bankingbpo.com

John Robbins asked:


One of the most important decisions that you will have to make while starting or operating your small business is that of which accounting software to use. It could certainly be a nightmare if you make the wrong choice.

During the past 20 years accounting software has advanced far beyond the old fashioned basic lined accounting books with ‘in’ and ‘out’ columns. Nowadays it is wholly possible to find accounting software that will assist you in all of your personal and business accounting tasks, from accounts receivable to online banking. With such a wide array of accounting software packages available, It can be difficult to decide which accounting software program will best fit your needs.

Before choosing an accounting software program it is worth while that you give some thought to exactly why you desire the program in the first place. There is really or no point in buying a software program that enables you to keep track of accounts receivable and issued invoices if you just need the software to do your home budgeting. On the other hand, if you are a small to medium business, then it’s quite likely that the ability to manage your issued and outstanding invoices is essential.

It would be wise to investigate the type of support you get when you purchase accounting software. A good support plan would include at least 30 days free support upon registration. You should be able to easily find answers to commonly asked questions or ask a question specific to your support needs and get accurate online answers quickly.

The form in which the accounting software package is going to interact with your other software is another factor that you need to consider. For example, if you make use of online banking, then a very useful feature would be the ability of the software package to update with your online bank statements. Furthermore, if you possess a number of different income streams, and you find it necessary to be sure that all of them are being included in your budget, then software that allows you to take advantage of this facility may be beneficial. However, if all you have is one or two income streams and all you want to do is keep a track on what your household outgoing expenditures are, then you might just need a simple Excel accounting software package.

Finally, before making a selection on any particular accounting software package, it would be best to make sure your computer has the correct system requirements for the application. For example, you should make sure you have enough room on your hard-drive to download the program and that you don’t already have the applicable software on your system. Bear in mind that there is nothing more frustrating than acquiring a new software package only to find out that it’s not compatible with your computer setup.

In conclusion, you can probably see that the issue of choosing the best accounting software is not a simple one. All in all probably the most important factor is ease of use, since you’re going to have to work with the software nearly every day if you own a small business.



Content for WordPress

Brendan Sullivan asked:


I. Control Potential of a Holding Company

Holding corporations derive some protection from their detached status as non-owners. Despite its status, a holding company can reap the benefits of its detachment without loss of control. Under the Savings and Loan Holding Company Act of 1967, holding companies are allowed to control thrifts. Thrifts are saving and loan associations that take deposits for loan obligations. (Black’s Law Dictionary). Thrift Associations give the holding company control of assets, but they are also heavily regulated under the supervision of the Office of Thrift Supervision. Out of the 1300 thrifts regulated by OTS, approximately half are controlled by holding companies. (Office of Thrift Supervision).

The Gramm-Leach-Bliley Act authorizes greater control for financial holding Corporations (FHC)s. Under older guidelines, holding corporations were only permitted to be “passive” and operate subsidiaries through “routine management.” (Dunham). FHCs may now become “full participants in the business of organizing, marketing, managing and investing in private equity funds and … an insurance holding company [may] remain in the set businesses after acquiring a bank.” (Dunham at p. 5).

Thrift Associations are frequently thrown into the general category of banking. (Investopedia.com). However, under the Bank Holding Act of 1956 (12 U.S.C. § 1841), thrifts engaged in insurance activities are not considered banks. Rather, they are institutions or associations. In fact, the Gramm-Leach-Bliley Act discussed below specifically addresses bank holding companies engaged in non-banking activities. A FHC may acquire control of 100 percent of a company’s voting rights, but may not hold the company interests in a depository institution which is a subsidiary of the FHC. (Duhham at p.5)

A recent controversy has arisen regarding the ability of holding corporations to gain too much control of the banking industry through thrifts. The Riegle-Neal Interstate Banking Act prohibits bank holding companies from obtaining more than 10 percent of U.S. deposits by purchasing other banks. (Taggart). Through thrifts, holding corporations can manipulate a loophole that would give them control over more than 10 percent of U.S. deposits. (Taggart). Wachovia Corporation’s recent attempt to purchase a California based bank recently raised concern over this issue. However, even if the acquisition does go through, Wachovia will not come close to the 10 percent limit. (Taggart).

