How to choose the location for starting a business

The location of a business can have a great importance for the evolution and success of the company. At the same time, there are businesses that are not so much location-dependent, such as e-commerce companies.

Regardless of the type of business you are planning to start, it is important to have a well put together business plan and a clear image of what the location should provide as well as your actual limitations in terms of budget and company formation costs.

It is essential to narrow down the search for a location suitable for starting a business based on a few key criteria among which we can list how easy it is to open a company in that location and how long the procedure lasts, whether or not you can use some local incentives for your type of company and lastly, the overall taxation regime for companies.

Choosing based on ease of company formation

Some jurisdictions are renowned for having implemented an easy and fast company formation process. Examples include Hong Kong or Singapore, the United Kingdom, Portugal, Australia, Georgia or Canada. In all of these locations, it takes less than a week to have an operational company and get the business started. Nevertheless, investors should consider much more than just the number of days for incorporating the business.

Another issue to consider apart from the effective process of company formation is the nature of the business. For example, foreign investors can use Hong Kong’s geographical advantages, low tax regime and the welcoming business policies for launching and operating a trade business, but if that business has a main manufacturing component, then opening a company in China will be a suitable option.

Choosing based on company taxation

Jurisdictions like Hong Kong, Singapore, Andorra, Ireland, Hungary or Gibraltar have low corporate income tax rates. This can be an important consideration for investors as a company registered in a certain jurisdiction will be taxed on its worldwide income.

Apart from taxation, another aspect to consider are corporate management, accounting, and reporting requirements. For example, investors who open a company in Seychelles have both tax advantages and light reporting advantages.

Bahamas, Anguilla, and other offshore destinations will have a zero percent tax rate for companies. Opening an offshore company has its obvious taxation advantages, however, investors are advised to seek proper counseling in order to determine if this type of company is suitable for their business needs.