A Foreign Incorporation Strategy for the Perpetual Traveler
Incorporating Offshore Banks into your Financial Plans
Establishing an offshore company is an effective legal way of protecting your hard-earned income against lawsuits while letting you take benefit from international tax cuts, providing more opportunities for your business to progress offshore. Today we are going to discuss A Foreign Incorporation Strategy for the perpetual Traveler: Incorporating Offshore Banks into your Financial Plans.
Unlike the common understanding, setting up an offshore business is not necessarily done to avoid local taxes or keeping money illegally from your state government. It is about formulating your business strategies and affairs in a way that can let you proliferate from international laws that are created for everyone who cares to benefit from them in accordance with their business.
To protect offshore companies and investments better, foreign investors opt for offshore banking. Offshore bank accounts may help you with protecting your assets from lawsuits, protection from creditors and judgments, excessive taxes, and helps with your business expansion.
Why Incorporating an Offshore Bank Account in Your Financial Plans is good for you
When you opt for offshore banking, it’s important to realize that it’s no different to your local bank. You can use online banking or acquire debit cards; in fact, there are offshore companies that will issue you a prepaid debit card. No matter which country you belong from, obtaining offshore banking services is imperative to the growth of your offshore company. You want to have a look at these reasons to know why.
Provide Asset Protection
If you live in the US, you should know that 5% of the world’s population resides in the US, which includes 80% of the attorneys, and 96% of the world’s lawsuits. And every resident is equally exposed to the threat of a lawsuit.
Whatever your profession is, there is always a risk of getting sued. Setting up an offshore bank account, where your assets are provided safety, can be the only way to keep your business and finances protected against all possible legal turbulence.
Offers Diversified Currency Holdings
Offshore banks allow you to hold various currencies that lead to diversified investments, higher returns, and lower risks. Diversification in currency holding is crucial to the safety and stability of the investment portfolio in the longer run. There are only a few local banks that allow you to hold diverse currencies.
You can reap benefits from the fluctuations in monetary policies and value of the currency if you are holding assets offshore. After 9/11, many locals opened Canadian Bank accounts and earned 30% profit by converting their US dollars into Canadian dollars.
Diversified flow of income
You may recall the US economy was struck by a massive recession in 2008. At that time, Asia’s economy was experiencing a boom. Limiting yourself to domestic bank accounts can be an obstruction for your business to profit from growing economies when your own economy is facing a dip. You can even consider opening multiple offshore bank accounts to reap the benefits of various international laws. For example, in Switzerland, banks also perform the functions of investment management firms that guide you through your financial planning, whilst suggesting portfolios for your business growth and financial safety. Many state laws cap the number of trades and transactions per day, this limit can be avoided if you have offshore banks accounts.
Higher Interests on Deposits
If you are a local resident in the United States, your local bank may only offer you an interest rate of 1% to 2% annually for your deposits in a savings account. You might be satisfied with your local rates, but examining other offshore banks will make you realize how you can earn a higher interest on your deposits. Countries such as Australia, The Netherlands, and Switzerland are not only known among the world’s safest banks but also known for offering high-interest rates.
Flexibility in Moving Funds
Having a bank account offshore allows you to easily move your funds, protecting you from all the hassle. Mostly domestic banks also make it very difficult for you to access your money, by limiting the funds on hand for large cash withdrawals. This type of asset protection, as well as policies, can be lethal in various situations—for instance, if a lawyer wants to freeze your account, it may be too late until your bank hands over your funds to you.
Setting up an offshore bank account
While your state regulations and laws can make it difficult for you to get a hold of an offshore bank account, an experienced professional can save you from the trouble.
Here are a few things that cannot be overlooked whilst you plan to open an offshore bank account. These requirements are called “Due Diligence” in the banking language, where the bank typically tries to get to know their customers. Following are a few examples of things required while banks perform Due Diligence:
- Application forms with your signatures
- Copy of a valid passport or your driver’s license
- Your banking references
- Legal documents
Looking at the requirements you may find opening an offshore account quite different than opening one in a domestic bank. If you cannot show up at the bank, you’ll be required to send in extra documentation to verify your identification. On a brighter note, it’s for your own security and ease, you’ll be able to readily access your money in your offshore account if your bank knows it’s really you.
Once all your documentation and KYC requirements are fulfilled and processed by the bank, you will be sent a confirmation via email. At this step, you’ll be required to wire transfer an initial deposit to activate your offshore bank account. There can be some expenses attached to, such as an opening fee, banking cards, courier expenses for the documents and others. These expenses may vary from one offshore bank to another.
Upon receiving your initial deposit, your offshore bank account will be activated, and you’ll be sent online access to set up your user account. Some offshore bank account providers may also send you a digital signature device and other tools to access your account balance readily and perform quick transactions safely.
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We hope you enjoyed today’s discussion on A Foreign Incorporation Strategy for the perpetual Traveler: Incorporating Offshore Banks into your Financial Plans.
About The Author
Mikkel Thorup is the host of The Expat Money Show podcast and Director of Content at Escape Artist. He is also the author of #1 Best-Selling book Expat Secrets on Amazon. He has spent nearly 20 years in continual travel around the world, visiting more than 100 countries including Colombia, North Korea, Zimbabwe, and Iran. His goal is to help people just like you to generate additional streams of income, eliminate your tax bill, and take advantage of offshore structures so you can travel the world freely and never have to worry about money again. For more information on his legal (but creative) tax strategies for Expats watch this free video.
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