# Investigating setting up an Offshore Corp for my online business



## Wanderful (Jul 6, 2009)

I'm a US citizen, full time expat, retired, but with an online business that stands to start making some money. I understand there are some significant advantages to setting up an offshore company structure for my online business.

To be clear, I'm not talking about doing anything shady. Instead of a US based LLC, which I might have set up if I were still in the US, it sounds like the equivalent sort of liability protection would be provided by an offshore corporate structure, but with the added benefit of allowing me to capture my non-resident tax benefits.

If you have done this for yourself, or have relevant experience, I would be delighted to hear your advice. I'm also looking for recommendations for someone to help me set this up.


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## eastwind (Jun 18, 2016)

One firm that I know of has a great deal of experience in this area, going back 45 years or more. They used to be quite pricey and cater to a very exclusive clientele, but I hear they have recently lowered their prices to try to expand their customer base. It's Mossack Fonseca, based in Panama.


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## Wanderful (Jul 6, 2009)

*Setting up an offshore company*



eastwind said:


> One firm that I know of has a great deal of experience in this area, going back 45 years or more. They used to be quite pricey and cater to a very exclusive clientele, but I hear they have recently lowered their prices to try to expand their customer base. It's Mossack Fonseca, based in Panama.


Wow... I just did a quick Google of their name, and learned Mossack Fonseca is the firm involved in the Panama Papers leak. Now their offices are being shuttered around the world. I think that maybe I'll look elsewhere... but thank you for your response in any case.

I'm STILL looking for good advice, personal insights and relevant shared experiences!!

Hope to hear from more of you soon!


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## eastwind (Jun 18, 2016)

Yeah, that was a troll, I confess. Hope someone gives you a real answer. OTOH, they've probably upgraded their security.


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## LMtortugas (Aug 23, 2013)

Wanderful said:


> Wow... I just did a quick Google of their name, and learned Mossack Fonseca is the firm involved in the Panama Papers leak. Now their offices are being shuttered around the world. I think that maybe I'll look elsewhere... but thank you for your response in any case.
> 
> I'm STILL looking for good advice, personal insights and relevant shared experiences!!
> 
> Hope to hear from more of you soon!


Find a very competent CPA with professional legal representation in Mexico. I know nothing of the nature of your business or rationale considering structuring an offshore business entity but I would advise doing your homework to determine an offshore is the preferred option. I utilized folks in Guadalajara several years back investigating the viability of forming a very simple offshore insurance company to underwrite warranty liability but quickly decided that any significant benefit didn't remotely justify the expense, compliance regulations, etc. In my opinion from experience, _Uncle Sam_ will collect his cut from expats regardless of the business structure.


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## Wanderful (Jul 6, 2009)

*If I were in the US, I'd get an LLC but I'm not*



LMtortugas said:


> Find a very competent CPA with professional legal representation in Mexico. I know nothing of the nature of your business or rationale considering structuring an offshore business entity but I would advise doing your homework to determine an offshore is the preferred option. I utilized folks in Guadalajara several years back investigating the viability of forming a very simple offshore insurance company to underwrite warranty liability but quickly decided that any significant benefit didn't remotely justify the expense, compliance regulations, etc. In my opinion from experience, _Uncle Sam_ will collect his cut from expats regardless of the business structure.


Again, I'm not trying to cut Uncle Sam out of anything. I legitimately live in Mexico, having retired here in 2009 (in my mid 50's). The IRS has had my address as being in Mexico for years. I have an Internet business to supplement my retirement (and because I enjoy it), but there are scenarios by which it would seem 'a good idea' to have the same sort of protections against litigation as an LLC would give me back in the States.

Sound advice on any aspect of this issue is appreciated, and if you have specific recommendations of a firm or an individual to consult, I would appreciate it if you would share them.


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## LMtortugas (Aug 23, 2013)

Wanderful said:


> Again, I'm not trying to cut Uncle Sam out of anything. I legitimately live in Mexico, having retired here in 2009 (in my mid 50's). The IRS has had my address as being in Mexico for years. I have an Internet business to supplement my retirement (and because I enjoy it), but there are scenarios by which it would seem 'a good idea' to have the same sort of protections against litigation as an LLC would give me back in the States.
> 
> Sound advice on any aspect of this issue is appreciated, and if you have specific recommendations of a firm or an individual to consult, I would appreciate it if you would share them.


I apologize as my intent was not to imply any professional misconduct, but to question if an offshore entity was the best option. I would suggest consider forming a_ Sociedad de Responsabilidad Limitada (S. de R.L)_ It is near identical to a U.S. LLC; liability is limited to shareholder contribution, capitalization is minimal, and management is simple & easy.


