5 Things About Offshore Banking Every Online Business Should Know
By James Allen
Posted Thursday, September 9, 2004
Offshore Banking - maybe this term conjures up images of secret Swiss accounts, James Bond, and sipping Martinis at a chalet in Lichtenstein. The fact is though that doing a portion of your banking in a financial institution outside of your national borders is not only easy, it also offers numerous benefits to those who make their living via the internet.
In this article, we will explore some of these benefits. We will also try to answer some of the most common questions regarding offshore banking in the hopes of demystifying the topic for the benefit of our fellow internet marketers and others who make their income online.
1. Is Offshore Banking Legal?
This is among the first questions asked when discussing this topic. The answer is YES. Many of the largest companies in the USA do their banking offshore including Exxon and Boeing, among others. You do not need to be a giant corporation though to reap the benefits of an offshore bank account as we will soon explain.
You may wonder why you don't see many ads for offshore banking. If you live in the US, the reason is that federal law denies international banks the right to advertise within the borders of America. Of course this is to the benefit of domestic banks.
Remember, you have just as much legal right to a bank account offshore as you do to a domestic account.
2. Why Bank Offshore?
For the internet marketer and any business that creates income online, there are several benefits to having an offshore bank account. These benefits encompass privacy, asset protection and wealth building.
One concern that offshore banking helps deal with is privacy. The current laws in some countries, including the USA, allow the government full access to anyone's domestic financial information for almost any reason at all. The act of creating a foreign bank account helps make some of your assets harder to access by those who should be minding their own business. A good foreign bank will usually not require your Social Security number, they won't answer questions from US sources about your credit and banking history, and they will not provide your financial information to any domestic data collection agency.
An offshore account can also help you with wealth building. First, there are the tax advantages. Offshore accounts can be arranged in jursdictions that do not impose taxes on income earned abroad. This can be very beneficial when arranged correctly. There is also the ability to earn a higher return on your investments with an offshore account. Many foreign banks are not as tightly regulated as domestic ones and can offer higher interest rates on accounts. This is due to their ability to make more lucrative investments and also the fact that the overhead to operate a bank is lower in many countries.
Finally, the ability to expand your business globally increases when you create an additional bank account outside your own borders. Many offshore banks allow you to do business and hold your funds in multiple currencies. This allows expansion of your customer base which in return can help increase profits.
3. What Country Should You Bank In?
Choosing the jurisdiction to do your offshore banking in will depend on a combination of your business situation, asset planning goals and even to some extent your personal taste. There are several factors that should certainly be considered when doing your initial reasearch though.
Is the country your are considering a stable country? You usually do not want your account in a country where coup d'etats are a regular occurrence. On the other hand, if the financial system is strong enough, it will withstand even political turmoil as in Panama when Manuel Noreiga was forcibly removed by an outside government. Most of those with bank accounts and corporations in Panama were not affected by this, since the financial system had a solid backbone.
What are the country's banking secrecy laws? There are still several countries with strong banking secrecy laws who will go all out to protect your financial privacy as long as you are not breaking the law. Switzerland and Panama come to mind immediately for not bending to international pressure to allow outside government agencies to peer into their customers' accounts whenever they want.
How far away is the country? Some individuals prefer their offshore accounts to be geographically close, since the time zones are often similar and communication is a little more convenient. Americans might prefer their offshore accounts to be located in the Carribean or Latin America, while a citizen of the U.K. might prefer an account at an institution located on the Isle of Man, all other considerations being equal.
4. Accessing and Managing Your Money
Thanks mainly to the internet and advances in international communication technology, offshore banking is fairly straightforward. Most accounts can be arranged with online access to your information. Transfers of funds can be done online as well. As far as accessing your money, most offshore banks will offer a debit card with your account so you can retrieve your money whenever you want, wherever you are from most ATMs.
As you can see, accessing and managing your funds in an offshore account need not be any more difficult than doing the same with a domestic account.
5. Acquiring an Offshore Bank Account
Once you decide that an offshore account is right for you and you have done some further investigating to select the appropriate country to open your account in, the actual process of acquiring the account can be relatively straightforward.
There are a number of legitimate offshore financial planning and asset management firms who will complete and submit all the paperwork for you for a reasonable fee. The advantage to this is they usually have connections with the banks they represent and can arrange your accounts more quickly and easily. Also, they can often offer you added perks such as secured credit cards, merchant accounts and incorporation services.
Be sure to compare the fees charged and services offered and always get feedback from previous customers. Of course, be wary of any offers that sound too good to be true, such as outfits offering unsecured credit cards with your offshore bank account. This is almost impossible to arrange with a new account, and anyone offering an unsecured credit card offshore may just be planning on taking your money and disappearing.
Otherwise, do your research, ask questions and check testimonials. Deal with a reputable firm and you will be well on your way to reaping the benefits of an offshore bank account.
We hope this article has helped not only clear up any misconceptions about offshore banking, but also given our fellow internet marketers pause to consider this financial tool as part of their overall wealth building and asset protection plan.
About the Author
James Allen is the editor of GatesToWealth.com, which introduces offshore banking and other instruments of offshore asset protection to online businesses and internet marketers. To learn more and subscribe to 'Mind the Beach' - their offshore living newsletter - just swing on by: (http://www.gatestowealth.com)
