Beyond Low Prices: How to Choose the Best Offshore Setup

Looking to incorporate offshore? Finding the cheapest country to start a business or buy a ready-made company sure needs careful thought. Below, you will find some considerations from International Wealth to make things easier for you. 

Remember that the total costs for offshore company formation can be much higher than the basic incorporation fee. Often, the best jurisdictions to register an offshore company are by far not the cheapest.

Cheap offshore setups can lead to financial headaches

When browsing for the cheapest place to start a business, you will often see the same names: Belize, Marshall Islands, Nevis, Seychelles, and other island jurisdictions. Yet, cheap doesn’t always mean profitable.

Many people who move their businesses offshore miss important factors. These may include the automatic exchange of financial information between countries, the FATF blacklist, CRS, and bankers’ concerns. Yet, ignoring the laws and rules of offshore incorporation may potentially hurt your business by making a cheap setup very costly.

Say, most businesses need a bank account. However, some offshore agents don’t have the right connections to help their clients with this. True, you will save a few hundred dollars on a cheap company formation, but it might lead to high legal fees for setting up a bank account. To avoid multiple checks, it’s often easier and cheaper to use the same agent for both incorporation and bank account opening.

If you’re offered an extremely cheap ready-made offshore company, find out why it’s so inexpensive. One of the possible explanations is that the agent might have a bad rep and poor knowledge of global financial institutions. Beware, as buying or incorporating a very cheap offshore company may lead to a lot of time, money, and effort to fix the resulting issues later.

Avoiding risky jurisdictions and hidden costs

When choosing the best place to incorporate offshore, you should keep several important issues in mind. There’s no single best country for everyone. So, look at prices, fees, and asset protection laws in your chosen jurisdictions. Also, think about anything that might affect your company’s reputation.

Offshore jurisdiction: reputation issues

The reputation of an offshore jurisdiction can’t be underestimated. Blacklists from the EU, USA, FATF, and OECD make it hard to set up a bank account if your company is in a blacklisted zone. Banks do their best to avoid risks and often refuse clients from these areas. Hence, it’s always better to choose a jurisdiction that is white-listed.

In 2024, some of the most reputable and cost-effective places for starting an offshore company are Belize, Nevis, Seychelles, Panama, and Marshall Islands.

Offshore jurisdiction: price matters

The cost of setting up an offshore company will impact your business’s bottom line. Buying one cheap online is both risky and potentially wasteful. Here’s what you should pay close attention to when choosing from cheap offshore company formation offers:

• The reputation and experience of the seller or intermediary.

• The costs of transferring the company from a cheap offshore zone to a more reputable one (redomiciliation). This is usually more expensive than starting from scratch.
• Local regulations for offshore business entities, including requirements for a registered office address, economic substance, taxes, registered agent services, and banking.

Here are some other valuable expert recommendations for you:

• Choose your offshore jurisdiction carefully. 
• Avoid hollow promises and the lowest headline figures for incorporation. 
• Double-check information and stay updated. 

Many gray schemes for extracting money via offshore structures have led to high-profile lawsuits or fraud cases. Don’t fall victim!

Shelf companies vs. new incorporations

Sometimes, it’s much easier to buy a ready-made shelf company than form a new offshore one from scratch. The time saved often justifies the extra costs.

You can quickly buy a ready-made offshore company from many reputable agents at a reasonable price. When you compare these costs with those of forming a new company, you might be pleasantly surprised. Besides the small cost difference, it saves you a lot of time. However, finding trustworthy offers is key here.

In many cases, buying a ready-made offshore company with all the necessary documents is the fastest and cheapest option. These companies often come with an existing bank account, which saves you weeks in launching your project. Just make sure your agent is reputable and all documents are included.

Buying a cheap ready-made company: risks and solutions

1. No Bank Account: The company exists on paper but can’t operate without a bank account.

Solution: Ask the agent about ready-made companies that come with already opened bank accounts.

2. Poor Jurisdiction Reputation: Banks refuse services due to the jurisdiction’s poor reputation.

Solution: Choose a reputable agent who understands your business model. For example, St. Vincent used to be good for forex companies, but as of 2023, it is no longer an option due to regulatory changes. 

3. Bank Scrutiny: Banks ask many questions and require proof of business operations and documents, which can be time-consuming.

Solution: Be prepared! Ask your agent about substance requirements and start gathering documents early. Audited financial statements, Economic Substance Reporting forms (ESR), bank statements, corporate websites, dedicated phone lines, and utility bills usually satisfy banks. An experienced agent will help you prepare all this in advance.

The above issues show that a cheap ready-made company might look good on the surface but lack real value. So, always make sure you’re getting a company that will operate smoothly and meet your business needs.

Top mid-shore and offshore jurisdictions around the world

In Europe, you will find several mid-shore jurisdictions (Switzerland, Great Britain, and the Netherlands), which come with the necessary tax incentives and excellent banking services. Asia-Pacific, Western Asia, and the Americas also have attractive options, including China, Hong Kong, and the UAE. Island states like Belize, Nevis, and the British Virgin Islands offer cost-effective offshore company formation with minimum initial capital requirements and tempting tax benefits. As you can see, the choice is rich, and it is yours to make!

Expert offshore advice is just a click away – contact International Wealth today!

Feeling overwhelmed by the choices? Don’t be! The International Wealth team is here to help you make the right decision. Contact us for a personalized consultation or simply follow this link for more info!