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Credit Tips

Credit Repair Programs: Benefits of Choosing the Right Company and Raising Your Credit Score

There are many benefits of joining credit repair programs, as long as you stick with the ones that are legitimate. Cleaning up your credit report and maintaining a high score will allow you to keep more money in your pockets since your interest rates will be lower and you won’t have to worry about getting sued. You’ll be more likely to get more credit if and when you need it, and it will be easier to get an apartment. Application processes will be faster, if not instantaneous. Also, a higher credit score means you have more bargaining power when it comes to negotiating with retailers, banks, and credit card companies. Need a new car all of a sudden? A high credit score will make that easy to get.

No matter how or why you ended up with bad credit, whether it was poor money management on your part or you experienced an emergency that cost a lot of money, there still might be some things about it that can be fixed. Negative items could potentially be removed. You could contact the credit bureaus yourself and try to have them removed, but that could take some time and your chances of being successful aren’t very high. It’s better to compare some credit repair programs and contact the one that seems to fit your needs the best.

Use Only Legitimate Credit Repair Programs

You absolutely must familiarize yourself with the Credit Repair Organizations Act so that you’ll know how to avoid scams. You do have legal rights when trying to get your credit report fixed. Before spending any money, you should be provided with a free consultation and a detailed guide explaining the services the company will perform. There should also be some sort of money back guarantee just in case you are not happy with how things are going.

Since there is absolutely no way of knowing 100% sure how the creditors and credit bureaus are going to deal with every single negative item on your report, stay away from any company that claims that it is going to provide you with specific results in a certain amount of time.

None of these programs will be able to do everything for you. You will still be responsible for making your payments on time. What they will do is help you get some of your previous credit problems resolved.

Check and see which credit repair programs are available in your area. If Lexington Law offers services in your state, you’ll definitely want to consider it, as it is a highly-rated and reputable organization.

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Credit Tips

Affordable Credit Repair Services Overview: How to Tell If a Company Is Reliable and Worth Investing

There are companies that help people with bad credit by using a variety of strategies, such as getting negative items removed via negotiation, identifying errors and having them fixed, etc. Since the industry is wrought with scams, it’s important that people are careful with their choice of a company. Not all affordable credit repair services are legitimate.

It’s possible to identify the trustworthy companies by knowing what kinds of red flags to look for and to avoid any company that has those red flags. A few of these red flags include:

• Trying to charge money upfront. This is actually banned by the Credit Repair Organization Act.

• Promises of a “quick and easy fix”. This is simply not possible – especially if they haven’t taken the time to first look at the client’s credit reports.

• Making any types of guarantees or specific claims, such as “Raise your score 200 points!”

• Having a lot of negative reviews and complaints filed against them.

• Not being open about what types of strategies they are going to use.

• Suggesting that the client actually create another identity. This is obviously against the law.

The ideal credit repair organization will always be upfront about what they will be able to do and what they won’t be able to do. They should have a team of lawyers working for them and use only legal means to get negative items removed.

Find Affordable Credit Repair Services

What about affordability? Only AFTER giving a free consultation should a credit repair company bring up payment. Some affordable credit repair services offer different levels of service at different prices. The lowest priced option will at the very least offer Bureau Challenge services and Credit Interventions. Even though they cannot make any specific guarantees regarding credit scores, they can provide a personalized score improvement analysis each month, which includes targeted information that could potentially help raise the score.

Communication is another important factor, in addition to price and payment plans. It’s very helpful if each client has a legal expert such as a paralegal assigned to their case, with whom they can communicate at any time, via email, phone, or chat. There should be coaching and guidance, as well as tools to help clients keep track of their case and monitor the results 24/7.

There are many credit report repair companies and only a few of them are legitimate and affordable. One company to really consider is Lexington Law, where free consultations are available. There are a few different payment plans to choose from, all of which include affordable credit repair services.

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Credit Tips

Legitimate Credit Repair Services Overview: What to Look for in a Company to Help Fix Your Credit

Credit repair refers to any type of legal action you or a service provider can to try and remove negative items off of your credit reports in attempt to raise your score. Since not all of these services are legitimate, it’s important to understand your rights. Even though you can attempt credit repair on your own, it’s better to work with professionals with legal experience who have a better chance of success when dealing your creditors and the credit bureaus. How do you know which ones are the real, legitimate credit repair services?

The first thing you need to do is familiarize yourself with the Credit Repair Organization Act (CROA). This Act protects consumers from illegal acts by credit repair companies. Here are a few things you need to know about your rights:

• Get a company to provide you with all of your legal rights in writing, as well as the details of the services they will provide

• You should be provided with a money back guarantee of some sort.

• Your consultation should be FREE and as personalized as possible.

• You should not receive any specific promises. Nothing can be 100% certain when it comes to credit repair.

• You should never, ever be expected to put up money upfront. No legitimate credit repair services will try to charge you right away. The only guarantee you should receive is the money back guarantee.

• A legitimate company will usually have lawyers and paralegals within its network, and will not propose any solutions or techniques that are not 100% legal.

Guarantees of Legitimate Credit Repair Services

Even though no company can guarantee specific results, they can show results from previous clients (with the clients’ permission) and give you an idea of what they’ve been able to do in the past, and what they will do to try and help you. Any money you end up paying to a legitimate company will probably be a lot less than the money you stand to lose from having bad credit. You might not even be able to rent or buy a home if your credit is bad! Also, in some places, you might have trouble finding a job.

