7 common mistakes when registering a company abroad that could cost you your business

One of the most common – and most costly – mistakes is selecting a country for company registration without analyzing the actual business goals. Many entrepreneurs focus solely on “0% tax” or trendy jurisdictions, only to face account rejections, high operating costs, or blocked business activities.

Key factors to consider:

• Taxation not only for the company but also for the shareholders
• Substance requirements (local office, staff)
• Banking infrastructure
• Jurisdiction reputation (EU/OECD white/grey lists)
• Ease of reporting and maintaining legal status

Example: A client registered a company in an offshore jurisdiction without substance. The bank refused to open an account, and they had to start from scratch.

How to avoid this:
Consult with experts before registering. Compare countries by key criteria: taxes, banking, KYC, account availability, and administration costs.

Not every registered company will be able to open a bank account – especially if the jurisdiction is considered high-risk or the documentation is incomplete.

Key issues:

• Non-transparent ownership structure
• Lack of real business activity / unverified source of funds
• Jurisdiction is outside risk-based compliance policies

Case: A client registered a company in an exotic jurisdiction, but no local bank agreed to open an account. The corporate structure had to be completely redone.

How to avoid this:
Check the jurisdiction’s reputation, verify potential banking partners in advance, and consider alternative options – such as EMI (Electronic Money Institutions).

Many countries require a local resident director or company secretary. Failing to meet these requirements often leads to registration refusal or an inability to operate the business.

Examples:

• In Singapore, a resident director is mandatory (a nominee can be appointed)
• In Thailand, a Thai partner is required if targeting the local market
• In Cyprus, a resident director is needed to obtain a VAT number and benefit from tax preferences

Common mistake:
Many clients try to cut costs by ignoring these conditions and registering a company without proper structure – resulting in delays and additional expenses.

How to avoid this:
Define your company structure in advance and use trusted nominee director and local representative services when necessary.

Registration forms, articles of association, apostilles – all documentation must comply with the specific jurisdiction’s requirements and be up-to-date. Using templates from the internet is a direct path to rejection.

Key points to watch:

• Translations (official/sworn translators)
• Document validity (typically up to 3 months)
• Apostille or legalization

Real case: A client submitted articles of association in a format outdated by two years – the application was returned, and three weeks were lost.

How to avoid this:
Have documents prepared by lawyers familiar with local standards. Always check format, timing, and wording requirements.

Company registration is just the first step. After that, obligations begin, such as:

• Preparing financial reports (including XBRL or Annual Return)
• Audit (e.g., in Singapore, if turnover or assets exceed thresholds)
• License renewal (e.g., in the UAE)

Common mistake:
Clients often overlook these requirements and deadlines, resulting in fines and account suspensions.
Fact: In Hong Kong, a late Annual Return filing can lead to a penalty of up to 10,000 HKD.

How to avoid this:
Plan your budget not only for company setup but also for annual maintenance. Use reminders and work with a team that handles full administrative support.

Several countries (especially Cyprus, Switzerland, and Canada) require a genuine economic presence – such as a physical office, employees, a website, and active contracts. Without this, your company may be classified as a shell or fictitious entity.
What regulators check:

• Local address, staff, contracts
• Actual activity within the jurisdiction
• Presence of management functions

Example: A company in the UAE without an office or operations was audited and denied license renewal.

How to avoid this:
Determine in advance whether substance is required. If so, establish it through local service providers (office, staffing, operations). Alternatively, choose jurisdictions without strict substance requirements.

Registering a company abroad without legal guidance is like flying without a map. Every country has its own rules, timelines, and nuances. One mistake – and everything falls apart.
Why legal support matters:

• Minimizes the risk of rejection and penalties
• Assists with account opening and communication with the bank
• Ensures the company structure matches your business goals

Real case: A client registered a company on their own but didn’t consider the resident director requirement in Singapore. As a result, they had to redo everything from scratch.