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## Wanderful (Jul 6, 2009)

*Sociedad de Responsabilidad Limitada*



LMtortugas said:


> I apologize as my intent was not to imply any professional misconduct, but to question if an offshore entity was the best option. I would suggest consider forming a_ Sociedad de Responsabilidad Limitada (S. de R.L)_ It is near identical to a U.S. LLC; liability is limited to shareholder contribution, capitalization is minimal, and management is simple & easy.


Thank you for your advice. If I may ask for clarification however... 

My business will be conducted in US dollars, 100% online. Payments may come from anywhere in the world, but overwhelmingly payments will come from Americans and secondly, from Canadians (and their accounts in their respective countries). Some of these individuals may physically be in Mexico (as I am at this moment), but overwhelmingly, payments will come from their US or Canadian bank accounts (going through either PayPal or a third party payment processing firm such as Stripe), ending up in my US account. I do not own property in Mexico, and we keep our Banamex account well below levels that require reporting to the IRS.

I will of course declare income on my US taxes. Consulting an attorney, I had previously been told I could declare income from my website on my Schedule C, as I am the sole proprietor. What's different now is that I'm interested in having a "corporate veil" for a worse case scenario. I have strong Terms and Conditions for use of the website, but there is always the chance of a frivolous litigation, and conceivable being exposed to a liability I haven't foreseen.

Who would be a good person (or company) to speak to about this? Thanks for the input, folks.


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## LMtortugas (Aug 23, 2013)

Wanderful said:


> Thank you for your advice. If I may ask for clarification however...
> 
> My business will be conducted in US dollars, 100% online. Payments may come from anywhere in the world, but overwhelmingly payments will come from Americans and secondly, from Canadians (and their accounts in their respective countries). Some of these individuals may physically be in Mexico (as I am at this moment), but overwhelmingly, payments will come from their US or Canadian bank accounts (going through either PayPal or a third party payment processing firm such as Stripe), ending up in my US account. I do not own property in Mexico, and we keep our Banamex account well below levels that require reporting to the IRS.
> 
> ...


My take from your business description is that your operation is wholly U.S. based, not foreign. Why does it not work forming a LLC in the state your business is/will be domiciled sheltering member owners from liability beyond financial investment. Your online business can book foreign revenue without necessarily having to create a foreign business entity. 

Perhaps restructuring your business as an LLC away from a sole proprietorship will appreciably reduce the potential risk you want to avoid while still enjoying simplified pass through income and related tax benefits/credits if applicable. A well-versed competent CPA in your resident state can direct you accordingly. 

Best of luck with your growing business venture!


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## ExpatEmigre (Nov 22, 2015)

Wanderful said:


> I'm a US citizen, full time expat, retired, but with an online business that stands to start making some money. I understand there are some significant advantages to setting up an offshore company structure for my online business.
> 
> To be clear, I'm not talking about doing anything shady. Instead of a US based LLC, which I might have set up if I were still in the US, it sounds like the equivalent sort of liability protection would be provided by an offshore corporate structure, but with the added benefit of allowing me to capture my non-resident tax benefits.
> 
> If you have done this for yourself, or have relevant experience, I would be delighted to hear your advice. I'm also looking for recommendations for someone to help me set this up.


In my professional life, I have done this many times. Never in Mexico, though. For an offshore entity, one wants a jurisdiction with minimal bureaucracy in this area. That is NOT Mexico, notwithstanding her many other charms & qualities.


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## ExpatEmigre (Nov 22, 2015)

eastwind said:


> One firm that I know of has a great deal of experience in this area, going back 45 years or more. They used to be quite pricey and cater to a very exclusive clientele, but I hear they have recently lowered their prices to try to expand their customer base. It's Mossack Fonseca, based in Panama.


I love you.


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## Meritorious-MasoMenos (Apr 17, 2014)

Wanderful said:


> I'm a US citizen, full time expat, retired, but with an online business that stands to start making some money. I understand there are some significant advantages to setting up an offshore company structure for my online business.
> 
> To be clear, I'm not talking about doing anything shady. Instead of a US based LLC, which I might have set up if I were still in the US, it sounds like the equivalent sort of liability protection would be provided by an offshore corporate structure, but with the added benefit of allowing me to capture my non-resident tax benefits.
> 
> If you have done this for yourself, or have relevant experience, I would be delighted to hear your advice. I'm also looking for recommendations for someone to help me set this up.


I have a question for you. Would the exemption to U.S. income taxes for an American employed overseas apply to you for income from this online enterprise, depending on where the LLC is based?

When I worked in Mexico for an American company, I had to pay Social Security and Medicare taxes (sorry, contributions), but income from working in Mexico was tax free up to a certain amount. I don't know what it is now, maybe $90,000?

Mexico didn't tax it, either. 

How would that apply to your income, if you know? Thanks.


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## drewjones (Aug 15, 2016)

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PT Shamrock's Guide to Protecting Wealth and Privacy


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