Overseas Business

Technology today has expanded the ability of the business community to grow globally with ease.  It should be remembered that the success comes with its cautions.  Global business persons must adjust quickly while maintaining emotional balance and stability in important decision making.  Technology can be a great advantage and reduce the learning curve of business when in foreign situations.

For many, the greatest financial freedom is enjoyed by those chosing to own a business overseas.  There are two advantages that come with this:

Asset protection:  Good asset protection is a plus for overseas businesses because lawsuits are less common overseas than in the US., and earned income and profits kept overseas makes them safer from legal attack.

Tax benefits:   Having an overseas business allows you to turn after-tax expenses into tax-deductible ones.  Even better,  the right kind of business overseas  can defer U.S. taxation. The most effective business structure from an asset protection and tax deferral point of view is a non-U.S. structure (corporation, LLC or limited partnership) operating entirely outside the U.S. and with 50% of it owned by one or more non-US citizens.

This structure protects against lawsuits, because for a creditor to be able to recover damages from a debtor, they generally have to bring about the lawsuit in a foreign jurisdiction.  This inconvenience eliminates the majority of lawsuits.

It also provides tax advantages, because the IRS generally will allow U.S. citizens with interests in overseas businesses with 50% or more foreign ownership defer paying taxes on the profits.  Therefore, if you were interested in building a new business structure overseas, you should look for non-US citizens or residents to work as partners to assist you in expanding an overseas business.  You could give them half the company and look to them for capital and business growth.

Many business owners may not want to have someone own half their overseas business.  The choice is theirs.  However, it should be remembered that either the IRS or the taxing authority where they reside will get half the profits.  So, which is the better choice:  A partner contributing to building the business, or the sole owner contributing to the tax man?