II. Diversification

Section 4(c)(8) of the Bank Holding Company Act (BHC Act) permits bank holding companies (BHC)s to engage in non-banking activities as long as they are “closely related to banking.” The close relation to banking requirement essentially restricts BHC activities to insurance related activities, but does not allow a BHC to underwrite insurance. These holding company activities are largely regulated by state law. (Dunham at p.5).

The Gramm-Leach-Bliley Act of 1999 is the legislation that initially permitted a commercial bank and an insurer to operate under a single holding corporation. Prior to the Gramm-Leach-Bliley Act, an insurance holding company could not own a commercial bank. An insurance company could own one thrift under the old rules. Now, restrictions are derived from the BHC Act which regulates affiliations between the bank holding companies and insurance companies. (Dunham at p. 2).

Under the Gramm-Leach-Bliley Act, it is highly advantageous for a BHC to become certified as a financial holding company (FHC). A BHC is certified as an FHC through the Board of Governors of the Federal Reserve System (The Board). (Dunham at p.4). The Board has been allocated extensive power to expand FHC activities. (Dunham). The Board may even veto proposals by the Treasury Department to authorize new activities.

Through investment in insurance sectors and banking sectors, holding companies have the greatest potential for diversification. “Insurance companies will be the FHC subsidiaries that have the greatest flexibility to make venture capital and merchant banking investments in non-financial businesses.” (Dunham at p.6). However, the insurance market has changed drastically over the last several years. (Eslick at p.4). Large insurance companies have consolidated and now approximately “20 percent of brokers…drive 80 percent of the volume.” (Eslick).

Holding corporations are restricted in their operations by the Gramm-Leech-Bliley Act, but their defined roles can be used efficiently to find an appropriate market. One function that satisfies the “closely related to banking” requirement of the BHC Act is to operate a limited purpose trust company. Limited purpose trust companies operate entirely in a fiduciary capacity and therefore do not qualify as “banks” under the BHC Act. (Dunham at p.4)

While holding corporations typically maintain expertise in one general area such as farming or home loans, there is potential for corporations to diversify their sector portfolio. Holding corporations in different markets typically have dissimilar concerns that will impact the structure of their organization. For instance, Cascade Bancorp, the holding corporation for Farmers & Merchants State Bank of Idaho, has done well enough to split its stock. (Idaho Business Review Staff Report). Conversely, SLM, otherwise known as Sallie Mae, a student loan corporation, may be negatively impacted by potential interest rate cuts under the upcoming reauthorization of the Higher Education Act.

III. Political Climate

Holding companies like Sallie Mae are subject to ramifications from political change in Washington. For SLM, profitability is regulated by Congress. (McLean). Student loan interest rates are set by congressional legislation. (McLean). Sallie Mae, however, has not been encumbered by cuts from the student-loan program. In fact, its stock has done quite well since the company has been protected by legislation from the seventies which guarantees a 9.5 percent return to student lenders. (McLean at p. 3).

Political ramifications and pertinent legislation are essential to understanding the structure of a business. Typically, interest rates are the focus of corporate volatility, but direct legislation and indirect legislation must be predicted in a business plan. An example of direct legislation for an oil company would be the opening of oil reserves. An example of indirect legislation might be the effects of taxation aimed (intentionally or unintentionally) at a particular market.

IV. Taxation

Flexibility is the main benefit derived from a holding corporation, but there are other factors that should be considered in light of the risks that a holding corporation will face. A Start up business may be hesitant to structure itself as a corporation. C-corporations are burdened by double taxation. A preferred arrangement for a holding company may be to structure itself as an s-corporation to avoid double taxation. S-corporations are taxed like partnerships. Profits and losses are “passed through” to the shareholders. (Minassian). There are, however, complex guidelines that s-corporations must follow. (Minassian).

VI. Corporate Governance

Recent legislation has attempted to control corporate wrongdoing through regulation aimed at parent corporations. Some legislation has imposed criminal sanctions on corporate actors that cause injury or death through negligence, willful, or malicious intent. (McGillivray).

