Futures Trading Blog

Creating a Company

Modern day companies have many different components that must all be operating well and working together if the business 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 aspects like 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, 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 process since everything else relies on them being laid correctly. A similar idea can be applied to the business world.

Setting your business off on the right foot is incredibly important, and is particularly 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. However, 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 business is a very important process and should not be taken lightly. It can also be a complicated process that can sometimes go wrong without the proper level of appropriate knowledge and experience. Would you prefer to pay a little extra money today or suffer large financial losses later?

If a complex component 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 funds on your most valuable assets to ensure they function correctly. This same theory is true when it comes to establishing a company.

Perhaps the most problematic 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 area 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 plot a course through.

It is also becoming more involved and complex to setup a business. As new markets present themselves, new trade links are forged and new legal clauses are described you will need to keep up-to-date with the relevant demands.

It is critically important that managers of any offshore business know the legal guidelines that govern the jurisdiction of their company.

Company Distinctions

Before you begin to setup your own enterprise you should understand 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 exterior are fundamentally different.

These corporate structures exist to fulfill the broad scope of circumstances that cover the business world. Companies vary a great deal, in terms of the number of employees, the industry they work in and also their sales environment, so different business models have been created to cater for this broad variety.

A few corporate 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 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. An LLC is sometimes referred to as a WLL, or company With Limited Liability.

A Limited Liability Company shares qualities with both a partnership and corporation business structure. 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 required levels of management 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 every possible circumstance. In cases where the law has been broken, such as fraudulent business activities, a court retains the right to hold the owners personally liable beyond their liability limit.

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 differences in national laws. Limited companies can 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 personally accountable for only the unpaid sum remaining on their own shares if the company were to go bust. This sum relates to what was unpaid on the shares when they were issued rather than any monies exchanged when shares were exchanged.

Tips about creating offshore companies can be found on the following website as well as via local business advice centres and workshops.

International Business Company (IBC)

An International business company, abbreviated to 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 generally share certain characteristics, such as greater flexibility of operation and relaxed trading regulations. The most prominent characteristic of an IBC however is the potential tax planning afforded by being registered offshore.

Offshore Companies

One idea that you may consider when choosing what type of business 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 a region where it does not carry out its main operations.

Benefits of creating an offshore company

Offshore companies are usually used as one aspect of an overall tax planning plan. Taxation rules vary between the different offshore financial centres available, although organisations will usually pay tax as a fixed annual sum that is insignificant 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 since 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 required by onshore organisations. This “no trade” rule is a requirement and offshore companies have to follow it, depending on the jurisdiction they operate in.

There are other advantages to establishing an offshore company, such as the levels of privacy that can be enjoyed. Business operations can be carried out under the business name without having to release the names of the key members in the company. Offshore companies are normally not required to submit the levels of paperwork that domestic companies do, and as such are easier to run.

Because the regulations for offshore companies are easily accessible, it gives potential new business owners the chance to choose which rules they want their enterprise to be governed by. Certain types of business might 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 companies that are looking to avoid capital gains tax and inheritance tax, or by investment firms that don’t want to pay tax on investment interest earned.

You can use the services of a legal company to register company details pertaining to new businesses or you can undertake the process by your self.

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 phrase. 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 locations are lightly 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. Although a large portion of residential income is powered by tourism, more than 50 percent of the governmental income of the territory is made from licensing agreements for offshore companies. It is thought that around 40 percent of the world’s offshore companies were incorporated in the British Virgin Islands.

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.

Off-the-shelf companies

Another alternative to consider when creating your own business is to not create it at all! It is possible to actually buy a new company “off the shelf” and become incorporated extremely quickly. You do not get to select 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 manner.

Establishing a company like this could also reduce the complexities that are sometimes encountered when registering a new company. Using a reputable corporate services provider to manage the paperwork required will get around this problem. It is not the best solution for everybody but it is an alternative that is worth thought.

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 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 gains and privacy afforded by an offshore company, but you may feel far better having the company registered onshore. As always, every situation is different and will have specific needs.

There are legal proceedings that must be undertaken, and the amount of paperwork needed is likely to be a lot higher 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.

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