How to choose the right offshore service provider?
The universal providers
The universal providers also sell offshore companies. The difference is that here, like in a supermarket, the client is offered a wide variety of products and jurisdictions, plus some advice and guidance on the top. Unlike the specialized providers, the "supermarkets" are often physically located in the big commercial centres of the world, like London, Hong Kong or New York. Consequently, quite often, they do not register the companies by themselves – they merely outsource the job to a, You guessed it, specialized Registered Agent. Most of the universal offshore service providers are essentially middlemen between the actual client and the Registered Agent who will be registering and maintaining the clients' offshore company.
Speaking of the middlemen, there are some really big ones. Think of a 40-jurisdiction offshore supermarket with outlets in all major cities of the world, full page advertisements in leading business magazines, TV ads, posh Main Street offices, complex websites, glossy brochures, lots of staff, lots of fuss … lots of overhead. Without doubt, it's the customer who pays for it. But price is only part of the story. Big, multi-level systems tend to be slow, bureaucratic and inflexible. They don't do anything by themselves, they outsource. You wait. The arguably good aspect of the big superstores is just that – they will be able to sell You just about anything, with just about any combination of extras and additional services. But don't expect them to really go the lengths of actually thinking and choosing the right jurisdiction and configuration for you – at the end, it's just a "supermarket", where You take Your pickings and proceed to checkout. The truth is, in this area, the best research is the one you have done yourself. Big brands don't help you out here.
Some of the big, multinational offshore services firms do in fact have some of their offices located in the actual offshore jurisdictions, licensed as Registered Agents. In this case, clients can be reasonably assured that the speed of registration and competence of the service will be adequate (the price might still be not). Some of the universal providers, especially the heavily internet-oriented ones, outsource all of their orders to third-party Agents. In this case, there is nothing precluding you from finding the source provider. If a straightforward offshore arrangement is what you are after, then it has good sense to talk to people who will actually go to the Registry and file the paperwork for you. Even more importantly, they will also be the ones who will maintain it for you, hopefully for years thereafter, without the delays and outlays associated with layers of middlemen.
There is, in fact, one particular type of intermediary who may be quite useful to You. It's Your legal advisor and/or Your accountant. Protected by client-attorney privilege, a lawyer can also be Your "offshore service providers" - with the assumed benefit of a competent knowledge in the legal and fiscal circumstances of Your business and Your assets. When going offshore, it is very advisable to take competent legal advice from a specialist, who is located in the country where You live or do business. Just as well, many of such advisors would be in position to outsource the required offshore services from a particular tax haven jurisdiction. However, certainly, an offshore company purchased this way may cost You very dearly, on top of the legal fees. But that's just the way world works…
So, if You are in the market for an offshore company, how to tell a good offshore service provider from a bad one?
If all you have about their business is a cool website with an anonymous "contact us" form and no hint of the real location of the guys, stay alert! Any reputable offshore incorporations provider should at least have a street address and a landline telephone. If there is none, especially after you ask - at best it's an irrelevant internet-business wannabe and at worst it's a scam. Confidentiality is not really an issue here – who hides from his prospective client?
So, internet age or not, a good offshore service provider must have a proper business office, which can be visited personally if required - OK, this may involve several thousands of miles of air travel, but You knew that… Any decent offshore agent must be available to call on office telephone at general business hours in the particular country. Any self-respecting firm should actually have at least two distinct lines. A telephone and fax on one single line will usually point to someone operating out of his flat – not a serious proposition…
If your prospective offshore service provider can not clearly identify his legal status and the geographical location, walk away.
You have heard this before: if the deal looks too good to be true, it probably IS! Watch out for sites promising anonymous accounts, offshore companies for $100 and all the wonders of the world. Again, at best it's incompetence or irresponsible marketing, at worst it's a scam. The experience shows that the best offshore service providers are actually very down to earth, they know their limitations, they rarely overpromise. What's even more important, they should be absolutely competent about the product and service they sell. They should be able to give a complete explanation of all fees and charges involved, what happens when and why. Competence is the key word in this business.
A bona-fide offshore service provider will be for all intents and purposes a domestic company in the particular offshore jurisdiction, with its registration number, local address, director, manager and all the other accessories of any regular business. Unlike the internet-based middlemen, a real Registered Agent based in an offshore jurisdiction will hold a financial services license. For instance, to provide offshore incorporation services in the British Virgin Islands, the Registered Agent must hold either a Company Management or a General Trust license issued by the BVI Financial Services Commission. In order to obtain such license, the Registered Agent must satisfy an impressive list of requirements. The owners, directors and all of the top management of the firm are screened and approved by the Financial Services regulator, same as the firms' internal control and due diligence systems. The licensed provider must also have a large amount of paid-up capital and a professional indemnity insurance. It is a paradox of the 21st century, but even a small offshore formations provider in a tiny tax haven jurisdiction is subject to more stringent official supervision that a huge consulting firm located in, say New York or London. Which one to choose – we leave it to You.