The credit bureaus and credit card companies will take your case more seriously if you have a legitimate company working on your behalf. This will really increase your chances of getting your credit cleaned up in a shorter amount of time than if you were doing it all on your own.

Where can you find legitimate credit repair services? One company that always seems to get positive reviews from clients is Lexington Law. The paralegals who work on cases are great at communication. You will be kept informed, every step of the way.

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Credit Tips

Credit Repair Services 101: Red Flags to Watch Out For, Your Rights, and Choosing a Legit Company

According to the “Credit Repair Organization Act”, it is unlawful for credit repair providers to lie about what they will be able to do for you, and to try to make you pay before they have even performed any services. These are red flags to watch out for when comparing offers from credit repair services. There is the “DIY” approach, but it can take a long time and be complicated depending on how messed up your credit reports are.

The ideal company will request copies of your TransUnion, Experian, and Equifax reports and review all derogatory marks like charge-offs, bankruptcies, late payments, tax liens, and so forth. Also, did you ever check to see if you were one of the millions of Americans affected by the Equifax hack? Hurry and do so if you haven’t yet. If any of your personal information is vulnerable to identity thieves, you’ll want a credit repair company with lawyers to help you prove that you are a victim.

The CROA requires that any such company you work with must explain your rights to you in a written contract, in addition to the details concerning the services they will perform. No company can make any specific promises. If you are not provided with proof that they are doing everything they possibly can to help you, then you have the right to sue them in federal court.

Avoiding Scams With Credit Repair Services

Avoid getting scam by watching for red flags and only working with an organization that has a long-standing positive reputation. What are some of the strategies a legit company will perform in order to help you repair your credit? It will prepare a plan for disputing errors and trying to have as many negative items as possible removed by using legal methods. The reason why it’s ideal to work with such a company instead of using the DIY approach is that they know how to negotiate with creditors and will do so on your behalf. Are you tired of getting harassed by obnoxious debt collectors? Just opt for credit repair services that include sending cease-and-desist letters to the collectors.

It might not be a good idea for you to apply for new accounts to try and get positive information added to your report to balance out the bad, so be cautious about any company that will try to get you to do this. If you’ve had trouble managing your debts in the past, it might not yet be the right time for you to apply for new lines of credit / loans. Depending on how low your credit score is, you might not even be able to get approved for new credit accounts anyway, and apply for them will have a negative impact on your credit scores anyway due to “soft hits”.

Now that you know how credit repair services can help you, provided they are honest and legitimate, you can get started on cleaning up your reports. Just get a free consultation from Lexington Law.

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Taxes

Offshore Company – Going Global

An offshore company is registered or incorporated outside the country where it has its main offices and operations, or where its principal investors reside. The term "offshore" can refer to any country, but it is mostly associated with certain countries, or jurisdictions, where the local laws offer asset protection, business flexibility, tax minimization and privacy protection. Forming an offshore company begins with choosing a business structure and jurisdiction. Then, the business owners must appoint a registered agent or trustee, incorporate the company and fulfill all financial reporting responsibilities.

Characteristics of offshore companies:

Offshore companies differ depending upon the corporate law in the relevant jurisdiction. All offshore companies have certain characteristics:

They are broadly not subject to taxation in their home jurisdiction.

The corporate regime will be designed to promote business flexibility.

Regulation of corporate activities will normally be lighter than in a developed country.

The absence of taxation or regulation in the home jurisdiction does not exempt the relevant company from taxation or regulation abroad.

Another common characteristic of offshore companies is the limited amount of information available to the public. This varies from jurisdiction to jurisdiction. Most jurisdictions have laws which permit law enforcement authorities (either locally or from overseas) to have access to relevant information, and in some cases, private individuals.

Most offshore jurisdictions normally remove corporate restraints such as thin capitalisation rules, financial assistance rules, and limitations on corporate capacity and corporate benefit. Many have removed rules relating to maintenance of capital or restrictions on payment of dividends. A number of jurisdictions have also enacted special corporate provisions to attract business through offering corporate mechanisms that allow complex business transactions or reorganisations.

Uses of offshore companies:

There are frequent allegations that offshore companies are used for money laundering, tax evasion, fraud, and other forms of white collar crime. Offshore companies are also used in a wide variety of commercial transactions from holding companies, to joint ventures and listing vehicles. Offshore companies are also used widely in connection with private wealth for tax mitigation and privacy. The use of offshore companies, particularly in tax planning, has become controversial in recent years, and a number of high-profile companies have ceased using offshore entities in their group structure as a result of public campaigns for such companies to pay their "fair share "of Government taxes.

Tax Haven:

A tax haven is a jurisdiction that offers favorable tax or other conditions to its taxpayers as relative to other jurisdictions. Particular taxes, such as an inheritance tax or income tax, are levied at a low rate or not at all. Maintains a system of financial secrecy, which enables foreign individuals to hide assets or income to avoid or reduce taxes in the home jurisdiction.

The following jurisdictions are considered the major destinations:

(1.) Bermuda:

Bermuda earned the dubious distinction of ranking No.1 on Oxfam's 2016 list of the world's worst corporate tax havens. Bermuda features a zero percent corporate tax rate, as well as no personal income tax rate. Due to the lack of corporate taxes, multinational companies have raked in huge amounts of money in Bermuda.

(2.) Netherlands:

The most popular tax haven among the Fortune 500 is the Netherlands, with more than half of the Fortune 500 reporting at least one subsidiary there. Oxfam's list of the worst corporate tax havens placed this Benelux country at No.3.

