There are numerous entities available to entrepreneurs looking to incorporate their business, the main selection include: a limited liability company (LLC), corporation and general partnership/sole proprietor. LLCs are by far the best suited, and most common, for small startups due to the nature of the benefits it offers – especially in comparison to the others which can be complicated and costly.
Prospective LLCs can find themselves asking the question: what are the best countries in the world to set up my LLC? Taking the easy route out and founding it in your home country has its benefits but may not always be the optimal choice, particularly in the long run. For example, living in a high-tax location quickly puts an international business at a disadvantage. This article explores the best locations in the world to start an LLC.
Factors to Consider
A business must consider the impact of a location’s taxation on the owner, employees and co-founders, as it can really affect its investors’ returns. For example, locations offering greater tax relief on returns as a founder will be more rewarding for a business, whilst those with greater income and capital gains tax liabilities will not.
One key reason to choose one jurisdiction over another is that investors optimise around their tax implications. They may also prefer to deal with matters in final legal documents in their local jurisdiction, rather than in new ones they are less familiar with. Preference of jurisdiction may be decided due to tax relief, which they may receive as part of investing in the company.
Paperwork is most likely the biggest hassle associated with making this decision. Whilst not the primary decision to choose one country over another, it may help separate two seemingly identically beneficial countries. Businesses will obviously try to avoid companies that mandate far more paperwork than others.
Human resources is an important issue regarding the choice of which country to incorporate within. For companies that depend on a large workforce, it may be difficult for any of them to move to certain countries if necessary. Hiring in the new country may also be a problem depending on whether it has a lack of human capital.
Some countries require founders to have residency to be able to establish a business there. So this must be borne in mind, particularly if immigration status is not owned/difficult to get.
What Are the Best Countries?
- The British Virgin Islands – BVI is the best place to incorporate for internet-based entrepreneurs that want to park their international income offshore. It has the most eminent company formation setups out of all offshore jurisdictions. The most advantageous aspect of an international company based here is that it can be paired with a bank account in a reputable jurisdiction; Asian banks are particularly willing to work with BVI companies.
- Denmark – a great alternative for businesses looking to incorporate in Europe. It offers the most flexible hiring and firing rules in the world, which drastically reduces the costs associated with scaling business operations up or down. Registration for incorporation is very quick – only taking days, not weeks. On top of this, there are no resident requirements for management, even the CEO and board of directors.
- Norway – a great option for digital nomads, Norway has a strong economy and the majority of communication with the government can be done digitally. For tech-based businesses, there is a large demographic of highly skilled workers in IT, finance and design. Additionally, it has long-standing trade ties with the EU and well-developed communication and transport infrastructure.
- New Zealand – widely considered to be one of the easiest countries to business in because incorporation only takes a day, and registering a property can be done in two. Furthermore, the workforce is incredibly skilled plus educated, and labour costs are low. With regards to taxation, there are no payroll, social security or capital gains taxes, which is always appreciated.
- Singapore – one of the best places to trade in the world because it is one of the wealthiest nations, is politically stable and has a strong labour force that benefits from large tax relief.
It is important to consider the industry your LLC will be working in when deciding which country out of the list is best suited for your company. Those depending on a workforce will need to prioritise the jurisdictions that offer a plentiful supply of this at a low cost, whilst those working digitally must identify those that have good tech infrastructure. For help on setting up an LLC, The Incorporation Rocket has a useful resource that has been linked.