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If you’re an internet entrepreneur, you might find yourself asking the question: what are the best countries to start a business? You may be tempted to take the “easy way” and just start your business in your home country. But there’s no rule that says you have to – and in the long run, that can be the “harder” choice. If you live in a high-tax location, for example, that can quickly put you at a disadvantage.

An offshore incorporation can offer some serious advantages. Especially if you’re a location-independent digital nomad. You can pick the best strategic jurisdiction from which to run your business, easy as pie.

Well, maybe not quite that easy. Because where do you start? What countries are good strategic jurisdictions? What would you even have to look for?

No worries: we’re here to give you that start and answer those questions!

What it means to “incorporate” your Business

Incorporating a business is the process by which a business entity becomes viewed as a separate legal entity within the eyes of the law. You’re forming a Limited Liability Company (LLC) or Corporation. That means it is afforded the same rights and allowed to function within those rights the same as an individual citizen.

There are many benefits of incorporating your business. The corporation can

• initiate law suits (like individuals),
• protect its shareholder’s personal property from seizure in the event of a lawsuit,
• acquire personal assets,
• remain in existence beyond the dispersal of shareholders.

In a nutshell: incorporating your business as an LLC means you’ll not be the only one responsible in case the company faces any loss. You’ll be liable only for the money you invested, not the entire investment.

Factors to consider when choosing a country to base your business in

Let’s look at some key factors to consider that will affect your decisions down the road.

Tax Implications & Treaties

One of the key things that can really impact your and your investors’ returns is whether there will be a tax impact to you, your employees and co-founders.

Consider things such as tax relief on returns as a founder or if you flip to a different geography in the future. Consider income tax liabilities as well as capital gains liabilities.

Also consider whether your local jurisdiction has a negative tax impact further down the line for potential future investors.

Investors

One key reason why the jurisdiction of choice matters is that investors optimize around their tax implications. There are also other matters in the final legal docs which they may prefer dealing with in their local jurisdiction rather than in new ones they are less familiar with. They might have a preference on where you incorporate due to tax relief, which they may receive as part of investing in your company. In addition to this, company governance may be affected by where you are incorporated. Certain company governance structures are enforced on your company depending on where you incorporate and investors may have an opinion on that.

Paperwork

Paperwork is one of the big headaches of making this decision. This includes the interval in which you need to report as well as other requirements, such as company filings required by Company’s Law of the country in which you incorporate.

Residency

Some geographies may have a residency requirement for the founders, while others don’t. Keep this in mind, particularly if you don’t have the appropriate immigration status or it is hard to get it.

Human Resources

It may be difficult for your employees to move to certain countries if necessary. Hiring may also be a problem because of lack of human capital or cost to hire and retain.

There may also be restrictions on how you can hire and fire employees that might affect how you upscale or downscale your company’s employees.

Governance

Corporate Governance requirements tends to vary from country to country. Since you’ll have to abide some of these requirements, you might as well familiarize yourself with these variables before making your decision.

Mergers and Acquisitions

When your company does eventually get sold, merged or floated, it’ll have to go through a process. In some countries this process is straight forward and simple and easy for potential acquirers to understand and do quickly. In other countries it may be less known and thus may cause delays or complications.

What Are the Best Countries to Start a Business?

So which of all the fabulous countries around the world comply with those key factors? Here’s our list of Top 10 Countries, which all have their unique sets of reasons for consideration as your business’ “home” country.

1. The Bristish Virgin Islands – Easy Banking

The British Virgin Islands (BVI) is the best place to incorporate if you are an internet entrepreneur with worldwide income that you want to park offshore. BVI has the most reputable company formation setups of all offshore jurisdictions.

One of the most advantageous aspects of a BVI International Business Company is that you can pair this incorporation with a bank account in a reputable jurisdiction, such as Hong Kong or Singapore. Asian banks are particularly willing to work with BVI companies.

In general, banks are so willing to work with BVI because:

• the country takes the requirements for filing companies seriously,
• they have been established as an offshore centre
• there are additional forms that are required to set up an International Business Company in BVI, namely the beneficial owners declaration. Banks feel comfortable with this jurisdiction.

Cons of Incorporating in BVI

• Not as cheap to incorporate as some other places (f.e. Belize).
• Registered office fees and government fees are also somewhat higher.

2. Denmark – Tax Efficient, Flexible Hiring and Firing

Denmark is seen as one of the easy countries in Europe to incorporate a business in, and it really has some great pros going for it:

• With “flexicurity” you get the most flexible hiring and firing rules in the world, reducing the costs of scaling business operations up or down.
• You are able to register and finish your incorporation in days, not weeks.
• There are no resident requirements for the management, including CEO and Board of Directors.
• No notarial deeds.
• It’s tax efficient to establish your business in Denmark compared to other Nordic countries.
• Danish company law is modern and in conformity with the current EU legislation.

3. Norway – Digital Communication

Norway has a strong economy and most communication with the government can be done digitally.

Registering a property is fast, and complying with tax laws is relatively straightforward. Resolving insolvency in Norway is also low-cost, with fees averaging 1% of the bankrupt entity’s value.

