Trading-Office-or-Virtual-Office

Trading Office Address or Virtual Office Address for Business – what’s better?

Trading Office Address or Virtual Office Address for Business – what’s better?

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Virtual offices for business is a complex topic, especially if we talk about offshore structures when a company is registered in a tax-free jurisdiction.

And its main purpose is to minimize taxation, protect assets, or diversify them. With such a scheme, the task of doing business is often not worth it at all, you just need to fulfill specific legal requirements.

This format is used quite widely. In almost all jurisdictions, it is completely legal, so there are no special problems. Yet what if a virtual office for business needs to be opened for the original, nominal purposes of doing business?

Is it necessary to have an official representative office in the same jurisdiction when registering a company, or will it be enough to order a virtual office for business?

What is the answer to trading address vs registered address? Let’s try to find out!

Trading address vs registered address: be attentive

registered-office-addressThere are no simple answers to the above-mentioned questions. Especially if we talk about offshore business, which is quite different from the traditional. So we decided to start by clarifying the basic points on the registration of the company concerning the topic of office for business and focus on the virtual office.

We will also share with you a full description of its advantages, distinctive features, principles of operation, and the most typical mistakes.

If you have any questions after reading this post you can contact the experts of the Hoxton Mix and discuss with them a convenient format of individual consultation. This article serves to provide general information and only expert consultants can provide tailored advice that business owners can decide to act on.

Points to pay close attention to are: 

  1. The applicability of a virtual office for business largely depends on the jurisdiction in which the company is registered.
  2. The fact of having an official representative office (even if the office is virtual) automatically makes the company a tax resident and generates fiscal obligations (with reservations). Registration of a company in a particular jurisdiction does not imply the mandatory presence of a corporate office in it.
  3. If an offshore business requires an account with a reputable bank, it should be remembered that companies from tax-free jurisdictions are often refused, as they cannot prove (justify) the transparency of their commercial activities. A virtual office for business does not require significant financial costs, but its reputational component is lower than that of a real office. Remember that any formats other than the classic office, for the most part, are services with time limits, they should be renewed every year. The scheme is approximately the same as with nominal service.
  4. A virtual office for business can be opened both on the company itself and on its branch (representation, branch). In this case, you get the opportunity to conduct a full-fledged commercial activity (office, bank account, employees, contracts, substance) with the execution of documents on the subsidiary.
  5. In most countries, a virtual office for business will not allow you to get substance (actual presence in the jurisdiction), but it will be enough for a full-fledged business.

Basic concepts

Company registration traditionally involves the presence of a place where the business will be directly managed. This arrangement was long regarded as the only one possible, so staff, meeting rooms, regular rent payments, and periodic repairs were taken for granted.

But at the end of the 20th century, it became clear that the virtual office for business fully covers most of the needs of companies, allowing you to save a lot of money, optimize the budget and reduce the risks of force majeure circumstances.

The situation became even more interesting after the COVID-19 pandemic and the transfer of most of the paperwork to a remote format.

The most typical physical (actual) services are:

  • legal address;
  • corporate correspondence processing and storage center;
  • stable communication with state/control authorities;
  • equipped conference rooms;
  • rental of office equipment;
  • concierge service, etc.

Digital virtual office services for business are:

  • stable digital communication channels;
  • telephone communication;
  • remote administration service;
  • cloud and Internet services.

Comparison of a virtual and physical office

virtual-office-addressThe desire to optimize costs at the stage of business formation (registration of a company, bank account, planning regular commercial activities) is quite understandable. But, as we have already said, saving should not become an end in itself. Be sure to consider all available options, even if some of them at first glance seem unprofitable.

The functions of a virtual office for a business that coincide with the traditional office:

  1. An equipped place for work, business meetings, and direct management of the offshore company.
  2. Legal address.
  3. Channel of communication with public and regulatory authorities.
  4. Record presence in a particular jurisdiction.
  5. A basic set of business services.

It may seem that a virtual office for business does not provide other benefits, except for savings, but this is not so. The features described above can be flexibly configured and tailored to specific requirements. In the case of a classic office, such actions will require investments, and while the changes take place, the normal functioning of the office may be disrupted.

Therefore, one of the most important advantages of the virtual format is not so much lower costs as flexibility in organizing current activities and boosting office morale.

Wrapping it up

virtual-officeTechnology is constantly evolving, many processes are transferred online and no longer require traditional offline representation. The virtual office for business is becoming more and more in demand, which has contributed a lot to the COVID-19 pandemic.

Almost all offshore companies allow remote registration of companies, and technologies of work with clients, which remained unchanged for several decades, are actively digitized.

Forecast for the near future:

  1. Migration of business to a remote format.
  2. The shift of emphasis to self-employment (freelancers displace employees).
  3. Reducing the value of traditional offices.
  4. Digitization of all business processes.
  5. Virtual offices for business are increasingly in demand.
  6. Introduction of new technologies/implementation of existing business processes (virtual reality, blockchain).
  7. Active use of virtual channels of personal communication (social networks, messengers).

Will a virtual office for business be the best option for you?

This question cannot be unequivocally answered without knowing the peculiarities and subtleties of the company’s functioning. And to choose the most suitable option for yourself, you can contact the experts of the Hoxton Mix to discuss the terms of an individual consultation.

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Manuela WillboldOnline Media & PR Strategist
Blogger and Educator by Passion | Contributor to many Business Blogs in the United Kingdom | Fascinated to Write Blogs in News & Education I have completed a journalism summer course at the London School of Journalism and manage various blogs.