Archive for December, 2009

When you hear the term, Offshore merchant account, or just the word offshore, what initially comes to your mind? Suspicious. Somewhat illegal. Sounds paranoid, isn’t it? Don’t worry. It’s just but normal to be cynical about this. We have watched in movies businessmen being arrested because of having a “hidden” offshore merchant account. But in reality, an offshore merchant account isn’t as bad as it seems.

The baseline

First, let’s get to the basic premise of an offshore merchant account. If you are engaged in an business that fall under the categories of travel, online gaming, online pharmacy, adult website, outbound telemarketing, escort service, etc., then, an offshore merchant account is a feasible option for you. But, actually, no matter what kind of business you have, setting it offshore is always a feasible option. Emphasis are given to the afore-mentioned types because they are considered high-risk businesses by domestic banks.

Preconceived notions

Talking about high risk, this is one of the myths surrounding offshore merchant account. Some say that opening up one is a risky step. One of the reasons seen is that you opt to make transactions with foreign banks. Foreign , being the operative word, smells like anonymity or hidden from the public eye. Clearing this, an offshore merchant account is not actually a secret account. You just have a privacy option. Domestic banks also have the same clause for you to check if you want to keep your account private in a certain level as well.

Another gray area regarding an offshore merchant account is that it is a way to escape tax obligations. In certain cases, you may be lured to the promise that there are super-low or virtually no U. S. taxes due on your account for the reason that you will use a separate offshore- company (your company) to handle your credit card transactions for you, o r that you;’re not actually the owner, you just manage it, or that no taxes are owned on offshore trust incomes.

The reality is you may be be able to hold over taxes until you declare your offshore earnings, but the watchful eye of the Internal Revenue Service (IRS) is just computing on the shadows on how much you actually are liable to. You will not be able to legally set aside taxes without assuming an investment risk or make a total surrendering of your control over your assets. It is a complicated process that entails legal action from a legitimate financial consulting firm. Bottom line, taxes are an inevitable part of life. Every working citizen pays taxes.

Changing the impression

Setting up an offshore merchant account may seem tricky to most, to get a better perspective, get the services of a merchant account provider. They have an established network of foreign and yes, domestic banks, to help you set up a merchant account. This move will help you be more knowledgeable of the inner workings of an offshore merchant account.

They say, what you don’t know won’t hurt you. But, at the end of the day, knowing what really happens makes you feel connected to the world, in the case of an offshore merchant account, what you know will not hurt you as well.

What is an international merchant account?

The simple way of answering this is the activity of payment by international credit cards and its receipt online by a merchant. The meaning of international merchant account deals with the feasibility of acceptance of payments by the merchant through their online business. The modern way of making payments of purchases are routed through credit cards instead of cash payment in most of the cases. This compels vendor to make necessary arrangements for processing the payments accordingly. This is more applicable in the context of the online merchants who have their websites to collect international payments through electronic system. To avail this facility a merchant has to obtain an account from the authorized provider, who can be a banker or a credit card processor. Small business can do with a third party arrangement of merchant account provider without opening a merchant account himself.

Online businesses are a little bit risk involving kind of businesses and that is the prime reason that the domestic account providers hesitate to cooperate merchants for international transactions. The offshore or an international provider encourages the merchant to have an account with them for his online business with more flexible characteristics.

Therefore, this kind of merchant account is preferred by the merchant for his worldwide business activities. Over and above, there is definite benefit in tax payments provided by the international providers.

Important Aspects of International Merchant Account

There are host of advantages provided to merchant account holders like the preference of using the virtual terminals and the processing services in several international currencies. There are certain measures to protect the account holders from fraud and scam. Additional facilities include reporting online, the safety and security of transaction irrespective of any limit and joining with several elite credit card and debit card companies for easy transaction.

The processing fees that are charged are very high in this respect, which does not affect the account holders due to the large scale of transaction that they enjoy in this online business.

Benefits of International Merchant Account

The basic and supreme advantage is for the customers of your online business where they are free to make the payments online in their own currency, which is a positive advantage for the growth of your online business internationally.

The vendors are able to enjoy the practical payment processing favors so that they can make expansion of the online business to any corner of the world through a single interface of international provider. An international merchant account permits multiple currency transactions to develop the business.

Once you have decided to set up your business base in another country the first step in offshore company incorporation would be to decide upon the particular country where you intend to set up. Choose one whose jurisdictions are secure and legitimate and corresponding laws and regulations are simple.

The tax laws, communications efficiency, foreign exchange laws and regulations, banking facilities available and overall cost of company incorporation and maintenance etc should be given utmost importance. Always opt for expert advice regarding the actual formation. There are numerous firms which specialize in offshore company incorporation.

Once the location has been fixed, it is up to the owner to decide whether to visit the place or not. The services provided by certain online firms who are registered agents can be utilized to carry out the incorporation formalities.  It takes very little time if you have all the necessary documents ready. An online application form can be filled and all necessary documents sent to them by fax or courier.

A major step is to open an offshore bank account. Proof of identification such as Drivers License, Passport copies or National ID has to be provided to your incorporation agent as they have to maintain records of all directors, shareholders and beneficiaries of the company. All information provided remains undisclosed with your agent.

A Beneficial Owner’s Declaration known as BOD has also to be filed with the agent. This will highlight the present activities of the entrepreneur, the business he plans to conduct through the newly incorporated company, information related to his career etc. There should also be a signed statement accepting to obey the jurisdictions of the offshore country and not stray into any prohibited areas etc.

There is usually a middle man involved known as the ‘Incorporator’ who plays a vital role in offshore company incorporation. He is the official signatory of the incorporated company in its initial stages and is also the first share holder of the company. He has to subscribe to the minimum number of shares as required by the law and later transfer them to the rightful owner. You can further appoint nominee directors and company secretaries if you further look forward to not being actively involved in the company operations.

An amount will be charged as the incorporation charges as well as the fees of the agent whom you have employed. Choose a good name for your company which is acceptable to the offshore company regulations.