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Creating a Company

Modern companies have many diverse 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.

Whilst this fact may seem very evident in large, well-known 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 relies on them being laid correctly.

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 an intelligent and forward thinking manner you will be able to reap the rewards long into the future. Conversely, creating your company in the wrong manner could have long felt consequences.

Why get help creating a company?

As previously mentioned, the creation of your business is a highly 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 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 money 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 problems. Not only do you have to take into account the legal restrictions of the marketplace you will be working in, but also any specific legal requirements of the geographical area you will be operating in and any specific needs of your workforce.

It is also becoming more involved and complicated to setup an organisation. As new markets emerge, new trade links are forged and new legal clauses are described 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.

If you read or pick up the term BVI incorporation it means incorporation of businesses in the British Virgin Islands in the Caribbean.

Company Distinctions

Before you begin to setup your own company 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 essentially different.

These corporate set ups exist to satisfy the broad scope of situations that cover the business arena. Businesses vary a great deal, in terms of the quantity of employees, the industry they work in and also their sales setting, so different business models have been created to cater for this broad assortment.

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 total 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 company. 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 framework. It provides its owners with limited liability (like a corporation) but enables pass-through income taxation (like a partnership).
There is also much less paperwork called for in running an LLC than a corporation, where necessary 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 all possible circumstance. In cases where the law has been broken, such as fraudulent business activities, a court retains the right to hold the owners individually liable beyond their liability limit.

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.

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 monies exchanged when shares were sold. Since shares are normally issued as being fully paid, the shareholders are no longer personally liable.

Start-up businesses that want to fully use offshore corporation to fulfill particular business requirements should explore alternative options as well.

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 authorized. The specific rules that control an IBC will depend on where it was incorporated, although they usually share certain characteristics, such as greater flexibility of operation and relaxed trading laws.

Offshore Companies

One idea that you might 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 undertake its main functions.

Benefits of creating an offshore company

Offshore companies are typically used as one element of an overall tax planning strategy. Taxation rules vary between the different offshore financial centres out there, although organisations will generally pay tax as a fixed yearly sum that is insignificant in relation to the levels of taxation applicable in other parts of the planet.

These tax savings can be offered by the governments of offshore financial centres since the businesses that benefit from them are not trading within that area. This means there is not the same need for administrative support and infrastructure that would be expected by onshore businesses.

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 business name without having to release the names of the key members in the company. Offshore companies are generally not required to submit the levels of paperwork that domestic corporations do, and as such are easier to run.

Because the regulations for offshore companies are easily available, it gives potential new business owners the chance 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 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 don’t want to pay tax on investment interest earned. They can also be beneficial when employing expatriate staff since tax can be avoided at source.

In the UK the regular fee in order to register Ltd company allows for incorporation inside of Ten days, although faster options are available for a larger fee.

Possible locations for offshore companies

There are many parts of the world that can be defined as an offshore financial centre because of the ambiguous nature of the phrase. However, there are a certain few that stand out above the rest, 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 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 derived from licensing agreements for offshore companies.

Seychelles

The Seychelles is a modest territory located in 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. Future economic growth is predicted.

Off-the-shelf companies

Another alternative 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 extremely quickly. You do not get to choose the name of your organisation, but if that is not a vitally important factor then there are great benefits to buying a company in this manner.

Creating a company like this can also reduce the difficulties that are sometimes encountered when registering a new business. Using a reputable corporate services provider to handle the paperwork required will get around this problem. It is not the best solution for everybody but it is an option that is worth consideration.

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 assistance registering a company in the United Kingdom. You might not be able to take advantage of the tax benefits and anonymity afforded by an offshore company, but you may feel far 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 experts in this field and can be of use. They should be part of your planning when setting up a new company.