Creating a Company

Modern day companies have many different components that must all be working well and working together if the company is going to succeed and be prosperous for any length of time. This idea extends from the core aspects of the business such as manufacturing and sales, to the less tangible aspects such as human resources. If each department is not working well together there will be problems with the business.

Whilst this fact may be very evident in large, well-known 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 critical stage of the building procedure since everything else depends on them being laid correctly. The same idea can be applied to the commercial world.

Setting your business off on the right foot is extremely important, and is especially crucial during times of economic instability. By establishing your company in an intelligent and forward thinking manner you will be able to enjoy the rewards long into the future.

Why get help creating a company?

As previously mentioned, the creation of your business is a very important process and should not be taken casually. It can also be a complicated process that can sometimes go wrong without the correct level of suitable knowledge and experience.

If a complex component 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 money on your most valuable resources to ensure they operate correctly. This same theory is true when it comes to establishing a company.

Perhaps the most problematic aspect in creating a new business is the level of paperwork that is needed in regards to legal problems. Not only do you have to take into account the legal boundaries of the marketplace you will be operating 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 a specialist will be able to help you plot a course through.

It is also becoming more involved and complex to setup a business. As new markets emerge, new trade links are brokered and new legal clauses are defined you need to keep up-to-date with the relevant requirements. Most of us do not have time to do this, so employing expert help offers an easy way to access this expertise.

Different countries and regions are accessible for offshore company formation, each one bringing individual rules and financial benefits.

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. Although almost all businesses work on the premise of bringing in more income 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 arena. Companies vary a great deal, in terms of the quantity of employees, the industry they work in and also their sales environment, so different business models have been created to cater for this broad variety.

A few corporate structures are outlined below.

Limited Liability Company (LLC)

A Limited Liability Company, abbreviated as LLC, is a form of company 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 accountable for a fixed sum which usually reflects the amount they have invested in the company.

A Limited Liability Company shares qualities with both a partnership and corporation business structure. It provides its owners with limited liability (like a corporation) but permits pass-through income taxation (like a partnership). This makes it financially advantageous to its owners.
There is also much less paperwork involved in running an LLC than a corporation, where necessary levels of administration and record keeping are exceptionally high. It is worth noting however that the levels of limited liability protection offered by an LLC do not cover all possible circumstance.

Limited company (Ltd)

A Limited company is similar to an LLC as a business entity, however it is limited to use in certain nations due to the differences in national laws. Limited companies may be created in the United Kingdom, the Republic of Ireland or Australia. It is the most common form of privately held company in use.

A limited company offers limited liability to its shareholders by making them personally accountable for only the unpaid sum remaining on their own shares if the company were to go bust. This amount refers to what was unpaid on the shares when they were issued rather than any monies exchanged when shares were sold. Since shares are normally issued as being fully paid, the shareholders are no longer personally liable.

Many current businesses look to Seychelles incorporation for simplified financial as well as currency flexibility.

International Business Company (IBC)

An International business company, abbreviated to IBC, is a form of offshore company that isn’t allowed to trade within the country or jurisdiction where it was authorized. The specific rules that govern an IBC will depend on where it was incorporated, although they generally share certain traits, such as greater flexibility of operation and laid back trading regulations.

Offshore Companies

One idea that you may consider when selecting what type of company you are going to start 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 usually used as one part of an overall tax planning strategy. Taxation rules vary between the different offshore financial centres available, although organisations will generally pay tax as a fixed yearly sum that is inconsequential in relation to the levels of taxation applied in other parts of the world. This potential tax planning makes them an incredibly attractive business proposition.

These tax discounts can be offered by the governments of offshore financial centres since the businesses that gain from them are not trading within that zone. This means there is not the same need for administrative support and commercial infrastructure that would be expected by onshore businesses.

There are other advantages to establishing an offshore company, such as the levels of privacy that can be enjoyed. Business operations can be carried out under the company name without needing to release the names of the key people in the company. Offshore companies are normally not required to submit the levels of paperwork that domestic companies do, and as such are less complicated to run.

Since the regulations for offshore companies are easily accessible, it gives potential new business owners the chance to choose which rules they want their business to be governed by. Certain types of business might be better suited to incorporation in a particular area. Owners can also weigh up short term benefits, such as easy incorporation laws, against longer term benefits such as relaxed requirements on record keeping.

Typical Uses

IBC or other offshore companies will be commonly used by businesses where tax is a major concern. These may include property companies that are hoping to avoid capital gains tax and inheritance tax, or by investment companies that don’t want to pay tax on investment interest made. They can also be beneficial when employing expatriate staff since tax can be averted at source.

Limited companies are the most popular form since the actual register Ltd company procedure is still cost-effective and relatively simple.

Possible locations for offshore companies

There are many areas of the world that can be defined as an offshore financial centre due to the ambiguous nature of the phrase. However, there are a particular few that stand out above the others, including Bermuda, The British Virgin Islands, The Cayman Islands, Luxembourg and The Seychelles.

Two of these centres are lightly 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 should not 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 region is made from licensing agreements for offshore companies.

Seychelles

The Seychelles is a small territory located in the Indian Ocean, off the Eastern shore of mainland Africa and to the North of Madagascar. Seychelles is the wealthiest 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 alternative to consider when creating your own business is to not create it at all! It is possible to simply buy a new company “off the shelf” and become incorporated incredibly rapidly. You do not get to choose the name of your organisation, but if that is not a critically important factor then there are great advantages to buying a company in this way. Due diligence must be performed, and payment must be made, but if that goes smoothly you can be in business instantly.

Establishing a company like this could also reduce the difficulties that are sometimes encountered when registering a new company. Using a reputable corporate services provider to manage the paperwork required will get around this problem. It is not the best solution for everybody but it is an alternative that is worth consideration.

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 advantageous 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. As always, every circumstance is different and will have specific requirements.

There are legal proceedings that need to be undertaken, and the amount of paperwork required is likely to be a lot higher than registering an equivalent offshore company. The workload alone may be challenging but there are plenty of corporate services companies that are experts in this field and can be of use. They should be part of your planning when setting up a new business.