longer, giving your startup more runway. For instance, a sum of money such as $20,000-which will last you 3-4 months in the United States – can be worth an entire year or more if you move to a cheaper country.

#2 You save on taxation

Corporate taxes elsewhere can be much cheaper than your home country, allowing you to save on taxation. This bears plenty of repeating, as it is a major reason why startups choose to be offshore. Most offshore jurisdictions offer external businesses zero taxation. Places such as Hong Kong have no foreign exchange controls and encourage businesses from other countries.

#3 Asset protection in a stable environment

While operating out of an offshore location, it’s important to pick a location that has a stable political and economic climate. Starting a business in a stable law system environment will ensure that you can stock your assets without fear in the future – especially if conditions aren’t quite right in your home country.

#4 If you’re an international team, you’ll do better and more

Especially if your start-up team is from different parts of the world, a set-up in another location makes sense. This allows you to network across the world, and diversify your team and perspective. It also builds a more international team culture which will only benefit their commitment and productivity.

#5 Ease of patenting in some offshore locations

If you’re a business that requires patenting, consider an offshore site in a location where intellectual property rights are more lax. Cyprus, for example, is a respected location which is famous for offshore businesses looking for easier patenting rules.

#6 Easier to find angel investors

Some locations are already more favourable for businesses in certain sectors. If you start-up such offshore locations, the probability of finding good funders increases, as they are already well versed with the domain and trust similar businesses in the area.

#7 If you’re a niche business, you’ll find it easier to fit in

Legislation in some countries is more permissible to certain kinds of businesses. So if your business is niche, an offshore location in a country with good legislation makes complete sense for you.

All aside, it is crucial to be well versed with legislation laws, accounting and taxation in the jurisdiction where you decide to set up your offshore business. While it is possible to do your homework, it is advisable to use a professional agency, such as Ocfam.

At Ocfam, we are experienced professionals who have expertise in setting up your offshore businesses. We assist you right from the time of setting up a bank account to helping you audit and account. We provide tailored solutions for financial services in global licensing, compliance and risk management, payment solutions and taxation. Moreover, some offshore jurisdictions only accept company registrations from trusted agents.

Give us a call, send a message, or visit any of our offices to know more about our solutions for your business, today!

Benefits of Forming an Offshore Company

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Setting up an offshore company and maintaining it is a very simple process, quick, and seamless. The primary benefits of starting an offshore company relate to saving taxes and cutting down costs. However, there are numerous other benefits that assist businesses to conduct operations easily and pave the way for growth. Listed here are some of the main benefits of having an offshore company:

Asset protection:

Offshore companies help in protecting the assets from creditors and claimants. This is possible because of jurisdictional sanctuary provided in those countries. Even financial companies have clauses in their acts that make it unfeasible for any parties to foist lawsuits or file a claim to a company’s assets.

Privacy of identities

Identities are protected and are not revealed to the public. This is a boon for companies that seek to protect their capital and investments from both internal and external threats. As no requirement exists for publishing financial statements, declarations, or annual reports, companies can rest assured in the safety of these investment havens and focus on growing their business.

Tax optimization and savings

Offshore companies benefit from tax optimization because of the tax neutral jurisdictional regions. In other words, they are tax exempt in the country of incorporation. In some cases, they pay a low or nil tax when used as a holding company. When properly administered, companies can succeed in complete elimination of the tax burden.

Low administration costs

Due to economies of scale and automated systems, administrative services come at a very reasonable fee. The organization does not have to worry about setting up a separate office and hiring staff. There are professional agencies that provide a range of services such as virtual office, accounting, secretarial services and more at affordable rates.

Low capital and maintenance requirements

Structuring the capital often includes minimum paid up capital requirements. This is because company laws in offshore locations are designed to maximize benefits and provide for operational flexibility. Moreover, maintaining an offshore facility tso comes at no extra cost as it falls under the purview of registered agents who are experienced in this business.

We help you form an offshore company

Being the leading licensing and consultancy firm for financial services companies, Ocfam offers custom solutions, which includes global licensing, audit and accounting, compliance and risk management, taxation, banking, payment solutions and corporate consultancy. Contact us today to get started!

Offshore Company Formation

What can you do with your offshore company?

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Setting up a company in an offshore jurisdiction is a simple step and is no different than starting your company back home. However, when it comes to international business, the company should comply with the laws of both the offshore country and the resident country. This can sometimes cause confusion if there is no professional support and advise to navigate through the murky world of tax compliance.

Every country has its own company law and an independent tax system. Countries with the lowest corporate tax rates are popular destinations for entrepreneurs undertaking offshore company formation. By incorporating companies in a low tax or tax-exempt jurisdiction, entrepreneurs take advantage of the flexible tax regime to generate more revenue growth and cut down on costs. Offshoring is emerging as the only alternative to companies where tax planning or tax outgo is a significant aspect to address. Therefore, setting up an appropriate corporate structure in a suitable jurisdiction helps in making a world of difference.

