Starting a business is hard for anyone, but starting a small business can be even harder due to the limited resources that most small business owners have at their disposal. Like anyone who starts a business on their own, there are plenty of risks involved. However by incorporating your small business you can protect your personal assets against legal and financial problems that can and may arise. Incorporating your small business also means that you can enjoy the benefits of owning your own stock and availing certain tax breaks. Though many people think that incorporations are only meant for big businesses, this is in actuality not the case, and is a very common misconception. Anyone who owns a business, whether it is big or small, can incorporate their company. However before you consider incorporating your business it is vital that you consider all the pros and cons of incorporation and examine the different types of incorporation options that are available to you.
Some major benefits of incorporation include:
Tax benefits. This is because corporations are taxed at much lower rates than say private business or partnerships.
Limited liability. By forming a corporation you can protect your personal assets. This means that if your company goes bankrupt you only have to worry about limited liability; your personal assets are safe.
Long life. Incorporations do not dissolve after a member's death or if he or she decides to leave. This is because a corporation is owned by stock holders and not by individual people.
Capital. Owing a corporation gives a business access to plenty of capital. The reason for this is that banks and other financial institutions trust an incorporated company more than say a private firm.
Incorporations in Cyprus
A recent growing trend is seeing many local companies now incorporating their businesses overseas. Cyprus in particular over the last two decades has seen a significant jump in companies incorporating their businesses there. The reason behind this is that Cyprus has now gradually transformed itself into a reputable business and financial center. Incorporating a business in Cyprus has the following advantages:
Cyprus is strategically located between the three continents of Africa, Asia and Europe providing a very attractive and diverse business market.
Cyprus can provide a stable business environment.
Cyprus has a favorable tax climate.
Cyprus has a skilled and flexible labor force.
Cyprus has a well developed infrastructure with straightforward business and administrative procedures.
Features of incorporations in Cyprus
Companies that have established their businesses in Cyprus enjoy many privileges. Some features of incorporation in Cyprus include:
No withholding tax on company dividends.
The net profits of an international company are subject to only a 10.25% tax rate.
International business partnerships get full tax exemption on profits.
If the management and control of an international business branch is outside Cyprus a full tax emption on profits is granted.
If the management and control of an international business branch is in Cyprus, net profits are subject to a 4.25% tax rate.
Estate duty is fully exempted on inherited shares of an international business.
Stamp duty is fully exempted contracts between international business companies.
Foreign employees of an international business living and working in Cyprus are exempt from income tax if they are paid through a bank operating within the country.
Import duties are fully exempted on the import of cars, office, and household equipment except for furniture and air-conditioning that are for the use an international business and its foreign employees, such business has to have a full-fledged office in Cyprus.
Resident and work permits for foreign employees and their families can be easily obtained if they have an office in Cyprus.