National governments often use tax incentives to lure businesses to invest in their country. However, far too often tax incentives have been found to be ineffective, inefficient and costly, according to Oxfam.

(3.) Luxembourg:

This tiny EU member state remains a center of relaxed fiscal regulation through which multinationals are helped to avoid paying taxes. It's the leading banking center in the Euro zone, with 143 banks that manage assets of around 800 billion dollars.

Pros: In Luxembourg, disclosure of professional secrecy may be punished with imprisonment. Asides from that, many international corporations choose Luxembourg as location for their headquarters and logistics centers, due to low taxes and excellent European location.

Cons: Tax exemptions on intellectual property rights may come up to 80% in Luxembourg, which is why many companies choose to manage their IP rights from here. However, it's important to note that the tax exemption applies only to intellectual property rights instituted after December 31 2007.

(4.) Cayman Islands:

Assets of 1.4 trillion dollars are managed through the banks in this country right now. Being a British territory, which has 200 banks and more than 95,000 companies registered, the Cayman Islands is the world leader in hosting investment funds and the second country in the world where captive insurance companies are registered (designed to ensure the assets of a parent company having another object of activity). Over half of GDP is provided by the Cayman Islands financial services sector.

Pros: The Cayman Islands is one of the few countries or territories in which the law allows companies to be formed and manage assets without paying tax. This is considered legal and it's not seen as a strategy to avoid taxes.

Cons: The tax benefits for incorporating in the Cayman Islands exists mainly for companies who are doing business in several countries, in order to avoid the hassle of dealing with various taxation systems.

(5.) Singapore:

Strategically located, the Republic of Singapore has a reputation as a financial center that's really attractive to "offshore" funds of Asian companies and entrepreneurs.

Pros: Legislation on the confidentiality of banking information entered into force in 2001 and since then, the electrifying city-state is recognized by the strictness with which it implements that law. And Singapore does not waive these rules, in spite of pressure from foreign governments.

Cons: Singapore is not a country used by wealthy individuals seeking important tax benefits, as most countries from this region offer a relaxed tax regime.

(6.) Channel Islands:

Located between England and France, the Channel Islands host hundreds of international corporate subsidiaries.

The Channel Islands consist of two British Crown dependencies:

  • The Bailiwick of Jersey, consisting of Jersey
  • The Bailiwick of Guernsey, consisting of three separate jurisdictions: Guernsey, Alderney and Sark

Crown dependencies are not part of the United Kingdom, but are instead self-governing territories.

There is no inheritance tax, capital gains tax or standard corporate tax. This has made Jersey a popular tax haven, and the island now houses $ 5 billion worth of assets per square mile. Maybe you should add the Channel Islands to your list when you look for cheap places to retire.

(7.) Isle of Man:

The Isle of Man is considered somewhat of a financial center for low taxes. This tiny island, located between England and Ireland has a very low income tax, of maximum 20% and no more than 120,000 pounds.

Pros: Low tax rates are not the only advantages offered by this small island. Their pension plan is also really great, which is way many companies choose to have their employee pension plans held in accounts in this country. It's possible to benefit from these pension plans starting from the age of 50 and onwards.

Cons: Establishing companies in the Isle of Man may be costly, especially for non – commercial activities and the registration process can be quite complex.

(8.) Ireland:

Ireland is often referred to as a tax haven, despite Irish officials asserting that is not the case. However, a Congressional Research Service report found that American multinational companies collectively reported 43 percent of their foreign earnings in five small tax haven countries: Bermuda, Luxembourg, the Netherlands, Switzerland and Ireland.

(9.) Mauritius:

Located in the Indian Ocean, near Madagascar, Mauritius is another island that attracts many foreign investments. A large number of international corporations have subsidiaries established in Mauritius.

Pros: The corporate tax levied in Mauritius is really low, compared with other jurisdictions, of only 15%. Capital gains and interest are not taxed in Mauritius and residents can also benefit from various tax exemptions, due to double tax treaties.

Cons: Mauritius was used as a location for investments, especially for those directed towards India, but in May 2016, a new protocol amending the double taxation treaty between India and Mauritius was signed. This gives India a source based right to tax capital gains, which arise from alienation of shares of Indian resident companies acquired by Mauritius residents.

(10.) Monaco:

This tiny state has only 36,000 residents, but it attracts many entrepreneurs and companies willing to invest in this small country. Why? Because the income tax for residents hasn't changed since 1869.

Pros: Once a person has become a Monaco resident, they are allowed to keep all the income they make, without any limitations. It's no wonder that most of the world's millionaires are residents of Monaco. Corporate taxes are also really low, which makes Monaco a great location to start a company.

Cons: In order to become a Monaco resident, a person needs to be a citizen of an EU – member state or have a long-term French visa. It's also necessary to deposit at least 100,000 Euro in a bank in Monaco, to have private health insurance and to buy a property in Monaco.

(11.) Switzerland:

Switzerland has in its banks right now the equivalent of 6.5 trillion dollars of assets under management, and 51% of that comes from abroad, so it's not really a surprise the country is also a global leader in asset management, with a market share of 28 %.

Under international pressure, Switzerland has relaxed slightly in recent years its laws on fiscal secrecy, but the lobby for keeping these regulations remains strong as evidenced by the aggressive policy of the country against pressures for disclosure of information in this sector.

