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Creating a Company

Modern companies have many diverse components that must all be working well and working together if the business is going to succeed and be profitable 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 company.

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, laying the foundations is the most critical stage of the building process since everything else relies on them being laid correctly.

Setting your business off on the right foot is extremely important, and is especially crucial during times of financial instability. By creating 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 highly important process and should not be taken lightly. It can also be a complicated process that can easily go wrong without the proper level of appropriate knowledge and experience.

If a complex part on your car were to break, or if a safety critical structure 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. This same principle is true when it comes to creating a company.

Perhaps the most problematic aspect in creating a new business is the level of paperwork that is needed in regards to legal issues. Not only do you have to take into account the legal boundaries of the industry you will be working in, but also any specific legal requirements of the geographical region 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 navigate through.

It is also becoming more involved and complicated to setup a company. As new markets present themselves, new trade links are brokered and new legal clauses are defined you need to keep up-to-date with the relevant demands.

From start to end the process of offshore incorporation can end up being swift since companies can be ordered off-the-shelf.

Company Distinctions

Before you begin to setup your own company you should know the different types of company that can be established and the key distinctions between them. Although almost all businesses operate on the premise of bringing in more income than they expend, the structures that exist underneath the surface are fundamentally different. You need to use the appropriate company structure for your own business.

These corporate structures exist to satisfy the broad scope of circumstances that cover the business world. 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 solutions have been created to cater for this broad variety. Different situations require different business approaches, 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 fixed sum which usually reflects the amount they have invested in the company. An LLC is sometimes referred to as a WLL, or company With Limited Liability.

A Limited Liability Company shares characteristics with both a partnership and corporation business framework. It provides its owners with restricted 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, although it is limited to use in certain countries 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 typical form of privately held company in use.

A limited company offers limited liability to its shareholders by making them individually accountable for only the unpaid amount remaining on their own shares if the company 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 sold.

Despite the potential benefits, it is worth noting that offshore registration for financial purposes will not necessarily always match the requirements of every business.

International Business Company (IBC)

An International business company, abbreviated as IBC, is a type of offshore company that is not allowed to trade inside the country or jurisdiction where it was authorized. The specific rules that govern an IBC will depend on where it was incorporated, although they usually share certain characteristics, such as increased flexibility of operation and relaxed trading laws. The most prominent feature of an IBC however is the potential tax planning permitted by being registered offshore.

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 an area where it does not carry out its primary operations.

Benefits of creating an offshore company

Offshore companies are usually used as one part of an overall tax planning plan. Taxation rules differ between the different offshore financial centres available, 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. This potential tax planning makes them an amazingly attractive business proposition.

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 area. This means there is not the same need for administrative support and infrastructure that would be required by onshore organisations.

There are other benefits to creating 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 of the company. Offshore companies are normally not required to submit the levels of paperwork that domestic corporations do, and as such are less difficult to run.

Because the regulations for offshore companies are readily available, it gives potential new business owners the opportunity to select which rules they want their enterprise to be governed by. Certain types of business may be better suited to incorporation in a particular region.

Typical Uses

IBC or other offshore companies will be typically used by businesses where tax is a key concern. These may include property businesses 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. They can also be beneficial when employing expatriate staff since tax can be averted at source.

Every new enterprise operator should set up company plans as well as processes before starting trading on a significant scale.

Possible locations for offshore companies

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

Two of these locations are briefly 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 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 sector in this region. Future economic development is predicted.

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 very swiftly. You do not get to pick the name of your company, but if that is not a vitally important factor then there are great benefits 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.

Creating a company like this may also reduce the complexities that are sometimes encountered when registering a new business. Using a reputable corporate services provider to manage the paperwork required gets around this problem. It is not the perfect solution for everybody but it is an alternative that is worth thought.

Creating a company in the UK

If after reading this article you do not feel that the creation of an off-shore company would be beneficial to you and your business then you can still get assistance registering a company in the United Kingdom. You may not be able to take advantage of the tax benefits and privacy afforded by an offshore company, but you may feel better having the company registered onshore.

There are legal proceedings that must be undertaken, and the amount of paperwork needed is likely to be a lot greater than registering an equivalent offshore company. The workload on it’s own may be challenging but there are plenty of corporate services firms that are specialists in this field and can be of use. They should be part of your planning when starting a new business.