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Old 12-07-2017, 06:15   #1
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Starting a Private BVI Charter Company

Hello all-

I have a client who’s in an interesting spot. I won’t bore you with the details, but essentially they do 15-20 charters in the BVI’s each year with at risk kids. For understandable PR reasons, they don’t want to own a million dollar yacht in the Caribbean so I'm looking at starting a private charter company with them as my main client. Once the boat is paid for, I can drop the rates and help them stretch their dollars. I'm still a ways from retirement per sé, but it would be a great option for me to have a boat down there plus I'd love to support the awesome work they're doing. They've been doing the trips for years and will continue to do so, so the rough numbers seem to work pretty well.

I wouldn't be competing with the big companies, pretty much just there to serve this non-profit and maybe do a few other charters for friends. I've been researching ancillary costs and was hoping to get some harder numbers from the good folks here who have been there, done that and got the tee shirt.

I'll rattle off my questions in order.

1) If everything moves forward, we'll probably buy a new or close to new 5 cabin Lagoon 52. I'm estimating a $1.3M purchase with a 25% down payment and a 7 year mortgage. Does that sound about right?

1) The next thing I need to know is the cost to register the boat and where to register. I was thinking of setting up a local company in the BVIs. I don't have any plans to bring the boat stateside. All transactions and income would happen there, so that seems to make sense. But this is new territory, so if anyone has any wisdom on that, I'm all ears. Also, what do I need to budget annually for boat registration, taxes, etc.? I know there are no taxes in the BVI's but if I have state side liabilities, I want to make sure they're covered.

2) I've estimated 2% for insurance ($26k annually) $4k for cleaning ($200 after each charter) $5k per year for scheduled maintenance for the first three years since the boat will be new or nearly so, then $6k for years 4&5, $7k for years 6 and 7. Do these numbers seem reasonable?

3) Dockage. Here's where things get nebulous. I'm planning on keeping the boat on a mooring ball most of the time with a few day rates when we're island hopping on the charters. In the interest of planning for worst case, I took a $35 day rate and multiplied by 365 for a total of $12,775 per year. What are some real world numbers for long term mooring / dockage?

4) Fuel. What can I plan on spending on fuel each month or year? I sail a Jeanneau 409 out of Marina Del Rey and the fuel costs are pretty minimal. But I know a cat has two of everything and I don't have a good feel for how much motoring we would be doing in a typical week of island hopping.

5) What am I missing?

Thanks in advance for your help and guidance!

Best-

Chris
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Old 12-07-2017, 06:45   #2
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Re: Starting a Private BVI Charter Company

Big omission: local requirements to legally conduct this business in the BVI.

Ive started businesses in other countries, but not the BVI. In many other venues, getting legal is one of the most time consuming issues...may take 1-2 years in some venues.

Related: Work Permits...are you a British Citizen? If not, what is required for you to legally work in the BVI? This can also be time consuming to sort out.

Liscening: what sort of liscening for captain/crew does the BVI require?
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Old 12-07-2017, 07:38   #3
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Re: Starting a Private BVI Charter Company

I just formed a BVI company with the help of a company in Fort Lauderdale Florida. I checked into doing this myself but for what seems to be a small fee for me (around 100 US bucks) it was well worth it. One of the questions on the form was if the vessel was for charter. I clicked the "not for charter " box as that is the appropriate one.

If this could be a possible direction you take and want her contact info, let me know. She is amazing at doing everything proper.

Don't know about the British/work thing.

Cheers
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Old 12-07-2017, 08:26   #4
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Re: Starting a Private BVI Charter Company

Thanks 336! That's exactly the kind of information I need to run down. And yes! I would love to talk with the person who helped you. Since this will be mostly for a single client, I think there may be a way around the charter provision.
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Old 12-07-2017, 08:29   #5
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Re: Starting a Private BVI Charter Company

Thanks Belizesailor! I'll look into all of that.
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Old 12-07-2017, 08:44   #6
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Re: Starting a Private BVI Charter Company

Oops. That should be $1000 bucks. I wish a hundo. She seems to be well known in South Florida and I understand why. Hope it's OK to post this info.

Amalia Noguera, Managing Member
INTERNATIONAL VESSEL DOCUMENTATION, LLC
999 Ponce de Leon Boulevard, Suite 715
Coral Gables, FL 33134
Phone: 786-360-2080
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Old 12-07-2017, 09:31   #7
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Re: Starting a Private BVI Charter Company

I don't have first hand knowledge on this, but I'd want to be sure of the efficacies of using a mooring ball for this.

