subject: Ten Ways to Increase Company Profits by Going Offshore [print this page] Ten Ways to Increase Company Profits by Going Offshore
Many economies in the world are growing faster than the European Community, Japan, Canada or the United States. Asian economies are leading the way out of the recession. Brazil is becoming the economic powerhouse of Latin America. Russia has become the world's largest oil and gas producer. Little Panama at the tail end of Central America grew its economy as fast as China's during the first decade of the century and never experienced a recession. With all this action around the world why limit your company's business to regions of slow economic growth or even economic decline?
Here we look at various aspects of taking all or part of your business offshore and some of the offshore structures and solutions that may help increase company profits. In general, tax advantages, a decreased cost of doing business, being able to set up a business in an offshore location where the business is and the ability to operate cost effectively with minimal red tape all lead to profits when setting up a business offshore.
1) Profit by Choosing a Tax Advantaged Jurisdiction
To profit offshore look for tax advantaged jurisdictions. Not every country takes interest from your bank account during the year. Not every country requires quarterly tax payments throughout the year. Most offshore jurisdictions never tax income that is earned from sources foreign to the host nation. Setting up a business as an offshore corporation and doing its banking offshore in a tax advantaged jurisdiction can reduce business costs and, thus, increase profits.
2) Profit by Picking the Most Cost Effective Jurisdiction
There are many international business corporations that headquarter in one offshore jurisdiction, buy from another jurisdiction, and sell to a third jurisdiction, controlling much of the operation of the business over the internet. In many offshore jurisdictions paperwork is minimal. The issue here is not location but finding a jurisdiction where the cost of doing business is low.
3) Profit by Having Low Labor Costs
When doing business from North America, Europe, or Japan outsourcing is a fact of life. If you set up an offshore corporation that can do business where labor costs are cheap you will be your own source of outsourced labor. You may just move your entire business to the jurisdiction where manufacturing, receiving, shipping, and office costs are a lot cheaper than in your nation of origin.
4) Profit by Being Close to Where the Business Is
Sometimes, even in the internet world, there is nothing like personal contact. Sometimes, when an assembly line is down or there a management issue it helps to be close to where the problem is. Setting up office operations offshore and close to where your suppliers are or where your manufacturing takes place will work a lot better than trying to solve problems online. Being an hour by air from your suppliers will often work out to be a lot cheaper than being 14 hours away.
5) Profit by Being Close to Where the Economic Growth Is
Even though business is recovering in the traditional centers of commerce and industry it is recovering faster in the small countries of East Asia and in countries such as Brazil, Russia, and even Panama. Contacts are easier to find and easier to maintain if you live and do business in the region. Web sites can get you contacts but in the end a face to face meeting and a hand shake are what count in developing and maintaining business.
6) Profit by Not Being a Target
Business success can have its downside in that you or your company can become a target for frivolous lawsuits, identity theft, and industrial espionage. Setting up shop in a jurisdiction where the law favors asset privacy and protection and well as personal privacy can help you and your company being a target of an unscrupulous person, company, or attorney.
7) Profit by Providing the Services That Others Purchase Offshore
It is possible to obtain government issued licenses to provide a whole host of services such as asset protection and management, trust services, money transfer services, offshore banking, and securities trading. In general it is easier to set up such entities offshore, cheaper to run them, and can be much more profitable when doing business with a global clientele. With the increasing tendency of others to move offshore, retire offshore, and do business offshore it can be increasingly profitable to service the needs of others who are seeking the benefits of offshore solutions.
8) Profit from Offshore Banking and Choice of Currencies
The vast majority of offshore banks will allow depositors to bank in a variety of currencies. As the Australian Dollar increases in value versus the US Dollar and as your business could involve exporting from China to various nations on the Asian Rim why not bank in the Aussie Dollar?
9) Profit from Asset Transfer Features of Doing Business Offshore
A profitable business offshore can be owned by or a subsidiary of another corporation, a trust, or a foundation. In this way the assets can be more easily transferred to the heirs or dependents of the principals with substantially less painful tax consequences than might be the case in a person's country of origin. For those truly interested in asset privacy and protection of hard earned profits there a number of offshore solutions.
10) Flexibility of Doing Business Usually Leads to Increased Profits
Businesses typically find that the less red tape they have to deal with the more profit that they make. Many offshore jurisdictions are very intent upon drawing business and capital to their shores. Thus these jurisdictions are typically very business-friendly and intent upon making the experience of setting up shop hassle free and profitable. The ability work fast, make changes quickly, and move capital efficiently in offshore jurisdictions can lead to much more substantial profits than in more oppressive business jurisdictions.