Pros: Combining low taxes with a top – notch banking system, it's no wonder that Switzerland is one of the most popular tax havens in Europe. Opening a Swiss company is a relatively fast process, compared with the legal hurdles of other European states.

Cons: Although any individual or legal entity is allowed to register a company in Switzerland, one of the conditions required by Swiss law is to have at least one Swiss company director. To solve the Swiss directorship issue and tackle company formation Switzerland you should talk to experts.

(12.) Bahamas:

Pros: In the Bahamas, the personal income tax rate is zero. It can't get any lower than that, right? There is also no wealth tax, no capital gains tax, no withholding tax and various other tax benefits both for individuals and for companies.

Cons: Not everyone can take advantage of a tax exemption on personal income, just those who are also residents of the Bahamas. Obtaining the residence here requires, in particular, the realization of an investment in a local property of a minimum value of $ 500, 000 (or a minimum of $ 1,5 million for the accelerated procedure).

The Bahamas doesn't levy direct taxes, so there are no double tax treaties with other countries, but this tiny country has signed tax information agreements with 29 other countries, including USA, UK and Canada. However, information disclosure is limited to criminal matters.

(13.) Hong Kong:

Hong Kong is one of the emerging tax havens, as here assets of 2.1 trillion dollars are managed right now. It has the second largest stock market in Asia, after Tokyo, and shows the highest density of people with fortunes of more than 100 million dollars. Just under half of foreign investment in China went to Hong Kong in 2012 for example.

Pros: Companies incorporated in Hong Kong pay tax only on profits sourced in Hong Kong and the tax rate is currently at 16.5%. There is no withholding tax on dividends paid to foreign shareholders and no tax on capital gain.

Cons: China's control over Hong Kong hinder initiatives to increase transparency and further enables the holders of bearer securities – instruments for some of the most harmful criminal activity – to remain unidentified. This damages somewhat the credibility and the reputation of companies registered in Hong Kong.

(14.) Malta:

Malta makes it on the top of the list of the countries with the lowest taxes in the world in 2016, which is why is one of the best tax havens in 2017. Living on the small Mediterranean island makes it possible to gain the status of resident and to be thus taxed only on income from local sources.

Pros: One of the best tax advantages for individuals and companies is that there is no tax levied in Malta for revenues obtained abroad.

Cons: Maltese nationality can also be obtained through a citizenship by investment program, for those who want a faster process. However, in order to obtain Maltese citizenship, it is necessary to make investments in Malta worth about 1 million Euros.

(15.) Panama , which is a significant international maritime center. Although Panama (with Bermuda) was one of the earliest offshore corporate domiciles, Panama lost significance in the early 1990s. Panama is now second only to the British Virgin Islands in volumes of incorporations.

(16.) New Zealand , the remotest jurisdiction, has the advantage of being a true primary jurisdiction but with a tough but practical regulatory regime. It is well positioned for the Asian market but retains close ties to Europe.

(17.) Nevis: the offshore companies located in this Caribbean island of the Federation of Saint Kitts and Nevis are exempt from all local taxes, including income, withholding, capital gain taxes, stamp duties and other fees or taxes based upon income or assets originating outside of Nevis or in connection with other activities outside of Nevis.

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Taxes

Offshore Company Formation in Gibraltar

When you start looking for European company formation options that will provide tax or operational benefits you narrow the list pretty quickly generally to:

  • UK
  • Ireland (though not often)
  • Isle of Man
  • Jersey
  • Guernsey
  • Malta
  • Estonia
  • Latvia
  • Cyprus
  • Switzerland
  • Lichtenstein
  • Netherlands
  • Luxembourg
  • Gibraltar

There are lots more but I can’t think of any reason you’d want to use any of the others when you’ve got those to choose from and frankly there are definite preferences among those depending on what you’re doing. We’ll cover each in detail in coming posts but for today we’re going to focus on Gibraltar. As it stands today as of this writing we LOVE Gibraltar. But when I first started studying offshore jurisdictions I didn’t quite understand why I would love it in spite of it being mentioned to me by several people.

On the surface Gibraltar isn’t that spectacular:

  • While supposedly inexpensive by European standards Gibraltar company formation or incorporation typically costs around 850 GBP in the retail market not counting other required documents
  • There’s a 10% tax rate and no tax treaties
  • Company formation takes a minimum 2 weeks often dragging on much longer
  • Director/ownership details are public
  • There’s no domestic corporate banking to speak of
  • Over a certain level audited financials are required

Reading the list it doesn’t sound that compelling to me and unless there are special circumstances I’d say if you’re going to form a resident Gibraltar company you’re probably better off looking elsewhere (alternatives discussed in other posts). It used to be that Gibraltar being an EU member but not a member of the VAT regime was helpful but updates to the VAT regime have mostly eliminated these benefits.

Favorable Tax Treatment

However, Gibraltar is one of only 3, really only 2, jurisdictions within the EEA (European Economic Area) with a particular nuance in their corporate residency laws. Tax residency in Gibraltar is based ONLY on management and control, which means you can have a non-resident Gibraltar company. What does that mean?

A non-resident company isn’t liable for any local income taxes except on domestic source income (no income in Gibraltar = 0% corporate tax rate). So we’ve just gone from Gibraltar being a 10% tax jurisdiction, which is OK, but not exceptional, to a fantastic 0% tax regime.

Non-resident Gibraltar companies also benefit from not having the same requirements when it comes to the likes of audited financial statements that resident companies have.