Moreover, registering an offshore company allows you to take advantage of international opportunities, grow your profits, and protect your assets among other features. Of course, it may seem daunting to work with foreign and international laws, regulations, and tax codes, but then different business structures exist to help make the move a seamless one. In any case, it is a profitable choice. Many countries encourage, assist, and welcome foreign nationals to own and operate a business. In fact, most of the offshore destinations have benefitted from the influx of capital, talent, and resources.

Of course, there is a stigma attached to offshore companies because of the fraudsters and tax evaders trying to capitalize on legal loopholes. This has given a cause for tax authorities to increase their vigil and scrutinize every business move. In some countries, nationals have to remit tax on all of their profits, whether the income is sourced within the country or outside. This is where the advantage of using a professional corporate services firm lies. Every year, thousands of businesses incorporate abroad for legitimate and legal tax strategies and for protection. They are also looking for the best comparative advantages, geographic advantages, globalisation and more.

We assist in structuring an offshore company and help them get up and running in quick time due to our experience and knowledge of the different company law requirements. Proper planning is necessary to ensure compliance with all jurisdictional requirements and obligations.

As a company with a global presence to accommodate our clients, wherever they choose to establish in the world, Ocfam provides complete licensing, accounting and auditing services to those starting an offshore company. We support and help you sail through the challenges that an offshore expansion process entails. Get in touch with us to know more!

Steps to Incorporate a Hong Kong Offshore Company

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There are many reasons why a business may want to expand into an offshore office, quite different from the usual narrative of tax evasion. Today, the Asian market offers technology and services that are unrivalled in the world, and an offshore company can be ideal for conducting international trade, for investment as well as asset protection.

Setting up an offshore company in Hong Kong is quite straightforward. Hong Kong’s low tax regime, absence of foreign exchange controls, and political and economic stability offers offshore companies a business haven.

You can register a new company in Hong Kong, or purchase an already existing shelf company. In this article, we tell you how to register a company with a simple step-by-step procedure, to help you start the next chapter for your business venture.

Step 1: File an application with the Companies Registry for your Hong Kong company name approval.

Step 2: Submit the incorporation documents to the Companies Registry. Your checklist here includes:

  • Hong Kong Incorporation application form
  • Hong Kong offshore company’s Articles
  • Copy of passport, proof of overseas residence, reference letter from the bank (for non-resident shareholders or directors)

OR

Copy of Hong Kong identity card (for Hong Kong resident shareholders or directors)

  • Copy of parent company registration documents (for corporate shareholders)

There can be any number of Directors and up to 50 shareholders. A sole director can be a shareholder as well. Appointing a Company Secretary is mandated by Hong Kong law – please refer to the Hong Kong Company Setup Guide for more specifications.

It can take between 4-7 working days for the application to be processed and for the Hong Kong offshore company to be incorporated.

Step 3: Within 14 days of the Hong Kong incorporation, you must submit the following documents to the Companies Registry:

  • Appointment notification of Directors and Secretary
  • Consent to act as Director
  • Registered address notification
  • Other documents, as requested by the Companies Registry

Step 4: Open a corporate bank account. You can choose from local banks such as HSBC, Hang Seng Bank and Bank of East Asia, according to your banking needs. Other factors to consider include the reputation of the bank, services offered, minimum deposit, availability of future support such as loans and trade financing and monthly fees.

Offshore companies need to submit a Certificate of Incumbency and Certificate of Good Standing in addition to the usual documents.

Step 5: Obtain a Business Registration Certificate. For this, you must register with the Inland Revenue Department within one month of the Hong Kong incorporation.

Step 6: Apply for Business Licenses (if applicable). If your business activities require a license, you have to obtain the required ones before you start business operations.

Operations such as dealing and advising on securities, future contracts, foreign exchange trading, providing automated trading services, security margin financing and asset management services require a license. For a complete list, please visit the Business Licenses guide.

Compliance Requirements

Please note the below compliance requirements for Hong Kong businesses, which includes an annual audit of company accounts (Form NAR1).

Maintaining compliance is essential for keeping your business legitimate and up-and-running. You must intimate the Companies Registry of any changes to the company and its members, file annual returns, and file tax returns with the Inland Revenue Department. Maintain company records, accounting records and all other business documents, and renew your business registration certificates as required.

You can also hire a professional agency like Ocfam to register your business and keep up with the compliance rules.

 

If you follow the steps we’ve mentioned, your business should be up and running in no time without any hassles or complications.

 

Get started today

As a leading licensing and consulting firm in Asia and Asian Pacific region, Ocfam is committed to offer the support you need to incorporate an offshore Hong Kong company. Right from collecting the required documents to obtaining the Hong Kong approval of name for your business, to filing paperwork, we assist you at all stages. Moreover, we can help you open a bank account, get your business licenses, and handle the company’s ongoing compliances.

 

Looking to register an offshore company in Hong Kong? Get in touch with us for a free initial consultation. Call our support team to get started with the process today!