Offshore Corporations

[busyguy]

I live in new york and I only have us citizenship. Can I incorporate in belize or any other offshore place? Will my taxes be lower if I do this?

[Modee]

I assume you intend to keep your citizenship, and continue to reside in the U.S.

First let's compare the benefits of, say, creating a Nevada or a Delaware corporation versus one in say, California. In other words, let us explore the idea of doing business in one state, but incorporating in another. Why do that? What are the benefits?

First, let's make clear one benefit that will NOT come you way: avoiding taxes in the state in which you do business. If your company does business in, say, California, but incorporates in Nevada, all that will happen is that you will still owe California taxes simply because you do business in California. If all you have is an office in California, and you spend enough time in California and do enough business in California, you will be taxed in California (at least for whatever business you conduct from California) no matter where you are incorporated.

So, why do so many corporations incorporate in states like Delaware? if doing so does not save them a dime of taxes if their headquarters and business are in another state?

Well, this is because the REAL benefits of incorporating in a state like Delaware have nothing to do with avoiding taxes. The benefits, in a nutshell, have to do with liability and privacy laws. Without getting into details (hire me if you are serious about this), states like Delaware, and even Nevada protect the identity of the officers and shareholders, and as well have favorable laws when it comes to liability. Also, states like Delaware have more flexible rules for corporation maintenance requirements (such as for example, allowing written shareholder meetings instead of physical ones).

These same sorts of advantages exist for offshore corporations. Most of these offshore companies allow you to create a corporation and not reveal who the true owners or officers are. For example, in a Panamanian company, if it is done right, you can have three local Panamanians on the board and they might have absolutely nothing to do with the real ownership of the company. The real owners are protected, and hidden from view.

Also, let's face it - who is going to sue an offshore corporation from the U.S. unless a lot of money is at stake.

So, in a nutshell - and again, hire me to get into more detail, there are MANY advantages to offshore corporations, but unless you plan to actually conduct business from offshore you will still be taxed on your activity in the U.S., same as if you lived in California, conducted business from CA, but incorporated in Nevada.

This sort of scenario is what lead to California suing the estate of Howard Hughes over claims that he was a California resident, because he spent enough time in CA and he and his companies did business in CA. Of course in that scenario CA lost, but: In general, if your business and its activities have enough ties to a given state, you will end up paying tax there. Same applies with offshore corporations - if you think you can sit in New York and funnel the money to an offshore corporation and avoid U.S. taxation, think again. But, if your intent in doing so is to hide yourself and avoid liability, then you may be on the right track.

The taxation laws have gotten so tight that even if you actually do business overseas, if you are an American person or corporation, you still get taxed by the I.R.S.

[needxtra]

Tax advantages

So I have heard it is best to incorporate your business in connecticut or nevada and form a foreign corporation for receiving the largest tax breaks? What are your thoughts on this?

[Modee]

You need tech support to address this specific topic, beyond what has already been posted in this thread.

[newzzlery]

American Psycho, do you know, is it hard to maintain a foreign office with a company in it? And what exactly bank accounts should I have to open for that? Offshore companies registration is not a simple task, so maybe you know some companies or agencies, which can help with maintaining a foreign offices? Would be great to hear some advises.

[Modee]

Hello, contact me for tech support. I handle this for both clients seeking a US presence, and US clients seeking an offshore entity.

[gregor54]

Modee is the greatest!