Your “offshore” startup.
January 30, 2017
American phrase “startup” stuck in modern business terminology and is successfully being used by young entrepreneurs. Moreover startups gained wide popularity.
Those who provide services of foreign companies’ incorporation, often pay attention to using offshore companies for successful development of new business. Therefore we also take part in the popular discussion on the offshore and startups.
What does it mean “startup”?
Let us offer more detail to understand this concept. Startup is considered to be a business created from scratch, based on innovative technologies or unique idea and attracted investment without financial guarantees.
Startup is not limited to any market area, although the most famous examples of successful startups are web sites in the Internet.
The first startup appeared in the late 30s of the last century in the USA. Two students from Stanford University have created a small project in the sphere of high technologies. The name was composed partners’ surnames and sound “Нewlett Рackard”.
Later Microsoft, Apple, Google and other known to the whole world companies have arisen based on the same principle. The most popular social network in the world Facebook is the other example of successful startup. Additionally do not forget about the largest online encyclopedia Wikipedia, a huge database of videos YouTube, one of the worlds’ most popular services for messaging – Twitter, of course, one of the worlds’ most known application Snapchat.
All these projects have made their founders billionaires and many people in the world would like to repeat this experience. Therefore, the process of generating new ideas can hardly be stopped, as well as searching for mechanisms of their successful implementation.
Recently, Crunchbase published an annual investment report The Global Innovation 2016. It highlights that in 2016 the total size of investments amounted to almost US $ 176 billion and this is the highest level of investment in venture projects in the last five years. In particular, in 2015 the figure was US $ 76 billion and in 2014 – $ 86 billion. At the same time, analysts have identified the most popular areas for startups. These include transport, artificial intelligence and virtual reality. It predicts that in 2017 startups in the sphere of FinTeсh, genetics, security and workflow automation system will be needed.
As it turned out, only 4.1% of startups falls on the United States, slightly more on the UK (4.6%) and almost the same on Western Europe. However, the venture capitalist can hardly invest in companies registered in regions with unstable economic indices and fragile political situation. In this regard, the idea to change the jurisdiction arises.
Three-quarters of today’s entrepreneurs incorporate companies abroad. One of our clients, who has built a successful business, which brings him considerable income, shares his experience and advises how to ease the burden of leading a young company into the top. Here they are – buy only necessary things and do not waste your time on the transferring to offshore, start with it.
“Many young enthusiasts, promoting their business, buy too much garbage, – says John (name changed), – for example, all of these cups, trinkets and branded bags require a huge expenses. But, at the stage of business development is better to invest money into something really worthwhile. For example, open an account in a respectable financial institution and provide the possibility of operation with the means of payment all over the world – this is important, because it affects the quality of services, while the magnet or cup is more likely for romantics”.
We have to admit that merchant account in the “right” bank gives the opportunity to do business, rather than worry about your money and privacy.
“With regard to the second point, – continues our guest – you can go offshore as an early stage of business, as after your business has begun to generate a stable income. Prudent businesspersons, who put the safety and protection of the company’s assets in priority start with this. In addition, you should always realize that your startup may not be successful. Therefore, it is better to relate costs and choose a cheaper jurisdiction instead of the more expensive. You will save funds in case you have to “start” again. Anyway, it is better to trust the professionals, who will select the most suitable jurisdiction, taking into account all your wishes and financial possibilities. This applies to both jurisdiction and bank”.
Incorporating the company offshore can solve several problems at once. First, with the help of this tool there is the possibility to attract investors and simplify the procedure for sale the company in future. Among the next reasons are a tax optimization, an effective asset protection, an intellectual property protection and a desired level of secrecy.
Classic offshore jurisdictions provide non-public record of shareholders and directors, law taxes and lack of accountability, while respectable European jurisdictions make it possible to achieve other goal – ensure the highest level of reputation.
You should know, that many well-known companies use offshore vehicles to reduce tax burden. Don’t you believe? Find tax optimization schemes.
Add Hong Kong into your list!
Hong Kong combines the advantages of a respectable European jurisdictions and relatively low cost and ease of use. The rapidly growing Asian market, the lack of immigration difficulties and the sufficient number of financing options may be decisive factor in favor of Hong Kong company creation. In addition, China has a leading position on investment into a startup industry.
Furthermore, Hong Kong offers a territorial principle of taxation and a possibility of opening office in China. Are you going to learn more about companies in Hong Kong? Download our brochures and reach your goals!