First, dock access will perhaps be pretty critical for moving goods/stores at the start of every charter.

Second, you will need a very robust mooring ball to support the windage and weight of a 52 foot cat. At least in the Abacos, monos in the mid 40s were considered too big for the rented balls.

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Old 12-07-2017, 10:23   #8
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Re: Starting a Private BVI Charter Company

You can register the yacht in BVI, and have your charter business in St Thomas, then people fly into St. Thomas and board. You then take them all over the BVI, come back to St Thomas. If I remember right, you don't have to be a BVI charter company to take people cruising BVI. It is also much easier and cheaper for your charter guests to fly to St Thomas and board there.
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Old 12-07-2017, 10:41   #9
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Re: Starting a Private BVI Charter Company

Thanks, Wendi! This is super helpful!
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Old 12-07-2017, 10:44   #10
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Re: Starting a Private BVI Charter Company

I think 1) You need dock space and not a mooring
2) Expenses are always more than you thought. If someone tears a sail, you'll be out about $5000 immediately. Stuff does and will break. I think you should more than double your expense estimates
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Old 12-07-2017, 10:57   #11
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Re: Starting a Private BVI Charter Company

Quote:
Originally Posted by Chris Coyote View Post
Hello all-

I have a client who’s in an interesting spot. I won’t bore you with the details, but essentially they do 15-20 charters in the BVI’s each year with at risk kids. For understandable PR reasons, they don’t want to own a million dollar yacht in the Caribbean so I'm looking at starting a private charter company with them as my main client. Once the boat is paid for, I can drop the rates and help them stretch their dollars. I'm still a ways from retirement per sé, but it would be a great option for me to have a boat down there plus I'd love to support the awesome work they're doing. They've been doing the trips for years and will continue to do so, so the rough numbers seem to work pretty well.

I wouldn't be competing with the big companies, pretty much just there to serve this non-profit and maybe do a few other charters for friends. I've been researching ancillary costs and was hoping to get some harder numbers from the good folks here who have been there, done that and got the tee shirt.

I'll rattle off my questions in order.

1) If everything moves forward, we'll probably buy a new or close to new 5 cabin Lagoon 52. I'm estimating a $1.3M purchase with a 25% down payment and a 7 year mortgage. Does that sound about right?

1) The next thing I need to know is the cost to register the boat and where to register. I was thinking of setting up a local company in the BVIs. I don't have any plans to bring the boat stateside. All transactions and income would happen there, so that seems to make sense. But this is new territory, so if anyone has any wisdom on that, I'm all ears. Also, what do I need to budget annually for boat registration, taxes, etc.? I know there are no taxes in the BVI's but if I have state side liabilities, I want to make sure they're covered.

2) I've estimated 2% for insurance ($26k annually) $4k for cleaning ($200 after each charter) $5k per year for scheduled maintenance for the first three years since the boat will be new or nearly so, then $6k for years 4&5, $7k for years 6 and 7. Do these numbers seem reasonable?

3) Dockage. Here's where things get nebulous. I'm planning on keeping the boat on a mooring ball most of the time with a few day rates when we're island hopping on the charters. In the interest of planning for worst case, I took a $35 day rate and multiplied by 365 for a total of $12,775 per year. What are some real world numbers for long term mooring / dockage?

4) Fuel. What can I plan on spending on fuel each month or year? I sail a Jeanneau 409 out of Marina Del Rey and the fuel costs are pretty minimal. But I know a cat has two of everything and I don't have a good feel for how much motoring we would be doing in a typical week of island hopping.

5) What am I missing?

Thanks in advance for your help and guidance!

Best-

Chris

Contact cysofbvi@bvi.com for assistance
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Old 12-07-2017, 11:12   #12
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Re: Starting a Private BVI Charter Company

ebsail,

That's a great point. I should've mentioned that I have budgeted a $20k emergency fund for sail repairs, replacement and other "oh crap" moments. Do you have any idea what I can expect to pay for slip fees on a year round basis?

