An excellent offshore business opportunity is that of changing money. The international world is full of travelers. Traveling from nation to nation virtually always requires that the individual at least has enough cash in a new country for taxi fare and, often, for a meal of purchase of essentials such as a map or toiletries. Very commonly travelers will wish to carry a sufficient supply of currency into a country so as not to need to change money at exorbitant rates from street vendors.
This ever present and increasing need in the modern world offers a great opportunity for the individual or corporation interested in setting up an offshore business. Many offshore jurisdictions will provide a government issued license for such activity. Most commonly the company will not be able to do business with residents of the jurisdiction but will be able to change money with anyone else from anywhere else in the world.
This sort of business benefits from ever increasing international travel. It benefits from travel by individuals, especially retirees, with second homes offshore from their countries of origin. The profit from this type of business comes from the fee charged for the transaction and, often, from an exchange rate slightly different for purchasing currency versus selling it. Those engaged in such a business may often profit from varying exchange rates also. There is no rule against holding the company’s capital in a currency that is appreciating while others fall in value.
How to Go about Setting up an Offshore Money Changing Business
To have an offshore money changing business an individual or corporation will need a license. That will mean finding competent counsel with knowledge of which offshore jurisdictions offer a government issued money changing license and the pros and cons of each jurisdiction.
Those wishing to set up the company will want to compare details of their business plan with the exact activities that each offshore jurisdiction allows and which that it may restrict. Here is where “re-inventing the wheel” is not necessary. There are competent authorities that can help the individual or corporation in choosing the right jurisdiction for setting up a money changing business or any sort of offshore business. Most typically these are other international, offshore companies run by individuals or corporations that are not directly tied to or dependent upon doing business in one country or another. A company that only does business in one jurisdiction will often be a feeder for local banks, lawyers, and other interests in the jurisdiction.
Because many offshore jurisdictions offer benefits beyond the opportunity to get a license and do business it is wise to look at these benefits and integrate those that make sense into the business plan for the company being set up. For example, many offshore jurisdictions are tax advantaged and have banking laws that allow for a fair degree of privacy in doing business. Likewise, many offshore jurisdictions offer the ability to run a business through an offshore corporation, often owned by an offshore foundation. None of these individual entities need be in the same country as the business being set up. Taking a careful look at the possibilities with the advice of competent counsel can be very beneficial, especially when done in advance of license application.
Once the individual or corporation has decided upon a jurisdiction and a business plan, getting a license becomes a matter of paperwork. Directors, officers, and shareholders will typically need to provide a degree of both personal and financial history. It is possible in some circumstances and in some jurisdictions to set up nominees for various positions in the corporate structure. This is a matter to discuss in advance with competent counsel.
Although prices will vary from jurisdiction to jurisdiction the cost of setting up an offshore business such as offshore money changing will be around $27,000 for the first year including application, fees, and license. Subsequent years will run around $12,500 including license renewals and fees.
Running an Offshore Money Changing Business
Just as jurisdictions vary in terms of opportunity offered and license restrictions so will jurisdictions vary regarding some of the requirements for ongoing business operations. One common requirement for businesses with a physical presence in a country is that there may be a requirement that a certain percent of employees be nationals of the host country. This is typically a benefit and not a disadvantage as the wage scale in the offshore jurisdiction will often be substantially lower than the founder’s country of origin.
Setting up business software, a web site, and other business operations may well be cheaper in the host country. If not competent counsel will be able to help from the outset in choosing which services and back office operations to outsource and which to retain in house (or in country).
It will be important to give some thought at the outset to scalability of the business. International businesses have virtually unlimited potential. A well run money changing operation could well find clients all over the globe. Having a plan to increase staffing, in house expertise, web presence, and computer software could be very financially rewarding in a rapidly growing offshore business. Setting up strong banking connections at the start may be essential in the event of rapid expansion and need for temporary credit.
Foresight and Success in an Offshore Money Changing
Just like doing business “back home” a little though before the fact and seeking wise counsel tends to beget business success. Setting up shop in countries with sound legal systems and stable governments helps avoid problems down the line. Hiring competent staff and seeking competent advice not tied to overpowering local interests will be essential. The founders of an offshore money changing company will typically want to be very “hands on” at the beginning but will also want time to enjoy the fruits of their labors as the business succeeds. This gets back to trustworthy and competent staff as well as a transparent system for keeping track of accounting and other business operations.