When starting business, the first step is to register a company in the government before you can legally operate. Most people will just register it in their home state and start. Yet, you have choices! You can either register it oversea or in other states.
Incorporate Oversea – Assuming you live in a country, say the United State, and plan to live there forever. Running an offshore company has the advantage of tax deferment, meaning you postpone the payment of taxes into the future or infinitely if you decide to keep the money oversea. For example, if you have a business that generates $1 Million profit every year, you will have to pay tax for the profit in most countries. However, in certain offshore destinations, you keep 100% of your profit, until you decide to move the money back to your resident country. With this you are free to reinvest your profit 100% into your business for growth. Often, we read in the news that big companies, such as Apple and Google keep money oversea for tax benefit. Sometimes, they acquire other companies using their money oversea. This is completely legitimate. You can do it too. Typically, offshore companies are registered in places like Bermuda, British Virgin Islands, the Cayman Islands, Hong Kong, Singapore etc.
Incorporate in Delaware or Nevada – In U.S., more than 50% of the public and Fortune 500 companies are incorporated in either Delaware or Nevada. There are reasons for them to do so. Delaware has many advantages for large business, but not much so for smaller ones. The main advantages of Delaware is it flexible business law. The Delaware Court of Chancery is often considered an advantageous venue for shareholder lawsuits. Also, Delaware do not have income tax on nonresident shareholders, directors, officers, etc. And, they do not impose tax on businesses that do not transact business in Delaware. Nevada does not impose personal income tax and franchise tax and allow nonresident to be shareholders, directors, officers, etc. If you register your company in either Delaware or Nevada, you are still required to registers a company in the state where you do businesses under foreign qualification.
If you are considering registering an offshore company or registering in Delaware or Nevada, you should factor in the initial and ongoing costs of registering and maintaining the corporation or LLC. The costs vary based on situations. But be prepared to spend at least a few hundred dollars per year on it. Another viable way is to start small on your home state and migrate to either offshore or offstate when your business grows to the level that benefits overweight the costs.