Non-Residency Requirements

By default a Gibraltar company is not non-resident so to ensure it is you need to file according with the local financial authority and meet the appropriate criteria. These include:

  • No funds remitted to Gibraltar
  • No business in Gibraltar or from Gibraltar sources (not a big deal since it’s a tiny market of around 80 000 people)
  • Management and control (generally speaking directorship of the company) outside of Gibraltar

This does raise some questions such as:

  • If no funds can be remitted to Gibraltar (there’s a sort of remittance basis in their tax system) where should the company bank?
  • If management and control isn’t in Gibraltar where should it be?

Banking & Reputation

Corporate banking in Gibraltar is virtually non-existent anyway, while Gibraltar is fairly well known for some of their banking it is private banking not corporate banking and certainly not for small businesses. The good news is this means other jurisdictions, particularly other European jurisdictions are fairly familiar with Gibraltar companies banking abroad and relative to a lot of other offshore jurisdictions gaining banking for a Gibraltar company can be relatively easy.

Unfortunately, even though this is the case the available jurisdictions that accept non-resident companies with strong banking are few and diminishing so it’s becoming more and more attractive to be able to bank locally in spite of an asset protection argument against doing so but that’s for another post. The common places to look would be Malta, Andorra, eastern European jurisdictions or Caribbean jurisdictions. There are a few gems in there but a lot that aren’t particularly attractive.

Gibraltar actually has a pretty strong reputation as it is what might be called a mid-shore jurisdiction competing within the global incorporation landscape on reputation as much as on tax and other features. This is very helpful in some parts of the world but in Asia it is a very unknown as a result hands on experience has shown in spite of a much better reputation it can be more difficult to open a bank account for a Gibraltar company in say Singapore than for say a Marshall Islands company as illogical as that might seem. Opening accounts in jurisdictions such as Singapore and Hong Kong is certainly possible but typically more of a hassle than doing so with some of the more well-known tax havens or by contrast more of a hassle than opening an account in a European jurisdiction where Gibraltar companies are more common.

Incorporating in Gibraltar

When actually forming a company in Gibraltar be prepared for a fairly rigorous process, this is not like opening a company in say Delaware or Anguilla where essentially just providing the name of the company and owners is good enough. In order to safeguard their reputation that Gibraltar agents will require details about the nature of the business comparable to what’s required to open a bank account and may decline applications based on certain types of business, which might negatively impact the reputation of the jurisdiction. If you’re aware of this in advance and have prepared the process can be relatively smooth but expect some hassles as compared with more traditional offshore jurisdictions. The end result if you’re not prepared is incorporations can drag on months rather than the optimal two week formation time if you are organized and prepared.

When forming the company be sure to clarify you are forming a non-resident company (unless for some reason you want the company to be resident locally). Forming a local company certainly isn’t the end of the world, while they will be subject to a 10% tax and audited financial statement requirements when the sales volume exceeds a certain threshold there is a quasi-territorial tax system in place that means depending on how operations of the business are structured the net effective tax rate might be quite low.

All companies in Gibraltar are “limited”.

Management and Control

For a Gibraltar company to qualify as non-resident it must have foreign management and control. What’s the problem with this? It might not be a problem, it might mean the company can have essentially stateless tax residency much like how Apple Inc. has applied with a couple of their Irish subsidiaries in their tax strategy. However, for a lot of the world’s jurisdictions, which determine corporate residency on the basis of management and control it could create issues. For example, I’d never recommend a Canadian company or individual form a Gibraltar company unless management and control were exercised somewhere else since Gibraltar doesn’t qualify for Canada’s favorable tax regimes and it also taxes based on management and control, meaning the non-resident Gibraltar company would end up fully taxable in Canada.

In other words whether to incorporate in Gibraltar becomes based on a variety of other facts and circumstances aside from the merits of the jurisdiction itself.

Bottom line if you’re going to form a company in Gibraltar and not have it be resident there be sure the foreign management and control won’t make the company taxable somewhere else, perhaps somewhere more onerous.

Asset Protection & Confidentiality

Confidentiality rules in Gibraltar are mediocre at best. While there are definite limitations on information sharing, which might come about as a result of tax information exchange agreements, FATCA, EU Savings Directive, and multi-lateral exchange agreements, Gibraltar does definitely participate in exchange sharing initiatives and is rated as largely compliant by the OECD. Further as previously discussed ownership and director details are public making confidentiality directly through a Gibraltar company difficult.

Getting around this later challenge is achieved through the use of nominees or corporate directors/shareholders, which are permitted as of this writing.

Conclusion

Overall Gibraltar is one of the best European jurisdictions to form an offshore company depending on your individual circumstances. There are very favorable tax regimes available, the reputation is good, and you gain access to the European advantages as discussed in other posts. We like Gibraltar and use it fairly frequently to form companies.

If you’re interested in any guidance as to which formation agents to use or how to go through the company formation process please contact us and we’ll be happy to provide direction.

Categories
Taxes

Limited Liability Company Setup

After getting a physical address for my as of this time purely online business, I could now complete the paperwork to setup my own Limited Liability Company. (See previous articles for why I chose to do this) There were several options for completing the paperwork and filing which I will briefly talk about. I am also mainly going to go write about the option I ended up choosing in order to accomplish the filing, and possible mistakes I may have made along the way.

