New Mission, New Website coming soon! Learn more now.

Equities logo
Search
Close this search box.

5 Considerations on Where to Domicile an Offshore Company

Starting your business as an offshore company can give your startup a significant boost from the very beginning, especially if you intend to work with the global market

An entrepreneur and independent journalist

I am an entrepreneur and independent journalist. I spend my time writing articles, overviews, and analyses about entrepreneurship, business innovations, and technology. Occasionally, I also conduct workshops and provides consulting services for young, but promising startups.
I am an entrepreneur and independent journalist. I spend my time writing articles, overviews, and analyses about entrepreneurship, business innovations, and technology. Occasionally, I also conduct workshops and provides consulting services for young, but promising startups.

If you’ve decided to start your own business, you may try to run it from your garage simply – there is nothing wrong about it, and many world-famous entrepreneurs have done so. However, sooner or later, you may have to deal with a plethora of legal matters related to your company, and it may be a wise decision to get it out of the way in the very beginning because it is easier to build on the clear ground than first having to tear things down. Starting your business as an offshore company can give your startup a significant boost from the very beginning, especially if you intend to work with the global market. Here are the most important factors you have to consider when choosing a location for your company’s HQ.

1.Tax Benefits

It is natural for a business to look for a way to optimize its taxation expenses, and it is a primary concern for choosing a jurisdiction for an offshore company. You don’t want your business to be taxed more if it can be legally taxed less, so make sure to look for a jurisdiction that can offer you advantages. For example, Hong Kong jurisdiction exempts you from all local taxes as long as you carry out your activities outside of the country.

2.Reputation

What many startup founders fail to understand when choosing a jurisdiction for their offshore companies is that reputation is just as hard currency in today’s world as the actual cash. At a glance, it may seem like an excellent idea to set up your company in one of the Caribbean countries because they have a lot going for them: negligible or nonexistent taxes, lax or negotiable regulations, and legislature, to name just a few things. However, don’t be surprised when your startup will be perceived as shady and untrustworthy by big banks and investors that have their own reputations to worry about. Therefore it may be a better idea to look for help from an expert in company formation and set your company up in a place that maintains a balance between stability, reputation and reasonable tax laws – for example, the United Kingdom or Hong Kong.

3.Asset Protection

Your startup is going to be regulated and protected according to the laws of the country it is founded in. If it has an unstable political and economic climate, your company runs a risk of suffering from negative changes in local laws and regulations. You don’t want that, because founding a startup is already a sufficiently risky enterprise, so it is a good idea to maintain a balance between the current beneficial situation and the likelihood of it staying that way.

4.Talent Pool

Your startup is going to need people to run it, and you want to found it in a place where you have a lot of prospective employees. The location should already have a culture of supporting companies of your type, for your new business is very unlikely to attract the necessary amount of talent if it isn’t already in place. This means that you should be sensible: for example, running a tech startup in a rural area is not the best idea, because there aren’t many tech specialists to choose from, and new ones are not likely to come.

5.Legal Requirements

Even if a specific jurisdiction is a good choice for asset protection and tax planning, it may have other legal issues that make it a bad fit for your particular type of company or international business in general. For example, if capital requirements are too high, you won’t be able to use it, to begin with, or local legislation can be outright hostile towards international businesses. The problem may also lie with the law related to your particular product – for example, you may want to avoid setting up a wine business in Texas because of its bizarre liquor shipping laws.

As you can see, the issue of establishing an offshore company is much more complicated than finding a location with no taxation. You have to take many things into account, and in most cases, it is probably a good idea to consult a specialist before trying anything on your own.