The question of corporate responsibility raises the age old debate over whether responsibility should be left to the market or state-imposed legal ramifications. Market theories depend on responsibility to shareholders for upholding ethical conduct. There are various theories on how much state control should be exercised over corporations. At the most extreme end, enterprise liability holds all parties involved responsible for the wrongdoing of a company. However, the center of the debate is balanced on requiring some degree of knowledge related to culpable conduct before holding parties responsible.

On the international front, global regulation is considered in three models. The neo-classic or liberal model relies on entirely free markets and loose state regulation to control corporations. (Backer). The second model, moral restraint, relies entirely on moral responsibility to control corporate behavior. (Backer). The third model, the control model, polices corporate conduct through direct and indirect regulation. (Backer).

The debate over how to approach corporate governance is focused on corporations that have holding company structures. A holding company can avoid responsibility for the actions of its holdings or actors at lower levels. However, more regulation is forthcoming for corporations that exercise control over offending companies or have knowledge of their actions.

In forming corporate structures, many companies have preempted domestic legislation by creating their own policies to prevent association with corporate wrongdoing. These policies, often referred to as soft law, impose requirements on contractors and sub-entities.

VII. Foreign Impact

U.S. holding corporations have recently raised objection to guidelines regarding criteria to become a financial holding company (FHC). (Dunham at p. 9). Foreign corporations that own subsidiary banks in the U.S. are subject to the Bank Holding Company Act (BHCA). (Dunham). Most foreign banks operating in the U.S. do not operate through bank subsidiaries. In order to qualify as a FHC, foreign banks must be “well capitalized” and “well managed.” (Dunham). Domestic corporations have objected to the method for determining a “well-capitalized” corporation. The method domestic corporations object to requires the corporation’s Tier 1 capital to hold assets leverage ratio to be at least 3 percent. (Dunham). Domestic corporations insist that the Basel Accord on banking supervision, does not contemplate a leverage ratio requirement. (Dunham). Since “foreign banks do not operate under a holding company structure, the assets and liabilities of a foreign bank’s affiliates will necessarily be incorporated into the bank’s consolidated financial statements.” (Dunham) The Board is currently addressing concerns over this matter by developing alternative methods. (Dunham at p.10).

Conclusion

Start up businesses must structure themselves in a way that reflects their long term expectations. The initial decision to form a corporation may be based on considerations such as tax implications or desire to protect resources. However, corporate structure decisions should also consider control, flexibility, and political climate.

Recent legislation has helped holding companies to be more flexible and maintain control over subsidiary companies. A thorough understanding of the direct and indirect legislation affecting markets is necessary to operate efficiently. Moreover, an understanding of political climate is necessary to predict corporate implications.

A holding corporation structure will provide the flexibility and control necessary to compete in today’s markets. However, the specifics of the market(s) involved and the degrees of control exercised will be determinative of the business’s success.



Content - Members-Only Content for WordPress

Ronald Edwards asked:


Today Panama has become the Switzerland of Latin America. There are 150 banks in Panama many of which have their name on a 40 story modern skyscraper. Panama is often touted as having the best banking secrecy laws in the world. This author believes this to be true and we will address the bank secrecy laws of Panama in depth.

The first important point to look at is the existence of any tax treaties that Panama may be in with any other countries. This is an easy topic since Panama has no tax treaties with any other countries. Tax treaties can be privacy invasive for a banking client. Under some treaties the bank must collect a certain percentage of taxes from interest income paid to the clients and this money is turned over to the client’s home country. Other treaties call for an exchange of information so if a requesting country wanted to gather certain facts about a bank account or if a certain constituent of theirs had a bank account the bank would be obligated to provide the information. The European Union Withholding Tax Treaty is a very relevant treaty.