Thanks!
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Old 12-07-2017, 12:14   #13
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Re: Starting a Private BVI Charter Company

Chris-
I believe that as a US citizen, you'll still have to report income from all sources, including the offshore corporation, and pay taxes on it, AND file special paperwork for the situation. There have been numerous articles about how the IRS has gotten onerous about this and a surprising number of semi-ex-pats have become full ex-pats to get away from the nonsense.
Then there's also the charter business. You'll have to satisfy the BVI authorities and the IRS, and the IRS is happiest when the business is an arm's length business. You hire a charter agent/manager down there, and they book the boat for charters, regardless of who is chartering it. And they make a real effort to make it booked 52 weeks a year.
Everyone, including you, your friends, and the charity, pays the same rate. Whatever you pay or your friends pay, just adds to the profit that ensures a bona fide company. It comes back to your pocket anyway, but if you gave yourself a discount, you'd be twisting that arm's length relationship. Same thing with your friends. Then you have the choice, either give the charity a discount, which may be qualified as a deduction, or charge them the going rate, with the understanding that you'll be making a cash contribution back to them at the end of the year anyway. Again, comes back to the same thing but may keep the tax men happier.
You'd need a competent tax attorney to give you the best advice as to how to set this up, and please all the international authorities that might be involved.
And then of course, there are the issues mentioned of being allowed to set up the operation in the BVI.
There could be further issues since the guests and crew of a BVI-flagged boat will be legally treated differently from a US-flagged vessel. That might or might not be to your advantage or concern, but it should be looked into as well.
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Old 12-07-2017, 12:17   #14
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Re: Starting a Private BVI Charter Company

I'm on the "you need dockage" side of the room. 40 charters a year is only 12 short of every week. Think about the logistics of getting kids off and on, provisions on, trash off and cleaning. I'm betting it would be hard to do all that on a mooring.
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Old 12-07-2017, 13:08   #15
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Re: Starting a Private BVI Charter Company

Hi Chris,

I think your plan is very ambitious but doable. My company, a US LLC, owns and operates a US flagged 47’ charter boat based in the BVI. I previously owned a French flagged vessel based in Raiatea in French Polynesia. I have an application in with the BVI government for a BVI equivalence master’s license based on my USCG license. My boat has a Commercial Recreational Vessel License issued by the BVI Ministry of Finance good for all charters in BVI waters.

Here are some questions and advice based on your plan:

First, don’t tie in with any legal experts or consultants or pay any fees just yet. Spend time in the BVI doing your own research. I’m sure the person recommended on the forum is a qualified professional but this is the way I recommend you approach it.

Mooring balls: Mooring balls are up to $45 dollars per day, up from $20 a day 6 or 7 years ago even if they can be used for your type of operation. My guess is you would have to install a private mooring ball in a government approved location at considerable expense and with many bureaucratic hurtles much like those erected by the Army Corps of Engineers in the US. Monthly dockage, if available, would be about the same as the current daily mooring ball fees (time 30) so I think your estimate is close. However, I don’t see mooring balls being practical for what you envisage, you would still have to have commercial dockage for pickup, drop off and maintenance for which you would have to pay.

Registration: There are two types of “registration” used by BVI charter operators; a yearly fee for foreign flagged boats, i.e. US, in my case, and those that are BVI flagged. Different fees and tax consequences apply. Also the business structure and banking arrangements are tricky thanks to the US IRS.

Fees & Costs: You can’t look just a cleaning fees after a charter. Complete turn-around costs include much more work. Mine work out to $650 after ever charter to do it right.

Fuel: Two months ago diesel was US$3.81 a US gallon, not bad. I asked the fuel guy if that was an Imperial gallon, he chuckled. Also fuel will be a bigger cost than you think, maybe not for at-risk youth, let them sweat, builds character, but paying charter customers want that gen-set and A/C running as soon as the anchor hits bottom. In this case on a sailing cat the genset will burn as much fuel or more than the engines.

Provisioning: For your propose probably the best approach would be to set up with a purveyor who will use a set menu for every charter and deliver dockside. Boring for the crew perhaps but the customers won’t know the difference. More expensive than do-it-yourself but probably worth it. Booze or no booze… at-risk youths, probably not, paying customers…that’s the main reason to go to the BVI for some people. We can do a good job at about $30 to $40 a day per person not counting alcohol. Depends on how many meals are eaten ashore, BVI probably many, Belize, not so much.

Personnel: You must use BVI licensed personnel for all except bare-boat charters. Currently for skippers and deckhand/cooks you will pay $150 to $175 per day.

What am I missing? You asked. Probably a lot but two heads are better than one. I’m very interested in your plan and would like to hear it in detail. I would like to expand my little operation in the BVI and am prepared to increase my investment there. Email me at jmschmidtjr@yahoo.com if you would like to talk about it.

Regards, Jack
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