Using an Offshore Merchant Account
by John Schroder
Many of our clients are interested in ways to
reduce their current tax liability with the current business they have.
Some are concerned about ways to move some of their assets "offshore"
without throwing up a "red flag". Others are interested in
setting up a new business, perhaps via the Internet, and need a way to accept
credit orders. Regardless of the need or concern, an "Offshore
Merchant Account" may be the ideal answer for you...
A merchant account is basically an account or facility that allows you to accept
credit card orders from your customers. It's that simple. If you
accept credit card orders already with your existing business, then you are
already familiar with this. But what is the difference or perhaps advantage of
using an "offshore" card processing service vs. a local or domestic
one?
Well, one thing that is certainly true about the US credit card business, is
that it has become very competitive. This has been both a good thing for
both consumers and business owners alike. As a consumer, you know that
interest rates charged on credit card balances have come down. For
business owners, it has meant that where as you were charged up to 7% in the
past to process your customer's credit card purchases, those rates have come
down to about 3% on average. All positive news. But, there are still
problems for the US small businessman wanting to set up his or her own merchant
account.
One major problem is of course the application requirements, and the possible
deposit requirements. Some banks or credit card processors will not
even accept your application unless your business has been operating for two
years or more. Others want a security deposit of $ 5,000 or more.
Some others even want to "hold back" your monthly card payments as an
additional "security deposit" for possible "charge backs".
In addition, especially in the case of US banks, they act as if they are doing
you a favor to take your business. Aside from all this, we know of some
clients that have had their merchant account "pulled away" simply
because their business started to grow. What am I talking about?
Well, because every US bank is now paranoid about such things as "money
laundering" and "suspicious transactions", any sudden change in
your business volume sparks a reaction. We know of one client that was
given a "we are closing your account" letter by his US bank, because
his monthly volume went from $ 10,000 per month up to $ 18,000 per month in a
fairly short time. The bank said it was "suspicious". The
client said it's called "advertising". Well, you know what they
say, people that fail in business end up in banking (I went from banking to
business, so I guess I graduated).
This is one reason why you may want to look for a bank or credit card processor
that understands your business, your needs, your problems - and is willing to
help. Where can you find someone like that? Well, it all starts with being
able to look beyond your own backyard.
Most people would agree that technology and modern telecommunications has
provided at least some benefit. We now have fax machines, e-mail, and of
course the Internet. What many people do not think about however, is the
fact that the world has become a much smaller place. What this means for
the business owner is, you no longer are "locked in" to doing business
with just the bank or company in your town or state. You can literally
"shop the world" for the best rates, the best products, the best
service, or what ever. You now can do business with a bank or credit card
processor in Germany, Singapore, Holland, or any place else just as easily as
"the bank down the road". In fact, nine times out of ten, you
will find the level of service to be much better with a bank half way around the
world, then you will with your neighborhood bank. Why? They want
your business, and they are willing to prove it. The other benefits are obvious.
If you intend to be virtual, the best place to begin is by becoming virtual in
fact. An offshore merchant account places you in a virtual / offshore
jurisdiction with favorable tax consequences.
The problem of course with some offshore banks or credit card processors are the
higher processing fees, when compared to current US rates. The fierce
competition that has been seen in the US, has not reached some parts of the
world, at least not yet. However that is slowly changing. In
addition, such things as "Internet Banking" and offshore merchant
accounts are new services that many offshore banks are just starting to take a
look at. Even in a banking location such as Panama (with over 130 banks),
these services are not even available with a handful of banks. However, we
did find a very reliable credit card merchant account service provider that
wants to change all that. They are based in Europe, they have been in
business for over 30 years, and their fees are extremely competitive (with both
US bank rates, and especially their "offshore" competition). In
addition, they will gladly accept a new business without any costly deposit
requirements. This is the type of company to work with, because they want
to work with you.
I know what you are probably thinking, "This all sounds very interesting,
but what is the real benefit for me to do business with an offshore merchant
account provider". Well, being able to get better
service, little or no hassles getting your account opened, and lower or perhaps
no deposit requirements are only the "tip of the iceberg". The
real benefits to you as a business owner are the tax reduction opportunities
that become available through the use of a separate offshore-incorporated
company (your company) to handle your credit card business for you. In addition,
you also have a very legitimate and convenient way to get your business profits
offshore. The fact of the matter is, if you have an offshore bank or
merchant company process your credit card transactions for you, your money
already is "offshore". This being the case, you now have the
means to really make the most of your business income and keep more of what you
earn.
For additional information about obtaining an inexpensive offshore merchant
account, or forming an offshore company for tax-advantaged strategies for your
current business, please contact our office.
About the Author:
John Schroder
Ascot Advisory Services
Tel. 809-334-5387 or 809-293-9427
Email: info@ascotadvisory.com
Visit our web-Site: http://www.ascotadvisory.com
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