Options for Filing the LLC Paperwork

  1. Do It Yourself
  2. Hire an Attorney and/or CPA
  3. Use a non-attorney legal documentation service

Do It Yourself

The first option for filing my LLC paperwork was to request the paperwork from my state, Texas, fill out the forms myself, and send it to the Secretary of State office for filing. Now I had read several articles on this with some people saying it was painful while others stated that it was not that hard to do. I guess it just depends on how much you like to do yourself. I often like to figure things out and over-research things before I do them (often spending more time on the research than the actual doing part which is a problem I have!) I decided from the start with my businesses that I didn’t want to get caught in that trap I set for myself often. On the other hand, I also don’t want to shell out more money than I think I need to if I don’t have to. I’m sure with proper research and time I could have completed the paperwork accurately and saved money in the final cost of filing. But since I did not have unlimited time or an unlimited ambition to tackle this, I chose not to follow this path.

Hire an Attorney and/or CPA

This of course would have been the most expensive option and I’m not sure it would have saved me anymore time or headache over the third option listed. First you would have to pick an attorney that had experience in setting up an LLC (from what I had learned, this can vary more than you think.) Also just like anything that you want to outsource, such as car repair, plumbing services, lawncare, etc., unless you have used their services before you really do not know how good it is until you use them. With attorney’s and CPA’s fees, this can be an expensive process. I personally do not have much experience selecting these professional services because I have not used them much in the past. So I would either have to research and find recommendations for these professional services, taking time and effort, or just hope that the ones I did contact would do a good job.

Use a Non-Attorney Legal Documentation Service

This option is much like taking your tax papers to tax preparation services like H&R block or the like. With this option you get some guidance with paperwork preparation and filing assistance, but they do not offer you legal advice which you may or may not require. These services are setup to be user friendly with answers to many frequently asked questions listed for reference. Think of Turbo Tax Online as a comparison except these are for legal documents. I ended up picking this type of service over doing it myself completely or hiring an attorney and/or CPA.

There are varieties of companies that provide these services and I did check out a few. I have to admit, I ended up choosing LegalZoom.com out of recommendations from others online that had used them, and also because of brand recognition. Hey I guess marketing does work. As a note of disclaimer, after I used their service and was happy with the results (keep on reading) I signed up for an affiliate account with them. I’m not asking anyone to use a particular service, that is up to you, and there are many out there which may be just as good or better.

How the Process Went

I will not give the actual step-by-step, line-by-line process because I believe most of it is self-explanatory to those who use their service, and there is no reason to duplicate their entire process just to bloviate and have more to write than I think is needed. Also there are many different choices to be made which are based on each individual business’s circumstances, and for me to lay out my specifics would not necessarily be of any benefit to others. I have to say, though, that I felt there was adequate information given to guide me through the procedure. The only point in the process where I think I should have done more research prior to starting the paperwork related to deciding how you want your LLC to be taxed. In simple terms, you can choose to be taxed either as a corporation or as an individual in terms of how profits are regarded. I believe this is an area where you might need to get more background information regarding the pros and cons of the route you choose prior to starting the paperwork process, and make sure you know why you are choosing the method of taxation you end up selecting.

Legal Zoom had three different packages for filing your LLC paperwork. They had the Economy, Standard, and Express Gold. The prices listed do not include the costs of the actual state filing fee which is charged by the state where you form your LLC. This varies from state to state so it is helpful to know what your state charges beforehand so you will not have sticker shock when it comes to the total cost. I will breakdown my costs a little later in this post.

  • The Economy package ($149.00) or basic package included a preliminary clearance of your LLC’s name, the filing of Articles of Organization, a custom operating agreement including provisions protecting officers and managers from liability, and their “Peace of Mind Review.”
  • The Standard Package ($249.00) included everything in the Economy package plus extras such as a Deluxe LLC Kit embossed with your company name, an official company seal, and 20 customized membership certificates with transfer ledger.
  • The Express Gold package ($359.00) included everything in the Standard package plus Priority Rush service (7-10 business days), over 40 essential business forms on CD-ROM, including employment and independent contractor agreements, Federal Tax ID (EIN) application preparation, and two-day FedEx delivery of final package

The price differences between the packages were mainly related to add-ons which had nothing to do with the actual filing process. I chose the Economy package because I was only interested getting the filing performed with just the necessary paperwork and services required to do this. At the end you can choose additional add-ons if needed as well. I added the filing for my business employer identification number (EIN) so that it would be provided at the same time my LLC paperwork was completed. I have read that obtaining your EIN through the IRS is a really painless, fast, and easy process online, so you may decide not to have it as an add-on expense if you use a filing service.

There was one hidden fee, or at least not clearly spelled out fee, I encountered during the process. It was a fee related to selecting a Registered Agent for your LLC. “Each LLC must have a registered agent. This is the person designated to accept official notice if the LLC is “served” with a lawsuit. A registered agent must be either (1) an adult living in the state of formation with a street address (P.O. boxes are not acceptable) or (2) a company registered with the Secretary of State in the state of formation.” (Legalzoom.com, 2010) Now there are advantages in selecting a registered agent other than yourself which are listed in the information on their website, such as adding a layer of privacy among others, but what did not seem to be clearly discussed was the fee of $149.00 a year for having your registered agent through LegalZoom’s registered agent service. This is something I will look into more during the year to see if I want to change my registered agent to avoid this recurring fee.

