Offshore Ecommerce Company and Audits (SG/HK/GG/GI)

[daniels27]

Sols said:
To each their own. I find audits to be easy and a small price to pay for a business that size. Just have your accountants forward all the documents to the external auditor and answer any questions that come up.

Audit costs vary a lot. An audit doesn't have to cost 10,000 GBP if you shop around a bit and if you make the audit easy by having everything in order.

Basic accounting is one hell of a drug. Once you start, you can't stop. Seriously addictive. Saves so much time and money in the long run.
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You have any auditors you can recommend for Gibraltar, Singapore, Hong Kong and Guernsey?

I run web shops with 25,000 sales per year. These result in about 120k of transactions in the book keeping. Most auditors don't like to touch it for less than 10k.

Any advice for Guernsey (only certification) would be highly appreciated.

 

[Sols]

I'm usually not hands on with audits but I can take‍ a look. In many cases, I/we use big international firms like Grant Thornton, BDO, Baker⁠ Tilly, and Mazars. Almost never Big Four. Excluding big name international firms, in Singapore and⁤ Hong Kong, there's a plethora of boutique CPA firm that do audits at very competitive⁣ rates.

Guernsey doesn't exactly have a lot of competition. Cleland comes to mind.

Gibraltar is⁢ a marginally better. AMS, as mentioned earlier, can do audits. PKF is another one that︀ springs to mind. They're also in Singapore and Hong Kong.

At that transaction amount, you might struggle to find major savings. If your auditor︄ is charging you 0.40 GBP/sale or 0.083 GBP/transaction, I think you're already getting pretty good︅ pricing for Gibraltar.

 

[daniels27]

Yes, so for web shops with high amounts of transactions, better avoid any audit jurisdiction?‌

 

[Sols]

As I said: to each their own. I have no‍ problem with audits. They're easy to get done. Banks, PSPs, and tax authorities like them.⁠ The cost is just another cost of doing business.

But if you don't like audits,⁤ that's entirely up to you.

 

[daniels27]

Thank you very much. I appreciate your help. Guernsey accepts anything from England,‌ Wales, Scotland and Ireland. Do you have anybody there. Any idea how to get below‍ the 40 pence per sale?

 

[Sols]

I don't think I've ever been involved⁠ in a Guernsey company running a traditional ecommerce business and needing local auditing at this⁤ scale. For me, Guernsey is mostly a jurisdiction for gambling, financial services, or holdings/investments.

The only local/boutique auditors that come to mind are Cleland and another one called Kemp. Asked⁣ around and someone mentioned Rawlinson & Hunter and Fitzroy Tax. But I wouldn't be able⁢ to say for sure if they can beat the pricing you've been offered.

Dixcart is︀ usually good. Not sure if they do audits in Guernsey, though, and they are rarely︁ the cheapest option.

 

[daniels27]

Thank you very much, Sols. Sorry to get a bit off topic. Which jurisdiction would‌ you recommend for ecommerce? Singapore sounds good, but audit if revenue and assets above S$10M.‍ Gibraltar, Guernsey, Jersey, Isle of Man are all about equal with different audit requirements. Leaves⁠ the Canada, Ireland, Scotland and UK LP/LLP, the US SM LLC in WY and technically⁤ also Estonia. What would be your best choice?

 

[baltic7]

In Estonia⁣ you also have to audit according to standards approved by the European Commission.

 

[Sols]

Split this part‌ of the discussion into a new thread.

If statutory audits are an absolute no-go,⁢ I'm not sure how many options you have. Is the problem cost? Can you just︀ raise your prices a little bit?

Besides Canada and the US, I'm not sure if︁ I think of any suitable jurisdictions for ecommerce that have relaxed statutory audit requirements. There︂ are plenty of jurisdictions that don't have it, but you end in some high-tax jurisdiction︃ and/or a jurisdiction where running ecommerce is simply not viable (banking, payment processing).

I'd consider︄ looking the opposite directions. Go for places like Malta, Cyprus, and Hong Kong where audits︅ are the norm (even if there are exceptions). If every company is audited, you have︆ a lot more auditor options to choose from and prices tend to trend downward.

