Creating a Company
Modern companies have many different components that must all be working well and working collectively 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 manufacturing and sales, to the less tangible elements such as human resources.
Whilst this fact may seem very evident in large, established businesses with many employees, departments and office buildings, 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 procedure since everything else depends on them being laid correctly. A similar idea can be applied to the commercial world.
Setting your business off on the right foot is incredibly important, and is especially crucial during times of economic instability. By creating your company in a sensible and forward thinking manner you will be able to reap the benefits long into the future.
Why get help creating a company?
As previously mentioned, the creation of your company is a very 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 appropriate 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 carry out the required work. It makes sense to spend money on your most valuable assets to ensure they function correctly.
Perhaps the most problematic aspect in setting up a new business is the level of paperwork that is required in regards to legal issues. Not only do you have to take into account the legal restrictions of the marketplace you will be operating in, but also any specific legal requirements of the geographical region you will be operating in and any specific needs of your workforce.
It is also becoming more involved and complicated to setup an organization. As new markets present themselves, new trade links are forged and new legal clauses are defined you will need to keep up-to-date with the relevant requirements. Most of us do not have time to do this, so hiring expert help offers an easy way to access this expertise.
It is critically important that owners of an offshore business know the laws that govern the jurisdiction of their company.
Company Distinctions
Before you begin to setup your own enterprise you should know the different types of company that can be established 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 essentially different.
These corporate structures exist to satisfy the broad scope of circumstances that cover the business arena. Companies vary a great deal, in terms of the number of employees, the industry they work in and also their sales setting, so different business solutions have been created to cater for this broad variety. Different situations require different business strategies, and these in turn require different business structures.
A few business 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 extremely basic terms, anybody who has total or partial ownership of an LLC can only be held financially liable for a predetermined sum which usually reflects the amount they have invested in the business.
A Limited Liability Company shares characteristics 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 fiscally advantageous to its owners.
There is also much less paperwork involved in running an LLC than a corporation, where necessary levels of management and record keeping are incredibly high. It is worth noting though that the levels of limited liability security 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 restricted to use in certain countries due to the variations in national laws. Limited companies can 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 amount remaining on their own shares if the business were to go bust. This sum refers to what was unpaid on the shares when they were issued rather than any monies exchanged when shares were exchanged. Since shares are typically issued as being fully paid, the shareholders are no longer personally liable.
In terms of offshore companies it should be obvious that Seychelles incorporation pertains to incorporation of an offshore company in the Seychelles.
International Business Company (IBC)
An International business company, abbreviated as 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 control 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 laws.
Offshore Companies
One idea that you may consider when selecting what type of company you are going to launch is choosing to register an offshore company. An offshore company is one that is incorporated in an offshore financial centre, or one that is incorporated in an area where it does not carry out its primary functions.
Benefits of creating an offshore company
Offshore companies are typically used as one part of an overall tax planning plan. Taxation rules differ between the various offshore financial centres out there, although companies will usually pay tax as a fixed annual sum that is inconsequential in relation to the levels of taxation applied in other parts of the planet.
These tax savings can be offered by the governments of offshore financial centres because the businesses that gain from them are not trading within that zone. This means there is not the same need for administrative support and infrastructure that would be needed by onshore businesses. This “no trade” rule is a requirement and offshore companies must follow it, depending on the jurisdiction they function in.
There are other benefits to creating an offshore company, such as the levels of anonymity that can be enjoyed. Business operations can be carried out under the company name without having to release the names of the key people in the company. Offshore companies are generally not required to submit the amounts of paperwork that domestic companies do, and as such are easier to run. This doesn’t apply to regulated businesses.
Because the regulations for offshore companies are readily 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 may be better suited to incorporation in a particular region. Owners can also balance 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 firms that do not want to pay tax on investment interest earned.
There are three forms that must be submitted before you register Ltd company that must be sent to Companies House; Form IN01, Memorandum of Association as well as Articles of Association.
Possible locations for offshore companies
There are many parts of the world that can be described 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 centres are briefly profiled below:
British Virgin Islands
The British Virgin Islands, also known as simply 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 percentage 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.
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 principally driven by the record setting offshore industry in this region. Future economic growth is forecast.
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 incredibly swiftly. You do not get to choose the name of your organisation, but if that is not a vitally important aspect then there are great advantages to buying a company in this way.
Establishing a company like this may also reduce the complexities that are sometimes encountered when registering a new company. 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 advantageous to you and your enterprise then you can still get assistance registering a company in the United Kingdom. You may not be able to take advantage of the tax gains and privacy afforded by an offshore company, but you may feel far better having the company registered onshore.
There are legal procedures that must 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 firms that are experts in this field and can be of use. They should be part of your planning when starting a new business.