The next type of treaty one must look at is called the Mutual Legal Assistance Treaty, or MLAT. This treaty allows countries to request information from other countries in the treaty. The general way this type of treaty operates is through diplomatic channels. Panama is in such treaties. The requesting country must have a criminal case on file in the national courts of their country. They would then cite this case already in their criminal courts when the request for information is made. The requesting country would a need to show that the requested information about the Panama bank account is absolutely required to successfully prosecute the case and that the requesting country has no other way to obtain such evidence. Then the request is considered by Panama. Panama may ask for more information. Panama could deny the request on whatever grounds they wish to use. Panama could also decide to conduct their own investigation because they feel that some Panama laws may have been broken and delay the MLAT request until after they have concluded their investigation which may be some years. The statue of limitations could expire before Panama completed their investigation. This is not to say that Panama is in the habit of thwarting requests for information but Panama does have a right to investigate crimes that took place in their jurisdiction. As a result of these investigations they could confiscate assets and prosecute individuals under their own laws.

For the MLAT to take effect the violation in question must be a crime in both the requesting country and the country the information is requested from. Various MLAT treaties have all sorts of details and exceptions and should be read individually if you are seriously interested in a particular treaty. Panama not only has no tax treaties with any other nation but all income tax related offenses in Panama are civil offenses only, not criminal offenses. So tax matters are not a crime in Panama. Thus Panama does not participate in requests for information in tax offenses. Panama does cooperate in certain areas freely. If one acts fraudulently while in the capacity of a fiduciary in a financial relationship Panama will cooperate. Panama also cooperates in cases of narcotics trafficking, money laundering, terrorism and child pornography.

The Panama Bank Secrecy laws are contained in a number of different legal statues. We will go through some of the relevant ones:

The Panama National Banking Commission was formed by Cabinet Decree 238 of July 2, 1970.

Article 74 of Decree 238 deals with protecting the privacy of Panama bank clients. It states that the Commission is prevented from conducting or requesting investigations concerning the banking affairs of any bank clients. Any data obtained by the Commission in the course of its normal regulatory functions may not be revealed to any person or authority, except if subpoenaed in accordance with the legal provisions in force (Panama Court Order required). If a violation of this occurred Article 101 of this Cabinet Decree contains provisions for the dealing of such a violation.

Article 101 of Cabinet Decree 238 states that:

“Any person who furnishes information in violation of this Cabinet Decree, or who violates any of the prohibitions established in it, for which no specific punishment is provided for, shall be subject to a monetary fine as determined by the Banking Commission, without prejudice to applicable criminal and civil liabilities.” This is fairly strong language.

Article 65 of Cabinet Decree 238 deals with how the National Banking Commission may gain access to documents relating to the bank’s operation, not individual records of banking clients. The Banking Commission needs to regulate the banks financially and thus inspect their books but this is mandated to be done on a collective basis, thus the books for the bank as a whole are inspected not the records for an individual account holder at the bank. The Banking Commission may not examine or inspect any type of individual deposit accounts, nor the securities held in custody by the bank for clients, nor the safe deposit boxes belonging to clients and their contents, nor the documents associated with receiving credit from the bank, unless there is a Panama Court Order in place that specifically authorizes such inspection or examination according to Article 89 of the Panama Commercial Code.

Panama statues specify that bank secrecy may be lifted by a Panamanian court through Article 89 of the Commercial Code. This is not a commonly invoked procedure but is possible concerning serious criminal activities.

Articles 168 and 170 of the Panamanian Criminal Code contain two sections which enables criminal prosecution for violation the privacy of Panama banking clients:

Article 168. Any person that is in legitimate possession of correspondence, records or documents which are not intended for public knowledge and notwithstanding discloses said correspondence, records or document without proper authorization, even in the event that they were addressed to him, shall be subject to prosecution, whenever such disclosure might inflict damage.

Article 170. Any person that in the course of his occupation, employment, profession or activity obtains knowledge of confidential information that in the event of being made public could inflict damages, and such person discloses that information without the consent of the concerned party; or in the case that disclosure of such information were not necessary to safeguard a higher interest, shall be punishable by imprisonment of 10 months to 2 years or a comparable fine, and the inability to practice his occupation, employment, profession or activity for not more than 2 years. One can readily discern that this would cover Panama Stock Brokers, and Panama Banks including all the employees and officers. This could also be construed to cover Directors of Panama Anonymous Bearer Share Corporations and Council Members of Anonymous Panama Private Interest Foundations.

