The Worst Way to Open an Offshore Business Bank Account

by birtanpublished on September 2, 2020

A lot of people who go offshore follow the cookie cutter methodology and while that may be okay for actually setting up your offshore company it's not going to really work on reducing your taxes legally but there's another area where people often

Falter and that's they can't get a bank account for this company and so today i'm going to share with you the biggest mistake people make when getting an offshore company bank account

hey guys i'm andrew henderson if you want to learn how nomad capitalist helps seven and eight figure entrepreneurs and investors go offshore legally go where they're treated best go

To nomadcapitalist.com and what i want to talk about today is a mistake that i've seen for many years but before i talk about that i want to talk about what you may be bombarded by if you are getting into

This offshore stuff you know a lot of times i talk to folks who are working with us here at nomad capitalist who say they've spent months or oftentimes years researching offshore stuff going

Under forums clicking on google ads and looking at all the different strategies people often come with ideas of what their plans should be and sometimes those are

Okay ideas that just need a bit more development sometimes they're just absolutely terrible ideas and so i'll tell you what i got in my email box the other day was an ad from a company that's one of the big

Cookie cutter offshore uh banking and offshore corporate services companies and what i see is basically what i see when i go down the street here and i go to my local mcdonald's i open the email

And i got a picture of a bunch of different countries a bunch of different flags a bunch of different options of where i can incorporate my company and they have mauritius and they have

Hong kong and they have seychelles and they have belize and so many other places and when you're just starting out i understand this can be very overwhelming but can also be very

Enticing remember very early on in my days of researching this stuff it was very intriguing the idea of you know putting my company here you know i would go to a certain country

To a certain place and i would enjoy it and there was almost like this emotional longing for wanting to um you know have a piece of that place in your life that you know if you opened a company or had a bank account that you

Would feel uh like you had that the excitement or the energy of that place in your life and i think a lot of people start out doing that i call this the mcdonald's approach

Where you know here's the menu pick which one you want okay i mean how many times have you gone to mcdonald's or gone to a burger restaurant or gondo wherever and you get a menu of things where they

Have lots of different burgers or sandwiches or whatever and you don't know the difference like what's the difference between a quarter pounder and a double cheeseburger and the new king royal burger like i don't even know

And so a lot of times you just kind of like uh that one and and you just feel compelled because it's your turn in line you just pick the first one that comes to mind and i don't want you to do that when it

Comes to setting up your offshore company now we've talked in other videos you can watch those here on our channel about how a lot of the offshore tax havens that have absolutely no requirements have become

Shunned by banks you're not going to be able to open a bank account um but even if you open a company in a good jurisdiction if you don't have a banking plan you're going to have a problem and so

I know a lot of folks personally don't like to keep as much money in banks they like to invest it they like to keep it in cryptocurrency whatever when you're running a business unless your business is in the cryptocurrency

Business um or unless you have some kind of specific type of business you're going to need a bank to fulfill and to facilitate payments from your customers

Whether those payments come through credit card through bank transfer through paypal uh whatever the case may be and so business banking is really a lot more important

And so i've had a lot of people come to me over the last couple years saying that they had an account that was rejected they could never open the account they opened an account somewhere that

Was closed and they're just having problems opening accounts i've told you stories of people who've come and they open the company opening the company is easy making the company actually work from a

Tax reduction standpoint is difficult because none of the cookie cutter companies tell you that they'll just say hey here's your company it's zero tax here totally ignoring that where you live and

How your company is set up actually is what dictates the tax that you pay not where the company is uh at least the big majority of it but i see people who you know they haven't been able to use their offshore

Companies for a year in some cases because they couldn't get a bank account and so you have to understand is there are questions that a bank is going to ask you about your business and so these are important to know the

Answers to before you figure out where you want to go in bank when i first started doing this stuff i remember one of the big places that stood out my mind was hong kong every one of these local chinese

