How to Migrate Your E-Business Offshore

Your can reduce your company's tax liability, vulnerability to law suits, labor expenses and regulatory red tape by moving it offshore. At the same time, you will increase your privacy and find more favorable banking opportunities. An e-business can benefit the most from moving offshore, because no physical property has to be moved. Follow some simple guidelines to find out how to move your business offshore.

Incorporate in a Foreign Country

1. Incorporate your business in the country of your choice by contacting the tax authorities. Most countries list their incorporation laws, so you or your attorney should become familiar with tax rates and other treatment of corporations. If your company already is incorporated, dissolve the corporation before applying in the new country. Look for "free zones" in countries such as the Dominican Republic, which actually had a 25 percent tax rate, but offers free zones where the tax is zero. In the Bahamas and Belize, you get tax free treatment as long as you don't sell or do business in those countries.
2. Open a foreign bank account in the country you register your business in. Check that country's regulations and reporting requirements, and ask about their privacy policies. Open the account online. Legitimate foreign banks offer online account services, and this will allow you to check balances and perform other transactions from wherever you are. Set up your website to process payments through your new bank.
3. Set up ACH payments from your foreign bank to your local bank. ACH stands for automated clearing house, and simply means electronic transfers can be made between two accounts. You will pay yourself a salary in this way.
4. Secure a mailing address in the foreign country where you incorporate. Mail services abound. A simple online search under the country's name plus the words "mail services" or "Virtual Office." They will provide you with an address and receive mail for you. Ask them to forward mail to you periodically.
5. Change your domain registration. Change your website contact address, as well as the registration with the service provider to reflect your new foreign address. Avoid confusion with the IRS by consistently listing all your contact information in the foreign country.

Other Issues to Consider

• Don't try to operate in a foreign country under an existing corporation from outside that country. This becomes extremely complicated and may subject you to corporate taxes where you live.
• You do not have to visit a foreign country to open an account there.
• Avoid using a foreign address that says "P.O. Box" as part of the address, because some legal documents cannot be sent to post office boxes.
• Your company may not pay corporate taxes in a foreign country, but you have to pay income tax on your salary from the company.
• Be aware of foreign exchange rates when transferring funds from a foreign bank to the United States.

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