Benefits of Norway for starting your business include:

• Great for digital nomads, as all communication is done digitally
• Focus on tech based business
• Highly skilled workers in IT, finance, design and music tech
• Entrepreneurs have access to industrial expertise, investors and talent
• Economic and governmental stability
• Long-standing trade ties with the EU
• Well-developed communication and transport infrastructures

There are a few cons too:

• Getting construction permits can be lengthy
• Labour regulations are quite rigid

4. New Zealand – Fast Setup

New Zealand is considered one of the easiest countries to do business in, because

• incorporating a business takes only a day,
• registering a property can be done in two days,
• the workforce is skilled and educated,
• labor costs are low,
• in terms of taxes, there are no payroll, social security or capital gains taxes, and
• it sets up LLCs that are their own legal entity, separate from shareholders.

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5. Singapore – No Capital Gains Taxes

Singapore is known for the many international businesses that station their headquarters there. Due to strong trade and investment opportunities, the city attracts global entrepreneurs and leaders, and has been named the most competitive Asian country to start a business.

Singapore has long been considered one of the best places to do business in the world because it

• is one of the wealthiest nations in the world,
• is politically stable,
• is an easy location to do business,
• has a strong labor force, and imposes no dividend or capital gains taxes.

6. Isle of Man – Zero Tax

The island has a customs agreement with the UK, facilitating trade, but it is legally separate from the UK and from the European Union. This gives some definite advantages to a company formed in the Isle of Man when it comes to doing business in other jurisdictions or holding investments:

• Zero corporation tax rate
• Sophisticated banking system
• Incorporation with a single shareholder possible
• Only one director required
• Director mustn’t be resident of Isle of Man
• Advantageous for holding investment portfolios including commercial property

Suitable for holding intellectual propert

7. Belize – Internet Entrepreneurs

Belize is a good place for an internet entrepreneur to incorporate because:

• Banks allow you to set up an account without being on site in Belize
• Great for merchant accounts
• Can be used for a variety of different businesses
• No taxes
• Low setup costs
• Banks allow high-risk merchant accounts (f.e. gambling, pharma- or adult industry)

Belize Cons:

• Capitalization above 50k requires a substantial government fee
• Belize is not the most reputable jurisdiction
• Not great for shipping to or from

8. Nevis – Asset Protection

Nevis is one of the best places to incorporate from an asset protection standpoint. If you are running a business that is fraught with liability, it makes sense to go to a place where the claimant has to post a bond in order to bring a suit against you. In order to sue your company, a person will have to file a suit in Nevis and pay for the court proceedings.

Further Nevis Pros:

• Privacy, since there is no country-wide register
• Good asset protection
• Lawsuit protection
• Government and prime minister willing to discuss passports with entrepreneurs

Despite these advantages that Nevis has going for it, there is one caveat: like Belize, it doesn’t have the most reputable jurisdiction – yet?

9. United States – Tax Breaks

There are several factors that make the United States a good country to start a business in:

• The workforce is diverse and skilled.
• It is a recognized leader in research and development as well as innovation.
• You can also find a wide variety of funding sources: investment firms, banks, venture capitalists and angel investors.

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But the US is a big country with 50 states to choose from. The key factors mentioned above can vary from state to state. Then there’s the question whether you’re a US-resident wanting to incorporate a business in the US or a foreigner – does that make a difference?

It does, but don’t worry. There’s a general rule of thumb you can follow:

• If you’re a US-resident, you should incorporate your business in the state you live in.
• If you’re a non-US-resident, you should incorporate your business in Delaware.

Why Delaware is the best state for incorporation your online business…

Delaware is America’s most popular state to form an LLC or Corporation. More than half a million business entities have their legal home there, including more than 50% of all US publicly-traded companies last year and 60% of the Fortune 500.

Delaware is considered to be the most business-friendly US-state for incorporating, due to the fact that

• the initial filing fee is minimal compared to other states,
• it offers several tax breaks for LLCs,
• a business license isn’t required,
• non-residents don’t pay personal income tax,
• non-residents can take the role of shareholders, members, directors or managers of the business,
• it features lower than market average tax filing fees, and
• it has limited regulations in transacting business across state lines.
• it has established the Chancery Court specifically to hear lawsuits for or against corporations.

There are a couple of cons to filing for LLC in the US:

• Not the lowest tax brackets
• Does impose a tax on foreign income

10. United Kingdom – One-hour Setup

Incorporating a company in the United Kingdom (UK) is both fast and affordable, making it one of the easiest countries in Europe to set up and run a business in, for the following reasons:

• Incorporating a company can be completed in an hour – for £14.
• The tax authorities understand that new companies generally aren’t profitable in their early years.
• The British government offers various tax benefits for investors, founders and employees.

Some of the best places to start a business in the UK include Derby, Stoke, Belfast, Stirling and Durham.

Honorable Mentions:

Canada – similar to the United States, except more taxes; aim for Alberta
Malaysia – all the benefits of larger markets with less costs
South Korea – the land of innovation and tech is a good location to set up shop
Switzerland – great banking options
Thailand – ideal for any digital business, as it is a digital nomad haven
Sweden – similar to Norway, just not quite as optimized
Australia – great place to launch a small business
Netherlands – great place to launch any new business

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To conclude…

The exact specifications of starting a business in a specific country are subject to the town, city, state or province you choose to incorporate your business in.

We have hopefully given you an idea of where to look more closely. But as stated before, you should take your time in thoroughly researching all options and figuring out what you want and need for your type of business.

Be smart. Do your research. Weigh the pros and cons. Get legal advice. And then?

Go for it!

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