An offshore company, which is also known as a "non-resident company", is a company that has been formed in a country that is different than where the person forming the company lives. Forming an offshore company can bring many benefits which include;

Simplicity - unless the offshore company is for banking, finance or insurance an offshore tax haven makes the maintenance of an offshore company rather simple Taxation - there are many corporate tax advantages to outsourcing some or all of your money to a tax haven. Capital that is foreign derived, in general, is not taxable Layered Asset Protection - finding out who owns an offshore company can be difficult, especially if bearer shares are used, even when the true owner is found and a lawsuit is mounted the attacker needs to file a court motion in the offshore country making it expensive to prosecute Increased Privacy & Anonymity - the name of the offshore companies owner can be kept secret through the use of nominee directors (not available in all countries). Simpler Reporting - in general, there are less strict rules that need to be adhered to in a tax haven for reporting making company operations cheaper to maintain.

Two types of of offshore company exist that can be registered; an International Business Company (IBC) and a Limited Liability Corporation (LLC). What is the difference between an IBC and an LLC?

An IBC is registered in a tax haven. This is an offshore company, incorporated as a tax-free entity, and is not permitted to conduct business operations within the jurisdiction of its incorporation. A LLC is a legal business company that offers limited liability to its owners and provides a more flexible type of ownership.

When it comes to categorizing a type of business that an offshore company incorporates as, there are three entities that seem to be the most common:

Companies that have a Share Capital Basically, this is a company that offers shares. The shareholder's obligation to the company ceases once the initial cost of the share has been paid. Depending on company rules, shares can usually be sold or transferred. The shareholders have the opportunity of reaping the company profits, or any of the proceeds resulting from liquidation.

Companies that are Limited by Guarantee In the event that this type of company claims insolvency, the members agree to pay up to a maximum limit. The rules of the company designate the rights that the members are entitled to, e.g. dividends, and membership is normally terminated by death.

Protected Offshore Cell Company This type of offshore company is identified by the seperation of its assets and liabilities into different "cells" in such a way the one cell's assets cannot pay for another's liabilities. These companies are also called Segregated Portfolio Companies (SPC) which are normally used for unit linked insurance bonds and umbrella mutual funds.

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