Today’s modern technology allows us true freedom. And this, in turn, makes us all the luckiest people in history.

This is even more true for people in the international business community. Personal computers, cell phones, DSL, SATCOM and the internet allow individuals to run their businesses anywhere they choose.

Bear in mind, even with today’s technology, success isn’t free. Success comes only after
people put in a lot of hard work, are dedicated, are frugal, are persistent, are willing to sacrifice, and (sometimes) are a little lucky. The ultimate financial freedom today is enjoyed by individuals who chose to own their businesses overseas. There are two great advantages that come with this:

Asset protection. For offshore businesses this is good to have because lawsuits are less common overseas than in the U.S. Additionally, earning income and keeping profits overseas makes your profits safer from legal attack.

Tax benefits. Like any business, an international business will allow you to turn after-tax expenses into tax-deductible expenses. Better still, the right kind of overseas business can defer U.S. taxation.
The most effective business structure from an asset protection and tax deferral point of view is a non U.S. structure (corporation, LLC or limited partnership) which operates entirely outside the U.S. and 50% of it is owned by one or more non-US persons.

This structure provides protection against lawsuits, because for a creditor to be able to recover damages from a debtor, they generally have to bring the lawsuit in a foreign jurisdiction. This inconvenience eliminates the majority of lawsuits.

It also provides tax advantages, because the IRS generally will allow U.S. citizens with interests in overseas businesses with 50% or more foreign ownership to defer paying taxes on the profits. Therefore, if you were interested in building a new business structure, you should look for non-US citizens or residents to work as partners or sales people to assist you in expanding an overseas business. You could give them half the company and look to them for capital and business growth.

Many business owners may not want to have someone own half their business. If so, the IRS or the taxing authority where they reside will get half the profits. Which is the better choice?: A partner who contributes to building the business, or the tax man?

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.