ARTICLES

Three Key Questions to Ask Before Opening a Corporation

  • August 7th, 2018

One of the most common questions our clients ask is, Which type of corporation is right for me? And frankly, the answer varies. The right corporation for you will depend on your needs and objectives.

We like to start the discussion by asking three questions:

1) What are your goals for the corporation?

For example, are you opening a corporation to apply for residency? Are you opening a corporation to capitalize on Panama´s advantageous off-shore structures? Do you plan to purchase real estate with a corporation? Do you need a structure that is respected by other governments?

Answers to questions like these help us advise our clients on the best type of corporation for them. Consider your current and long-term needs and plans. We encourage clients to be open and answer this question truthfully. There are no wrong answers.

2) How important is privacy to you?

A discussion of privacy levels is critical. While International Business Corporations (IBCs) and Limited Liability Corporations (LLCs) share many characteristics, one difference is the level of anonymity they provide. Some individuals feel uncomfortable with their names, the names of their family members, or their business partners being listed in the Public Registry.

If you feel this way, an International Business Corporation may be a better choice. In an IBC, the directors and officers (president, secretary, and treasurer) are all listed in the Public Registry. These roles can be fulfilled by you, family, or partners or by a nominee director service. By utilizing a nominee director service, a client can maintain their preferred level of confidentiality. In addition, the names of the shareholders are kept private and are not publicly listed.

Alternately, Limited Liability Corporations offer relatively less privacy. When an LLC is searched in the Public Registry, the names of the officers and partners (owners) are shown. This is personal preference, but it is important to discuss the level of confidentiality you require with your lawyer as it can determine which type of corporation you will need to use.

Three Key Questions Open Corporation Partner Kraemer Law

Having a business partner is one important consideration

3) Do you have a business partner?

This is a question we ask all clients who are interested in an LLC. The structure of this entity requires that there be a minimum of two partners (owners). If your business has two or more owners, this requirement can be easily fulfilled. Clients who do not have a business partner can consider listing their spouse or a trusted friend or associate in the role.

At this time, we also remind clients that the ownership of an LLC is customizable and can be designed to suit your needs. Each partner does not need to own 50%. For example, one partner could own only 1%.

Regardless of how you to decide to structure the ownership, if you have an LLC you must have a partner. If you do not have a partner, and IBC with nominee director services may be a better choice.

Ready to open a Corporation in Panama?

Our goal is always to assist our clients in choosing the entity that best helps them accomplish their financial and personal goals. While there are many features and benefits of IBCs and LLCs that our clients reflect upon, we believe these questions can help them get closer to an answer.

Considering your personal goals, your desired level of privacy, and how you will fill the required roles for the corporation will help determine which entity make the most sense for you.

Contact us today if you are considering opening an IBC or LLC in Panama.