Think an offshore account is a surefire way to protect your assets? Guess again. There are a number of easily-avoidable offshore account mistakes that people continue to make.
In the event that an offshore account is necessary, you want to do your homework ahead of time to avoid any pending legal matters that can arise. The good news is once you are aware of these common offshore banking mistakes they become much easier to avoid.
If you are already utilizing offshore banking and intend on keeping your money safe, read on for more information on what you should do to stay out of legal trouble.
What are Offshore Accounts?
If you’re new to the world of offshore banking it is important to have a clear idea of what this term really means. For many people, their extent of knowledge when it comes to offshore banking goes as far as the last James Bond movie or their favorite heist flick.
In reality, having an offshore bank account isn’t more glamorous or exciting than opening your standard local bank account. The only real differences you may encounter are the services that are provided by the bank.
Mistakes to Avoid When Opening an Offshore Bank Account
While you may think that an offshore bank account is an obvious answer to keeping your money safe and secure, these common offshore account mistakes can have severe consequences.
Read on to take care of yourself, your legal status, and your money. Remember, it’s important to invest time in researching as some of these mistakes can result in the loss of thousands of dollars or even jail time.
1. Opening an Account with the Wrong Mindset
Thanks to Hollywood movies, many individuals operate under the false belief that opening an offshore bank account is something reserved for the rich and famous.
However, the process is fairly affordable and you may not even need to visit the bank in person.
It all depends on where you decide to open your bank account. Those who decide to open a bank account in Puerto Rico will only need to deposit €260 in their personal account of €550 into a business account.
All of this with forms that can easily be sent in by mail. With the help of a courier service, the process can be done relatively quickly and with little headache.
It’s important to get clear on why you want to open an offshore bank account. If you are doing so under the false belief that you can hide your money offshore, it is important to know there are very few grounds to support this claim.
Even offshore banking services may claim that they’re the only way to keep your assets safe. However, this is often without providing any real proof or guarantees. Remember, these banks will say whatever is necessary to get you to bank with them, even if it doesn’t hold much water.
The more you learn about offshore banking the more you’ll be able to establish the truth about hiding funds on what is and isn’t within your jurisdiction.
2. Forgetting About Re-Occurring Costs
While it may be true that opening an offshore bank account is reasonably affordable, there are the transactional and recurring costs that need to be kept in mind.
Depending on the type of bank account you opened, you may be faced with steep fees or monthly transaction costs. If you’ve chosen a good bank all of the transaction fees will be found in the paperwork you received when you first opened the account.
It is important to be aware of these additional costs upfront and to set regular reminders so your money doesn’t become an “out of sight, out of mind” problem.
3. Not Reporting Your Account to Local Tax Authorities
If you think you are free from withholding any money deposited in your offshore accounts, you are strongly mistaken.
If you are caught attempting to hide money in offshore accounts without telling the local tax authorities, you can face steep penalties and even time in prison.
Back in the US, you can even end up paying up to $500,000 or having to serve a serious jail term of up to 10 years.
From where we stand, we would say that it is not worth it.
4. Thinking Offshore Banking is the Ultimate Solution to Protect Your Money
All this may be a quick fix to protecting your current assets, however, it doesn’t mean that it is the best solution that is currently available to you.
In fact, depending on your situation keeping your money within the US may actually benefit your financial situation long one.
It is suggested that you speak with a finance expert before making any decisions. A finance consultant can help you adequately weigh the benefits and disadvantages that come with an offshore bank account.
5. Finding the Right Information that You Can Rely On
When it comes to where you place your money, legal proceedings, and offshore accounts, there is little room to confuse fact with fiction.
It’s important to have the counsel of an experienced financial expert to guide you through the best options for your money. You may find that having an offshore bank account is little more than an overhyped solution.
We Can Help You Avoid Offshore Account Mistakes
If you’re still unsure as to whether or not you want to open an offshore bank account and are seeking more information, contact us today. Our financial advisors are here to provide you with the information you need to make your choice.