A lot of business owners today see the potential of having a RAK offshore company as part of their business conglomerate. With an offshore company, these entrepreneurs can easily set up their businesses overseas with just a fraction of the cost and with less hassle.
But the work does not stop with the registration and formation alone. Owning an offshore company entails a lot of work and you need to manage the expectations of some members of the board to ensure that they are fully aware of how an offshore company works. If you own an offshore business or you are a new owner of one of the DIFC companies, here are some guidelines you need to manage the formation of your offshore company:
- It is always not totally tax free
One of the reasons why many are quite convinced to form or create an offshore company is because it is commonly advertised as a “tax-free” formation. It may be true most of the time, but that would depend on the jurisdiction. There are some business areas and districts that impose corporate tax to companies, but they are significantly lower than other business sites. It is important that business owners and board members are aware whether the jurisdiction that they chose has a tax haven policy.
- It will not make profit by itself
Another misconception that most business owners have about offshore companies is that it will profit by itself. But like any other company, you and your team would still need to work hard to keep the operations and cash flow going. Business owners need to think of offshore companies like a normal company – profit will follow after the company is established and working well.
- You need to establish control
Since most offshore companies are situated overseas, business owners have significantly less control over the business, leading to mismanagement. Offshore company owners would need to ensure that their overseas branches are managed accordingly, just like how the head office is being managed. If you cannot personally oversee the operations, have someone do it for you. Still, you need to check the performance of the offshore branch once in a while and see if it is still bringing value to your company.
- Be aware of the changes
Although the concept of forming and managing an offshore company has been the same for years, you still need to watch out for certain changes in the business scene, such as the laws and regulations. Keeping yourself updated with these changes will help you manage your company better.