My Order Summary

Package:

Economy LLC $149.00

Two-Day Delivery (Two Business Days) $14.95

LLC Filing Fee – TX $300.00

EIN Obtainment $79.00

250 Premium Business Cards $19.99

Non-Customized Membership Certificates (10) Included

Filed Articles of Organization Included

Operating Agreement Included

Registered Agent Services $149.00

Business Registration $49.00

Grand Total: $760.94

As you can see, the total cost is much more than the first impression you get when you see $149.00 initially. I knew there would be state filing fees which is a good chunk of change by itself for my state, so this did not surprise me. I added the business card add-on which also gave me a free coupon for a total of 500 business cards and free shipping. I also had the EIN obtainment add-on which I had mentioned previously. So I could have shaved $100.00 off the order total and also the Registered Agent Services if I had chosen to do so.

How Long Did it Take Using the Economy Package?

Below is the time table from the order status on my account at LegalZoom.com

Steps to Completion

Status – My order was placed on 3-10-2010 around 8:00 pm

· LLC name is preliminarily available – Completed 03/11/2010 12:01 PM

· Sent to Texas Secretary of State for filing – Completed 03/12/2010 11:34 AM

· Texas has approved your filing – Completed 03/15/2010 03:41 PM

· Preparing your final documents – Completed 03/18/2010 11:23 AM

· Preparing your order for shipment – Completed 03/18/2010 05:43 PM

· Final quality check – Completed 03/19/2010 02:21 PM

I received all my paperwork in the mail at my business address two days later. Since I had not purchased the expedited services and only the Economy package, I was pretty impressed with the overall turn-around time from start to finish being 11 days. I received all the required paperwork and documentation for the LLC including the official LLC registration certificate from my state’s secretary of state office along with my business Employee Identification Number. I now had everything I needed to open up a business bank account in the name of my new Limited Liability Company. This is the next step I will write about in an up-coming article.

Conclusion

I was very happy having used a legal documentation service, in my case LegalZoom.com, as opposed to filing the paperwork myself or using an attorney for the project. The process was straightforward and very easy to complete. I think it took me about 30-45 minutes to go through the steps of questions during their online interview procedure. The costs were a little more than I had expected, but overall I think it was a good value. I wish I would have explored a little more in-depth the taxing designation I chose for my LLC because I have learned more about this since I setup my LLC. I also probably would have applied for my own EIN on the IRS website rather than paying for this service if I have to do it again. Everything is a learning process and I hope this post may help readers understand a little better the process I went through in getting my LLC paperwork completed. I would love to hear any comments you have on the subject and even advice from you if you have gone through this process differently.

Categories
Taxes

Selecting the Business Structure and the Process of Company Registration in India

To work legally, in India, every business has to register itself. The process of company registration starts by deciding the structure of it. By selecting the proper structure, a company can:

  1. Meet targets set easily.
  2. Operate at its highest efficiency.

A Business Structure – the Vital Necessity of it

The structure of a corporation determines two essential factors:

  1. The filing of Income Tax returns.
  2. The compliances that have to be adhered to.

To give a clearer picture take this example:

A business registered as a company has to file income tax returns along with annual returns to the Registrar of Companies. On the other hand, a firm registered as a sole proprietorship merely has to file income tax returns. Moreover, a company’s financial books need must be audited once a year which means extra expenses of:

  1. Auditors.
  2. Accountants.
  3. Tax filing authorities.

Another example of how a business composition can influence the company is:

Some structures like a PLC or LLP have the image of being investor-friendly because they are separate legal entities. It signifies that a business which hopes to get a monetary backup in the future would fare better as a PLC or LLP. If the owner chooses to register as a sole proprietor, he or she may face issues while looking for outside investors.

Essentially, it means consider many factors before electing the business structure because they impact the venture in the long run.

Four Primary Business Structures in India

The options an entrepreneur has when deciding the formation of business are:

  • OPC

One Person Company allots a single individual as the sole-proprietor of a firm. This type of structure is ideal for a company that has just one owner or promoter. It was introduced in 2013.

  • LLP

Limited Liability Partnership has more than one owner. Called partners, there is a restriction on the liability they have to bear. It is equal to the contribution they made. The LLP is a separate legal entity.

  • PLC

Private Limited Company is also a separate legal entity from its creator. The most common type of structure, it has directors and shareholders. The firm considers all of them as employees.

  • PLC

Public Limited Company also has a separate legal existence, and like an LLP, the liability of its members is restricted to their shares. This structure is formed by “a voluntary association of members.”

A Business Structure – How to Select the Right One While Applying a Company Registration Online

To pick the right choice of a business structure, ask the following questions.

  • What is the number of owners of the business?

An OPC is ideal when one individual is putting up the total initial capital. An LLP or a Private Ltd. Co. would be better suited for businesses that have 2 or more owners and are also looking for further investment by new entities.

  • Does the initial investment affect the structure?

Yes, it can influence the decision. For example, owners who don’t want a substantial investment at the starting can pick:

  1. A Partnership.
  2. Sole Proprietorship.
  3. A Hindu Undivided Family.

Entrepreneurs who are sure to recoup compliance and setup cost can choose:

  1. Private Limited Company.
  2. OPC.
  3. LLP.
  • How much liability can be borne?

Structures like PLC and LLP have a clause for restricted liability. It indicates that in case there is a default of loans the members will only repay the amount equal to:

  1. Their contribution.
  2. Value of shares held.

In other structures such as partnership, HUF, and sole-proprietor, the liability has no limit. They members or owners have to repay the entire cost which can put personal assets at risk.

  • What are the applicable tax rates of the business structures?

For an entity registered as a company or partnership, a flat tax rate of 30% is applicable. For HUF and sole-proprietorship, the slab rates applied are standard.

