Registering an offshore company is a widely used financial instrument in today's global economy. A quick search on Google will show you that this statement is true beyond a shadow of a doubt. The main benefits that forming an offshore company can provide include but are not limited to; asset protection, financial privacy, business tax mitigation and to operate the business cheaper.

The benefits are many and varied, but there are a number of pitfalls to be cautious of. Base your decision on your needs in order to establish what area or jurisdiction you want to incorporate in.

Forming an offshore company is not a way to cheat your local government out of taxes but is rather a component of your tax strategy that gives you options. Regardless of what country you incorporate in make sure you utilize the services of a local lawyer to help you understand the myriad of tax laws and rules for corporations to operate.

The main benefits associated with forming an offshore company include; asset protection and holding, financial anonymity & privacy in transactions, more legal hurdles to jump through to pursue a prosecution against you and less strong rules to follow for reporting making it cheaper to operate the business.

The most attractive benefit to most people who want to create an offshore version of their business is the increased privacy benefits. In Panama, for example, it is still possible to register a company using nominee directors and officers with shares distributed in bearer share format. The actual person controlling the company does not need to have their name anywhere on the corporate documents making it difficult to prove an association between that person and the offshore company.

As an offshore you are offered a strong layer of protection from any future liabilities when you place assets into an offshore company or legally structured entity. "Own nothing. Control everything." Is an often heard quote from some of the world's wealthier individuals when they refer to offshore companies. Standard asset searches fail to find anything when those assets are in offshore accounts.

If you are a bank, financial institution or insurance company you will not be able to enjoy the less strict reporting rules available in many offshore tax havens. Easier reporting can make running your business cheaper to operate but be careful that you aren't a business type like the one listed above or you can run into hot water.

Mergers that are conducted for the purpose of acquiring assets of a subsidiary entity on its liquidation are another benefit that some jurisdictions provide. Notice the word "some" in that last sentence. This is not common throughout all the world's jurisdictions, so if this is an important feature for you, some due diligence and investigation is necessary.