Should you buy an offshore company with a bank account? While this might seem like a good idea, it can be laced with challenges and expensive headaches that you need to consider first.
In fact, the considerations outlined below are especially important if you want to access offshore business banking in top banking hubs around the world.
Below, we’ll explain the challenges to consider and the opportunities you might be able to unlock.
Of course, feel free to use the table of contents to jump ahead to the sections that are most relevant to your banking requirements.
Table of Contents
- Can You Buy an Offshore Company?
- What is the Cheapest Offshore Company With a Bank Account?
- What is an Offshore Company?
- Where Should You Set Up a Company?
- Should You Set Up Offshore?
We’re going to answer two of the most common questions we receive about buying offshore companies first. That way, you can quickly decide if this approach is right for you.
Below, you will find additional information related to offshore companies and the specific banking challenges they might face.
Can You Buy an Offshore Company?
Yes, you can buy an offshore company. This is true whether you are registering a new company or buying an existing company.
Existing offshore companies are often referred to as “shelf companies”. These entities are effectively unused companies that lawyers “keep on the shelf” for anyone that wants to buy an existing, aged company.
We’ve covered shelf companies in great detail in the past and all the legitimate reasons why they’re used by individuals, entrepreneurs, and investors. You can find more information in our Business Banking section if you would like to learn more.
What is the Cheapest Offshore Company With a Bank Account?
Buying an offshore company with a bank account is like buying anything else. First, you need to find a willing seller. In this case, most offshore companies with bank accounts are either sold by lawyers or by private individuals. So, finding an offshore company with a bank account can sometimes be challenging.
This is just one of the many reasons why it is often easier, faster, cheaper, and more straightforward to register a new offshore company – unless you have a very specific reason for needing an aged company with an existing bank account (which might be the case).
With this in mind, let’s take a closer look at offshore companies in general and how they differ when it comes to bank account opening.
What is an Offshore Company?
Before diving in, let’s first define what is an offshore company and where you can actually buy one (with and without a bank account).
Offshore companies refer to legal structures that are registered, formed, or incorporated outside of your country of residence. In most cases, this term is used to refer to companies registered in offshore financial centers (OFCs) or offshore jurisdictions.
That said, some of the most popular tax-optimized offshore structures are actually “onshore” entities, like those available in the US (US LLC), UK (UK LLP), Canada (Canada LP), and the EU (Estonian OU).
On the other hand, entities registered in tax havens, free zones, and far-flung island jurisdictions typically have a much harder time opening bank accounts.
However, in our experience, when someone is looking to buy an offshore company with a bank account, they are typically looking for entities in jurisdictions like Hong Kong, the British Virgin Islands (BVI), Panama, Singapore, Cyprus, the Isle of Man, and similar offshore centers.
To this end, we’ll focus our attention on entities from these (and similar) jurisdictions for the rest of the article.
Where Should You Set Up a Company?
Importantly, there are many legitimate reasons for setting up a company offshore. This can include doing business in multiple countries, holding assets in multiple jurisdictions, receiving payments in multiple currencies, having a need for holding structures or investment entities, tax structuring, asset protection, and beyond.
Offshore companies are incredibly common. Sometimes, it just makes business sense to have an entity registered in a certain offshore jurisdiction. It might be a part of a business’s larger corporate structuring strategy or someone’s personal wealth management strategy. There are a variety of reasons.
But deciding where to set up an offshore company can be a challenge, especially when multiple jurisdictions are involved.
Ultimately, where you choose to register or incorporate a company is a personal matter. For most people, the decision is a function of cost, local connections, and what they’re trying to optimize for.
One important consideration that many people overlook when choosing where to structure an offshore company is how the business will be perceived from a banking perspective.
In other words, how do banks view your entity of choice? Can the jurisdiction you choose impact whether or not you can open bank accounts? In a word, yes. The entity you choose will ultimately dictate your banking options, which countries you’re able to bank in, and which banks are available to you.
For example, while BVI companies are very well-known and widely used, they can still struggle to open accounts in certain mainstream banking countries. Additionally, since they are commonly used as holding structures, some entrepreneurs struggle to open operational business accounts for them. However, because BVI companies are well known, they can still access some of the best banking hubs in the world, like Singapore, Liechtenstein, and Switzerland.
Should You Set Up Offshore?
Setting up an offshore company is entirely possible. And, depending on where you decide to register your entity, it can also be very affordable while offering many benefits.
If you’re currently in the process of deciding where to register your company, you may want to explore the Offshore Company Banking Report available through GlobalBanks IQ – it discusses the different bank account opening considerations and will likely impact where you decide to incorporate them.
Of course, if you have any questions before moving forward, don’t hesitate to contact us – we’d be happy to help you get started in the right direction.