Panama has done away with numbered bank accounts as have the rest of the offshore tax haven jurisdictions. This is due to pressure from FATF, the Financial Action Task Force. FATF is a private entity that unofficially dictates anti-money laundering statues to the banks worldwide. Numbered accounts are no longer allowed.

Panama through the use of anonymous Bearer Share Corporations accomplishes practically the same privacy as the old numbered bank account. The banks around the world including those in Panama must know who their customers are. This usually means getting identity documents such as passports, driver’s licenses, national identity cards, and letters of reference from banks and businesses. The Panama Bearer Share Corporation is anonymous in that there is no reporting or recording of any stock ownership records in any registry or database thus it is impossible to determine who the natural persons are behind the corporate veil. This means when international wire transfers are sent only the name of the anonymous corporation appears in the wire, the true owner of the account is not revealed for the world to see same as it was when numbered bank accounts were allowed. With regards to writing checks the same applies assuming the signatory signs the check in a hard to read manner. To provide for more privacy Panama only allows an attorney to form a corporation or foundation. This cloaks the formation of the corporation with Panama attorney client privilege further protecting the owners of the corporation or foundation with an additional layer of privacy. In most tax haven jurisdictions the formation of a corporation handled by a corporate agent which does not provide privileged communication to protect the identity of the person owning the corporation.

One can readily see why Panama has become the new Switzerland of Latin America.

For more information, please visit:

http://www.panamalaw.org

email at: panamalegal@hush.com



Content for WordPress

Ronald Edwards asked:


You can obtain a Panama Bank Account without having to come to Panama!

Panama Banks - Panama banks do open bank accounts for foreigners. Panama asides from being the number one retirement haven in the world is also the world’s foremost tax haven. Offshore bank accounts in Panama are the most coveted in the world today. All the banks we use have online banking including the ability to send international wire transfers, check balances, history and other information. You can get an ATM Debit card that is good worldwide for ATM withdrawals and it works for some Point of Sale Purchases. We work with several different banks and savings and loans in Panama. We do not discuss names of banks until after a person becomes a paid client, and all the required documents have been provided, please do not ask. Same applies to sending out bank forms, signature cards, etc. We have a list of banks that we have a working relationship with where we are able to have accounts opened without the need for the parties to come to Panama. Some of these banks are large multi-national conglomerates with assets in the 100 Billion Dollar Range and others are small Panama only Banks that offers a more personal touch and banks with everything in between. We have never had a customer leave us because we could not get them an account with a bank or savings and loan they felt was not suitable. We can normally have an account opened within 5 working days of the receipt of our fee and the required documents, some times faster.

The Process - Making a trip to Panama is not necessary. Panama Banks never accept cash to open an account. Some customers wish to come to Panama to meet the bank, etc. This is fine but we will NOT introduce a person to any bank until after they are a paid up client and we have done our due diligence having their reference letters, passport copy etc. The banks rely on the law firm to do the required due diligence in the area of know your customer which is the same as required by the banks. The banks in Panama have no shortage of customers since a Panama Bank Account is the most coveted in the world right now. The banks do not wish to have potential customers contacting them directly before the law firm has completed their due diligence. The banks are not fond of foreigners calling on the phone about opening up an account. If you are coming to Panama which again is not necessary, we suggest you do the formation of the corporation or foundation before you come and we can get the bank account approved by the new account committee before you arrive so basically you just meet the bank manager, sign the forms and signature cards and then are free to depart and your account should be functional the next day. We can assist with corporate rates on a hotel; get you an English speaking driver with a car, etc. You can have a checking account or a savings account. Time locked deposits for higher interest rates are available. Minimum deposits tend to run between $500 and $2000. Some banks will provide an ATM card with the account immediately. Some banks will issue direct from the bank a Visa card that is a secured debit card. It is good for ATM machines, internet purchases etc. The bank will generally require a security deposit which goes into a special interest bearing account. If your Visa card had a $10,000 credit line they would probably request a security deposit of $12,500. At the end of the billing cycle the money to pay your card balance down to zero would be deducted from your regular account. If a need arose you could ask the bank to clear the balance before the end of the billing cycle freeing up your credit for travel. There is the option of a third party ATM card that has numbers only, no account name at all on the card. There is also the option of having a third party MasterCard or Visa debit card (not credit card) for an extra fee. The Visa or MasterCard debit card also can function as an ATM card.

