Choose a Business Structure

Choose a business structure

The business structure you choose influences everything from day-to-day operations, to how much of your personal assets are at risk. You should choose a business structure that gives you the right balance of legal protections and benefits.

There are several business structures in the Cayman Islands. The most common types that will allow you to carry on business in the Cayman Islands are:

Sole proprietorship

A sole proprietorship is the simplest and most common form of business structure. This is where an individual operates a business in their own name. It gives the business owner complete control of their business. However, it does not produce a separate business entity and therefore does not provide liability protection. This means your business assets and liabilities are not separate from your personal assets and liabilities, and you can be held personally liable for the debts and obligations of the business. Sole proprietors are easy to form, and can be a good choice for low-risk businesses and owners who want to test their business idea before establishing a more formal business. To establish a sole proprietorship in the Cayman Islands, owners must be Caymanian.

Partnership

A partnership in the Cayman Islands is formed when two or more persons enter into an agreement to carry on a business with a view to make a profit. The partnership agreement can be oral or written; however, it is always recommended to have a written agreement with clear terms and obligations of each partner. Partnerships allow for the sharing of financial risk, skills, knowledge, and workload. Partnerships can be a good choice for businesses with multiple owners, professional groups, and groups who want to test their business idea before forming a more formal business.

Registered Company

An ordinary resident company must be registered with the Cayman Islands Registrar of Companies. This structure allows companies to carry on business within the Cayman Islands. Ordinary resident companies must maintain a register of their past and present members at their registered office, open for public inspection. They must also file Annual Returns with the General Registry annually, giving the names and addresses of members, directors, and the amounts of paid-up capital. This type of company is also allowed to hold land as defined under the Companies Law.

Other companies, e.g. Exempt or Non-resident Companies, primarily operate offshore, or outside of the Cayman Islands.

An ordinary resident company wishing to trade within the Cayman Islands, e.g., in retail trading, real estate, hotel operation, restaurants, etc., must be at least 60 percent Caymanian-owned and controlled. If the company is less than 60% Caymanian-owned and controlled, a Local Companies (Control) License (“LCCL”) will be required in addition to a Trade and Business License. 

The structure you choose will depend on your circumstances, goals, and preferences. You should carefully consider your desired level of protection, flexibility, and growth potential, and seek professional advice to choose the structure that works best for you to achieve your objectives.

Compare Business Structures

Compare the general traits of these business structures, but remember that ownership rules, liability, and filing requirements for each business structure will vary. The following table is intended only as a guideline. Please confer with a specialist to confirm your specific business needs.