While forming a company is relatively simple and can be accomplished online, a few set-up mistakes could cost you time and money. Fortunately, these are easy to avoid if you chose the right professional to work with and take a little time to get everything right.
The most common mistakes we see when a business is forming an offshore company include:
1. Choosing the wrong jurisdiction
The biggest mistake we see is company owners not selecting the best jurisdiction for their requirements. It’s important to consider the benefits of different jurisdictions and what they offer beyond simple tax benefits such as accounting and audit requirements (if any), can you open e-wallet accounts for e-commerce business e.g. PayPal for your chosen jurisdiction.
2. Unsuitable banking arrangements
A common mistake is that clients are trying to replicate to what they are used to. e.g. bricks and mortar bank offering traditional services. It may well be that an e-wallet makes sense in many cases and gives greater flexibility.
3. Not understanding the tax rules
Tax law is always changing, and it’s essential to make sure you understand what applies in your chosen jurisdiction and how it will impact your personal tax. e.g. is it better to take a salary or dividends? This often requires professional advice to get it right.
4. Paying too much attention to tax savings
We often see companies looking to make significant tax savings but not considering other factors, such as ease of doing business in a particular jurisdiction, and the total cost (both start-up and annual) of maintaining the company.
5. Spelling mistakes and typos
One of the simplest things is to make sure that everything is spelt correctly and there are no typos on your application, e.g. your company name and directors, as well as their addresses, are correct. It is equally important to check draft forms/applications that were completed for you and submitted on your behalf – this is where mistakes can easily creep in and can expensive to rectify.
6. Choosing the wrong company formation professional
Finally, one of the biggest mistakes that owners make is picking the wrong professional to handle their company formation. It’s fair to say that cheapest is not always the best and can increase the cost in the long term.
Why choose International Formations
At International Formations, we have expert staff on hand right now to help you choose the best jurisdiction, navigate the complexities of setting up a company and ensure you get all the paperwork right the first time.