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Creating a Company

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

Whilst this fact may be 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, laying the foundations is the most crucial stage of the building process 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 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 enjoy the rewards long into the future. Conversely, creating your company in the wrong manner could have long felt repercussions.

Why get help creating a company?

As previously mentioned, the creation of your company is a highly important process and should not be taken casually. It can also be a complicated process that can easily go wrong without the correct level of suitable knowledge and experience. Would you prefer to pay a little extra money now or suffer large financial losses later?

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 undertake the required work. It makes sense to spend funds on your most valuable assets to ensure they function correctly.

Perhaps the most challenging aspect in setting up 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 restrictions of the industry you will be operating in, but also any specific legal conditions 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 complex to setup an organisation. As new markets emerge, new trade links are forged and new legal clauses are defined you will need to keep up-to-date with the relevant demands. Most of us do not have time to do this, so employing expert help provides an easy way to access this expertise.

From start to end the system of offshore incorporation may be fast since companies can be purchased off-the-shelf.

Company Distinctions

Before you begin to setup your own company you should know 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 structures exist to satisfy the broad scope of circumstances that cover the business arena. Businesses 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 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 business where the owners have only limited liability. In very basic terms, anybody who has complete or partial ownership of an LLC can only be held financially accountable for a predetermined sum which usually reflects the amount they have invested in the business.

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).
There is also much less paperwork called for in running an LLC than a corporation, where required levels of administration and record keeping are exceptionally high. It is worth noting though 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 variations in national laws. Limited companies may be created in the United Kingdom, the Republic of Ireland or Australia.

A limited company offers limited liability to its shareholders by making them individually accountable for only the unpaid sum 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 funds exchanged when shares were sold. Since shares are normally issued as being fully paid, the shareholders are no longer personally liable.

One of the several benefits of Seychelles incorporation involves settling set rates for a business license irrespective of future rises.

International Business Company (IBC)

An International business company, abbreviated as IBC, is a type of offshore company that isn’t allowed to trade within the country or jurisdiction where it was registered. The specific rules that govern an IBC will depend upon where it was incorporated, although they usually share certain characteristics, such as increased 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 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 undertake its primary operations.

Benefits of creating an offshore company

Offshore companies are typically used as one aspect of an overall tax planning plan. Taxation rules vary between the various offshore financial centres out there, although companies will usually pay tax as a fixed yearly sum that is insignificant in relation to the levels of taxation applicable in other parts of the world. This possible 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 area. This means there is not the same need for administrative support and infrastructure that would be needed by onshore businesses. This “no trade” policy is a requirement and offshore companies have to 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 procedures can be carried out under the business name without having to release the names of the key people of the company. Offshore companies are normally not required to submit the amounts of paperwork that domestic companies do, and as such are less complicated to run.

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

Typical Uses

IBC or other offshore companies will be commonly 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 made. They can also be beneficial when hiring expatriate staff since tax can be avoided at source.

You can use the services of any legal company to register company details pertaining to new companies or you can undertake the process by yourself.

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 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 shouldn’t be mistaken with the U.S. Virgin Islands. Although 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 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 wealthiest nation in Africa in terms of GDP and this is principally driven by the record setting offshore industry in this region.

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 quickly. You do not get to pick 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.

Creating a company like this may also reduce the difficulties 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 beneficial to you and your business then you can still get help 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 needed is likely to be a lot greater than registering an equivalent offshore company. The workload alone may be daunting 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.