Documents Required - A notarized copy of the picture page of the Passport, letter of reference from a recognized bank, and a letter of reference from an attorney, accountant or company you do business with on their letterhead. Any bank in the modern world using the international wire system will require at least this much documentation from a foreigner opening up a bank account in their jurisdiction.

Stock Trading - The savings account can also be directly tied to a stock trading account. This allows one to trade online around the world. There is a $50,000 minimum to open such an account. The clearing agent is top drawer. We can also arrange for you to have a separate brokerage account in Panama with minimums as low as $20,000. USA passport holders can not have a personal stock trading account corporate or foundation only.

Type of Account - Offshore bank accounts in Panama can be opened for a corporation or a foundation. Accounts can be opened for personal, corporate or for a foundation. USA passport holders can not open personal bank accounts unless they actually reside in Panama and can document this. We always suggest the offshore bank account in Panama be opened using a Panama corporate structure. This way when wires are sent or received it can not be seen that you are the person(s) behind the corporation. When you use an anonymous Panama Bearer Share Company the ownership of the company is not recorded in any registry or public record database so no snooping entity can determine who is actually receiving the funds, and this makes for very private personal banking. Recently there was a scandal in the media where it came out that the USA was monitoring SWIFT wire transactions for some years. Monitoring a wire transaction to an anonymous corporation is fairly meaningless since nothing is known about the ownership of the corporation. If the sending entity was also an anonymous corporation that would be a good working definition of a dead end both ways. We always advise against personal offshore bank accounts in Panama for these reasons in addition to the fact that a corporate or foundation bank account greatly enhances asset protection but will work on personal accounts at the client’s request. We can not get personal bank accounts for USA residents/citizens. As an additional option one can open an offshore Panama bank account using a Panama Foundation which is also anonymous.

Bank Account Signatory Verification You or your designated signatory(s) will be the only person(s) with access to your offshore Panama bank account. What we do is have the bank opened up as a zero balance account; no money is in the account. Before you load the account with any funds we will show you how to securely contact the bank by phone and verify that no one else can sign on the account or otherwise access the bank account. After the account is funded online banking information will then be emailed to you directly and you reset the password securely online immediately upon receipt. ATM card will be sent by courier directly to you.

Number of Bank Accounts - You can open up more than one Panama offshore bank account in different banks using different corporations or same corporation or a corporation and a foundation. Sending funds from one corporation or foundation to another for payroll, purchases or other reasons can easily be accomplished using the ACH system in Panama which 30 large banks use. This is not a wire transfer and the data is covered by Panama Bank Secrecy laws and only entities covered by these laws have the data. It takes one to two days for the ACH transfer to be completed and the cost is about $1.00 per transaction.

Panama Bank Secrecy - Panama has strict banking secrecy laws better than any jurisdiction we know of. Panama has no tax treaty with any other country. This is not the case with tax havens like Switzerland, Belize etc. who do get into tax treaties with numerous countries. Tax treaties are the legal basis for government fishing expeditions. Fishing expeditions do not happen in Panama. If a bank employee or officer violates the bank secrecy laws they can go to prison, get fined and of course you can sue the daylights out of the offending bank. The bank secrecy laws are statutory in Panama. A question that frequently comes up is if a Panama Bank that is operating under the name of a chain of large international banks is able to maintain true Panama Bank Secrecy. Let us say the Bank is called Bank Two (no such bank in Panama) and Bank Two operates in Europe and North America with 68 bank branches in different countries. The Bank Two banks in other countries can not go into their computers and see account holder information about Panama Bank Accounts. This would violate Panama Bank Secrecy, expose the bank officers to criminal prosecution and enable you to sue the bank and its responsible parties for millions of dollars of damages. In spite of this some people prefer a bank that operates only inside of Panama and we can accommodate this sort of request.

For more information, please visit:

http://www.panamalaw.org

email at: panamalegal@hush.com



Content