  • Will others be investing in the company?

Any business that hopes to get investments from venture capitalists or other parties should register it as a Private Limited company or LLP. They are measured as trusted entities and therefore easier to get financial backup.

The Process to Registering a New Business

A new company Registration or startup in India can now be easily registered easily online. The new process was incorporated by the Ministry of Corporate Affairs a few years back. The basic steps that need to be taken to register a business are:

  1. Get a Digital Signature Certificate, also known as DSC.
  2. Get a Director Identification Number, also called DIN.
  3. Accurately fill in the New User Registration form, also termed as eFrom.
  4. Submit the eForm.

The company is now registered and ready to work in India legally.

Categories
Taxes

Why Are Payroll Management Services A Good Thing For Your Company?

Employees are a company's asset. And a breach of their trust is what can cost a company severely. It is thus of utmost importance to have an efficient payroll service that goes beyond the conventional writing of checks for the employees and have grown to include intricate accounting services that are crucial for the smooth running of the company. It is also pivotal in aligning the company with the various legislative rules that are necessary to abide by. Payroll management services ensure that the terms and conditions of salaries remain transparent and this in turn adds to the credibility as well as reputation of the company.

Let us now look at some of the basic added benefits that you can consider before taking the final leap in appointing a payroll service.

Cost Efficiency
Processing payroll can prove to be quite expensive. However, with the help of professional payroll service providers, the cost gets greatly reduced. Organizations sometimes allot bookkeepers and accountants to manage the payroll of the employees and their individual salaries are often considerably higher than the cost you might incur if you appoint a payroll management team. Payroll management services not only handle all the necessary paperwork for the employee's salaries seamlessly but also reduce the risk of marginal mistakes that can lead to an unhealthy confusion between the employer and employee.

Error Reduction
Continuing from the aforementioned point, error reduction plays a great role in making sure that the payslip that is presented to the employee is compact and comprises of all the necessary tax deductions, the total number of hours worked and the numerous costs incurred by clients and customers alike. Outsourcing payroll services eliminates the possibilities of errors which can be very likely while managing a company and also promptly detects minor missteps in calculations, giving them the highest priority.

Increased Tax Savings
Managing the business as well as making sure that all the deadlines associated with tax are met, ensuring that the employees as well as the company are not subjected to any penalties is a tough task. This is where a payroll service provider comes in as they are known to be well acquainted with the legislative rules, amendments and the current tax slabs. They ensure a timely deliverance of salaries and also see to it that the financial limitations that are imposed on a company are adequately met.

Advanced Technology
Payroll management services use some of the most advanced technology to manage every aspect of the accounting system. Utmost care is taken so as to not let the highly confidential and personalized paperwork of the company be compromised. It might so happen that the payroll is externally influenced leading to great losses within the company. Payroll services do away with those probabilities and exercises an authorized control system over the management of the company.

With its automated system to manage efficiently, such services also allow companies to re-allocate resources that solely concentrate on the workings of the company without having to keep a track of the complex payroll system. It thus is simply mandatory to employ a Payroll Service Provider of repute to ensure that a company's stability is maintained and that which also guarantees a favourable experience for its employees.

Categories
Insurance

Reasons To Change Your Car Insurance Company

1. Paying too much for Car Insurance, its time to seek change.

2. When you must think of a new car insurance company.

Auto insurance is not a luxury but a necessity. And in order to get the maximum advantage experts recommend that you should shop around for auto insurance every 2-3 years. As policies change and newer players enter the market there are so many new attractive auto insurance schemes that you could benefit from. You should consider changing your auto insurance when:

o You are availing a huge mortgage to buy property and the bank or institution offers you a lower interest rate on home and auto insurance through their tie -ups.

o You have moved to another state where the auto insurance rules are different and you will make a saving by transferring your insurance to a new car insurance company. Or when your old car insurance company does not offer service in your new state.

o You want to cut costs and are trying to run your life on a budget. Shop around online for competitive auto insurance rates and change the car insurance company to one who offers the best deal.

o You have purchased a new car and the dealer is offering free insurance for three years. New cars have lower insurance rates so it is best for you to do a comparative study and find a car insurance company that offers a great deal. Car insurance rates vary greatly between car brands and types; find out which car insurance company offers the maximum coverage for the lowest rate.

o You are getting married and now will have two cars. Think about cancelling your individual car insurance policies and getting a joint one for both cars. Similarly if your family is growing and you have many cars used by adults as well as kids, ask auto insurance companies about group insurance schemes that will cover all the cars and drivers in your home. Most companies offer great discounted rates for combining car insurance policies.

o You are retired and now a senior citizen. Car insurance companies offer discounts to those who are 55 and above. There are a great many discounts available for a car that has a good insurance claim record, a car that is not driven every day, and a car that is single driver driven and well maintained.

o You are eligible for coverage through your new job. Many large companies have facilities like auto insurance schemes at premium rates lower than the market. If you are working in such a firm then you must consider cancelling your old policy and taking a new one with the car insurance company chosen by your workplace.

o When the rates being paid by you are high and your car insurance company shows no inclination to offer you a competitive rate. If you are paying too much for car insurance its time you changed your car insurance company to one that is offering you great facilities and rates.

Whatever the reason to change your car insurance company, the World Wide Web has sites where you can compare offers as well as quotes. Sites like LowerMyBills.com give quote comparisons in a click. So, read all you can about car insurance and the companies and determine which car insurance company offer will suit you best.