Creating a Company
Modern companies have many different components that must all be working well and working collectively if the company is going to succeed and be prosperous for any length of time. This idea extends from the core aspects of the business such as manufacturing and sales, to the less tangible aspects such as human resources. If each department is not working well together there will be problems with the company.
Whilst this fact may seem very evident in large, established businesses with many employees, departments and offices, 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 depends 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 a sensible and forward thinking manner you will be able to enjoy the rewards long into the future.
Why get help creating a company?
As previously mentioned, the creation of your business is a highly important process and should not be taken lightly. It can also be a complicated process that can sometimes go wrong without the proper level of suitable knowledge and experience.
If a complex part 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 funds on your most valuable assets to ensure they function correctly. This same principle is true when it comes to creating a company.
Perhaps the most challenging aspect in setting up a new business is the level of paperwork that is necessary in regards to legal problems. Not only do you have to take into account the legal boundaries of the marketplace you will be operating in, but also any specific legal requirements of the geographical region you will be operating in and any specific needs of your workforce.
It is also becoming more involved and complex to setup a business. As new markets present themselves, new trade links are forged and new legal clauses are described you need to keep up-to-date with the relevant requirements. Most of us do not have time to do this, so hiring expert help provides an easy way to access this expertise.
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Company Distinctions
Before you begin to setup your own enterprise you should know the different types of company that can be established and the key distinctions between them. Whilst almost all businesses operate on the premise of bringing in more money than they expend, the components that exist underneath the surface are essentially different. You need to use the suitable company framework for your own business.
These corporate structures exist to fulfill the broad scope of situations that cover the business world. Companies vary a great deal, in terms of the number of employees, the industry they work in and also their sales setting, so different business solutions have been created to cater for this broad assortment. Different situations require different business approaches, and these in turn require different business structures.
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 complete or partial ownership of an LLC can only be held financially liable for a fixed sum which usually reflects the amount they have invested in the business. 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 restricted liability (like a corporation) but allows for pass-through income taxation (like a partnership). This makes it fiscally advantageous to its owners.
There is also much less paperwork involved in running an LLC than a corporation, where necessary levels of administration and record keeping are incredibly high. It is worth noting however that the levels of limited liability security offered by an LLC do not cover every possible circumstance. In cases where the law has been broken, such as fraudulent business activities, a court retains the right to hold the owners personally liable beyond their liability limit.
Limited company (Ltd)
A Limited company is similar to an LLC as a business entity, although it is restricted to use in certain countries due to the differences in national laws. Limited companies can be created in the United Kingdom, the Republic of Ireland or Australia. It is the most typical form of privately held company in use.
A limited company offers limited liability to its shareholders by making them personally 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 funds exchanged when shares were exchanged. Since shares are normally issued as being fully paid, the shareholders are no longer personally liable.
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International Business Company (IBC)
An International business company, abbreviated as IBC, is a form of offshore company that isn’t allowed to trade inside the country or jurisdiction where it was authorized. The specific rules that control an IBC will depend upon where it was incorporated, although they usually share certain traits, such as increased flexibility of operation and relaxed trading regulations.
Offshore Companies
One idea that you may consider when selecting what type of business you are going to launch 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 operations.
Benefits of creating an offshore company
Offshore companies are usually used as one element of an overall tax planning strategy. Taxation rules differ between the different offshore financial centres available, although companies will generally pay tax as a fixed yearly sum that is inconsequential in relation to the levels of taxation applied in other parts of the planet. This possible tax planning makes them an amazingly attractive business proposition.
These tax savings can be offered by the governments of offshore financial centres because the businesses that gain from them are not trading within that zone. This means there is not the same demand for administrative support and commercial infrastructure that would be required by onshore organisations. This “no trade” policy is a requirement and offshore companies must follow it, depending on the jurisdiction they function in.
There are other advantages to establishing an offshore company, such as the levels of anonymity that can be enjoyed. Business operations can be carried out under the company name without having to release the names of the key members of the company. Offshore companies are generally not required to submit the amounts of paperwork that domestic companies do, and as such are less difficult to run. This does not apply to regulated businesses.
Given that the regulations for offshore companies are readily available, it gives potential new business owners the opportunity to select which rules they want their business to be governed by. Certain types of business might be better suited to incorporation in a particular area.
Typical Uses
IBC or other offshore companies will be commonly used by businesses where tax is a key concern. These may include property companies that are looking to avoid capital gains tax and inheritance tax, or by investment firms that do not want to pay tax on investment interest made.
If you are looking for initial corporate registration information then website resources are usually helpful and can steer you in the right direction.
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 term. 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 lightly 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 shouldn’t be mistaken with the U.S. Virgin Islands. Although a large percentage of residential income is driven by tourism, more than half of the governmental income of the territory is derived from licensing agreements for offshore companies.
Seychelles
The Seychelles is a modest territory located within the Indian Ocean, off the Eastern shore of mainland Africa and to the North of Madagascar. Seychelles is the richest nation in Africa in terms of GDP and this is largely driven by the record setting offshore industry in this region. Future economic development is predicted.
Off-the-shelf companies
Another alternative to consider when creating your own business is to not create it at all! It is possible to actually buy a new company “off the shelf” and become incorporated extremely swiftly. You do not get to select the name of your company, but if that is not a vitally important aspect then there are great benefits to buying a company in this way. Due diligence must be carried out, and payment must be made, but if that goes smoothly you can be in business instantly.
Establishing a company like this could also reduce the complexities that are sometimes encountered when registering a new business. Using a reputable corporate services provider to handle the paperwork required gets around this problem. It is not the best solution for everybody but it is an alternative that is worth thought.
Creating a company in the UK
If after reading this article you do not feel that the creation 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 gains and anonymity afforded by an offshore company, but you may feel better having the company registered onshore. As always, every situation is different and will have specific needs.
There are legal proceedings that need to be undertaken, and the amount of paperwork needed is likely to be a lot higher 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 specialists in this field and can be of use. They should be part of your planning when starting a new business.