 

[daniels27]

Thank you very much. The cost if not the main problem. The main problem is‌ that the accountants tend to work with accounting software like Datev in Germany. Those are‍ horrible tools for this use case. Not only are they incapable of handling currencies, but⁠ also they fail ridiculously when importing things such as bank account statements spanning two calendar⁤ years. Hence, I normally spend more time fixing the errors of the accountants than it⁣ would take me to do it on my own.

How bad is Singapore and Channel⁢ Islands for ecommerce from your point of view? I had a long discussion while trying︀ to help aidenaiden, but shortly Xshore started to question me with all sorts of strange︁ and mainly irrelevant information he found or never had:
https://www.offshorecorptalk.com/threads/singapore-company-structure-for-offshore-taxation.43973/

 

[Sols]

Given the size of your business, aren't you at a point where it makes sense to⁢ hire a CFO/FD role? In-house accounting and external auditing.

Channel Islands are a pain because of VAT and because it's sometimes UK and sometimes︄ not, which can make payment processing difficult. The VAT issue isn't just on selling things,︅ it's also for buying things. Of course, depends on where you buy from and sell︆ to.

But 9 times out of 10, I'd go with Cyprus or Malta over Channel︇ Islands if the project is to be kept within Europe. Isle of Man is more︈ mature than Guernsey/Jersey/subdivisions but it's fraught with issues. A big problem with all of those︉ (IM, GG, JE) is staffing up. As soon as you need to hire someone, you︊ have an extremely small talent pool to choose from. Malta and Cyprus are metropolises by︋ comparison.

Singapore can be excellent. Banking is tricky but can be solved with non-banks if︌ necessary. You might get stuck with annoying currency exchange fees, though, if you want to︍ charge customers in EUR, GBP, USD, and so on and the processor settles in SGD.︎ Staffing is expensive but generally very good.

 

[daniels27]

It takes me less than 4 days per year to finish all accounting issues.

Thanks. Yes, but HMRC is quite easy to handle these⁢ days. I can do it in 20 minutes per return.

Thanks. I agree. I do not plan to hire︉ people. I will follow Guernsey, Jersey and Singapore and see what is best. I prefer︊ the Channel Islands as they have no maximums on the audit exemptions. But the Guernsey︋ certification may be an issue. Have you understood the difference between the certification and the︌ audit in Guernsey?

 

[Sols]

I'd be lying if‍ I said I had much insight into that particular aspect. My understanding is it's basically⁠ a sign-off by a trusted party confirming the statement was prepared correctly, unlike a full⁤ on audit where someone basically does your books all over again.

But I'd ask someone⁣ like Dixcart, TMF, Trident, or Vistra.

 

[Dandyline]

Its not like they audit each and every transaction, for E-commerce they just audit the⁣ overall report of all transactions.

 

[daniels27]

Ok, thanks. Do you know‍ somebody that can do it for not too much? Also, if I ask UK-based companies,⁠ what do I need to ask them exactly? It seems that there is no exact⁤ equivalent in the UK? Do they just need to put a stamp on the accounts⁣ or what do they need to do?

Thank you very much. I wrote them.

 

[Dandyline]

Usually they just check that all⁤ balances looks fine and the overall bookkeeping is done correctly.

Just ask about their rate,⁣ don't even mention the transactions. Just the yearly revenue of your company and employees.

Should be around 2000-3000 EUR for a company of 1-2MEUR yearly revenue in any TIER1 EU⁢ country.

For other countries, might be cheaper.

 

[daniels27]

Ok, I just checked with them. AAT is also acceptable:
https://gov.gg/CHttpHandler.ashx?id=95415&p=0
Hence, the cheapest way‌ is to get level 2 and 3 in bookkeeping with AAT using the St. Regis‍ in Kuala Lumpur as address:
https://www.aat.org.uk/qualifications-and-courses/fees-funding
It will only cost £122 + course fees if⁠ you only take level 3. Much cheaper than hiring some dude.