Agencies in hong kong would sell you a company you know the most these hong kong companies they compete on price uh so it's you know 788 or you know 7588 or whatever the price may be

Hong kong dollars to set up um they don't give any tax advice they don't help you figure out how to collect money if you're collecting credit cards absolutely forget it but they'll compete and then people

Would get in and they would say well what do i do now the people at this company mill won't tell me the one thing that the company mills would provide was a referral to hsbc in

Hong kong now if you've been watching our stuff for a while you know that uh we're big fans of hsbc around here it's about the world's worst bank um and so but for the for years including after i started talking about how hsbc

Hong kong was no longer accepting any companies uh including people who worked at the bank and had side companies they would do consulting on the weekends they would try and open an account of

Their own bank and they were rejected lived in hong kong worked the bank everyone knew who they were they couldn't even get an account i started saying that i still saw plenty of these mill you know these company

Mills recommending hsbc hong kong and you people would go there just get rejected rejected rejected now when it comes to business banking there is a higher chance of rejection i don't

Have a 100 success rate our success rate is somewhere in the 90 of people we send to go into banks we say hey here's the right bank for you or the right two or three banks for you uh we're a little uh over 90 or 92

Something like that um but if you're sending people to hsbc in hong kong for years and the success rate has been about one percent and so you know this old world mentality of you open a company here you get a

Bank account they're just not working anymore cookie cutter banking does not work there's no way that i can tell you if you open a company here this is where you should bank number one banks offshore

Have higher requirements in terms of due diligence in terms of paperwork banks onshore are probably going to require a higher deposit and they're going to want to see that you've got a business that's been

Running for a while and so some of the questions you have to ask yourself is this a new business or is it an established business that i'm moving over from another country if it's a newer business you probably

Want to start with an offshore bank maybe one you can open remotely even a fintech or a challenger bank that you would start with you don't want to be there forever because as your business grows you don't

Want to be stuck in a fintech in my opinion and you want to have options besides just being in some bank in a little island but you can start there uh what is the revenue of your business how much can

You deposit a lot of banks that we work with uh for um for good you know companies they want thirty thousand fifty thousand a hundred thousand dollars in some cases

There are alternatives to those but if you want the best banks that's what they're going to require um you know how many transactions are you doing in a month who are you paying what countries are you paying you know

Certain countries have restrictions you know i've talked before about how if you're doing business in the middle east or north africa you probably want a bank account in somewhere like dubai because your bank in singapore or the

United states is not going to really like that as much but dubai gets it they know what it's like same thing if you're doing business in eastern europe you might want to bank account in cyprus or in latvia or in

A place like georgia where they understand that part of the world and it doesn't freak them out to hear the word russia where are your employees located how are you paying them

How long do you intend to keep the account what's the purpose of the account is it a transactional account is it a place where you're just going to store money is it an account that you're opening up for

One single transaction or is an ongoing business what's the nature of the business what do you do and so you know i have worked with folks who are in let's say the casino consulting business they

I've had a couple people like that they uh consult in the casino industry they work for you know online gambling or actual physical gambling we've had other folks who are other things that are deemed controversial by

Some folks they're going to go to certain types of banks you're going to have to perhaps deposit more or be open to different types of banks if you're in that industry but you know if i'm a

Company male and i'm opening a company for someone in hong kong or cyprus or panama and that guy is in the gambling consulting business i just send him along to my normal bank he's going to be

Rejected right you know there are industries that are tough some banks don't like e-commerce some banks that's all they do is e-commerce okay so all these banks are different

Now you know you would say well andrew you're you're talking about you know why your services are better and i suppose yeah i mean remember i started nomad campus as a blog and people started asking me questions about

Hey how are you doing this and how can i do it and it started okay well you know i'll help you and briefly help people for free and that didn't work no one really listened and then i started charging and building

Into a business and i wanted to build this the way that i as a consumer solve this because i get frustrated being jammed into one option first of all i think if you're running an offshore business you need at least

Two bank accounts one bank account's not enough you need a redundancy because you may be sending payments to certain people you may want to place just to store money in case there's a problem with one

Account you know you want redundancies and if you're just used to doing business onshore you probably aren't used to that potentially but if you're going offshore you at least two bank accounts and so just being referred to

One is not enough in my opinion uh but i've come to realize in addition to wanting redundancies you also want banks that suit your needs and understand you

I have had banks that don't understand me i had a bank once that dealt with companies that were in the offshore company business they formed offshore companies and they were one of these mills but

They charged you know not a lot of money you know they did it on volume they provided no level of service uh and so we have a different approach here at no medical list and so those

That that one bank lumped me in with all these other people and they said well why are you charging these prices i said well i'm offering a holistic solution we're doing someone's

Domestic tax work foreign tax work their company formation we're closing down this company over here we're migrating we're doing transfer pricing we're getting their residents their tax residents to help them facilitate using

The offshore company in a tax friendly way we're doing all that and they didn't understand it because they were just used to guys who said seychelles company 972 dollars

And then people would just use those companies many of them i'm sure got into trouble because they were they didn't know how the laws actually worked they didn't know you can just can't just sit in the united states and

Have a say shells company and magically not pay tax but that bank didn't get it now i have banks who do get it i have certain banks who are comfortable that we just store money there

And that's the purpose we don't do transactions and so that is going to be a bank that perhaps is higher quality but more risk averse and so they're happy to let you park money there um

And so for me banking as a business if you're just starting at a brand new business again you're going to find a small offshore account you're not going to get a great account in a

High-level jurisdiction because those high-level jurisdictions and their banks generally want you to have some experience but if you're just starting out that's what you're going to do as you develop

More and more money you're going to want to build your banking contingency plan you're going to want to build out your resources you're going to want to make sure you can make payments around the world

I've been asked andrew why don't you recommend fintechs why are you fiddling with these banks because when you're dealing with millions of dollars you don't want to keep it in some

Place that's the entire bank is on an app and you've got to like you know write the name of the bank before your name in the recipient's name and you can't receive payments from certain types of

People so as your business grows you want flexibility that's what i think has been missing in the offshore company industry for a long time not only the tax part which is

We've talked about a lot before but also this banking part another question to ask yourself is are you receiving payments by credit card by paypal etc that's a big issue you know if you have

A company in hong kong and your bank account somewhere else if you have a company in the eu and the bank accounts in a different country which is common for people who have companies in places

Where they don't live you often have to get a bank account somewhere else um then you may have trouble using things like stripe or paypal and so you've got to figure out how that's going to work you made in

A multi-company structure then how do you handle the banks for that so there's a lot of questions that are involved i don't take the mcdonald's approach i want unit to take the mcdonald's

Approach and i'm saying this is a guy who when i first started this was kind of excited by that because you look at all the pretty pictures of all the pretty countries and oh it's so nice and

Imagine i could have a company here and it feels really you know you feel cool right it's that sort of james bond effect that i've talked about before where

You feel very international it feels kind of sexy but you're going to do that at your apparel make sure you find the right business bank accounts or you're going to have trouble

Using your offshore company how can nomad capitalists help you four ways number one subscribe to our channel and click the notification bell to make sure you get our new video every day number two get a copy of nomad

Capitalist the book you'll learn a lot of my personal experiences over a dozen years of studying this stuff as well as exactly some of the strategies that you can use to build your nomad capitalist plan

Number three if you're not sure where to start but you want to come and learn from my team and i you want to come and mingle with like-minded people learn more about our

Live conference nomad capitalist live it's coming up soon and number four if you want some help right now because you've got a burning issue you need something solved you want

To lower your taxes get a second passport or build the nomad capitalist lifestyle of your dreams go to nomadcapless.com and click on become a client

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