Business registration 101: What you need to know

Are you nurturing a business idea, a startup or running a thriving business informally? Have you thought of registering and formalizing the business or idea? Business registration is a crucial step toward legitimacy, growth and increased opportunities.

Why the need to register your business?

1. Business registration gives you legitimacy and credibility in dealing with clients and the general public. For example, if your business bids for contracts, it definitely has to be registered;
2. Your business name is secured and cannot be used by any other business;
3. A business that is not registered can hardly access funding from banks and other investors when the need arises. In addition, an unregistered business cannot open a corporate bank account.
4. Once your business is tax registered, you formalize its tax position to be able to access available tax incentives and reliefs. Without registering your business for tax purposes and filing required returns, you are at the mercy of tax officers. Arbitrary taxes will be imposed on the business to your detriment.
5. For businesses in certain industries, registration is a legal requirement. The business cannot operate without it being duly registered. Some of these industries are the pharmaceutical industry, insurance, financial services, public practice of accountancy etc.

Agencies responsible for the registration of businesses in Ghana?

1. Registrar of Companies (ROC)

ROC is your first point of call if you want your business registered. They are responsible for the registration of all types of businesses irrespective of structure and industry. The business can be registered as sole proprietorship i.e. registration of business name, company or partnership depending on your chosen structure.

Sole proprietorship i.e. registration of business name

An individual operating a small business can register a business name to prevent others from using the same name or any name similar. In this case, the business and the proprietor are seen as one and the same.

Requirements for registration:

• A distinct business name selected by the business owner
• Completion of prescribed forms
• Payment of processing fees

Company registration
A business can also be registered as a company when the requirements are met. The requirements are quite stringent compared to a business name registration.

There are different forms of company registrations i.e. company limited by shares, limited by guarantee and an unlimited company. The nature of business determines which is more appropriate.

Requirements for registration:

• A distinct name
• Completion of prescribed forms
• A consent form from a qualified and licensed chartered accountant to serve as auditor
• At least two directors
• Payment of registration fees

Partnerships
Two or more (maximum 20) individuals can register a partnership to engage in business.

Requirements for registration:

• A distinct name
• Completion of required forms
• Partnership agreement
• Payment of required fees

Note: The registration of all three forms of business ought to be renewed each year by filing the required returns.

2. Ghana Revenue Authority (GRA)

The GRA is responsible for registering businesses for tax purposes.

Requirements for registration:

• Business registration documents
• Completion of prescribed forms
• Details of directors (for companies), details of proprietor (for sole proprietors), details of partners (for partnerships).

Note: engage an experienced accounting consultant to engage the authority on your behalf. It will save you a lot!

Other regulatory agencies

Businesses operating in regulated industries ought to register with the regulator of the industry. After registering the business with the ROC and GRA, you will have to acquire the required licenses and permits from the regulator to be able to operate.

Registering your business is the first step at formalizing the venture and building a solid corporate brand. Depending on the type of ownership structure desired, the business can be registered as a company, a partnership or a business name i.e. sole proprietorship.

After registering with the Registrar of Companies, the next step is to register with GRA to formalize the tax position of the business and take advantage of tax incentives and reliefs. If the business is in a regulated industry, you then go ahead to acquire the license to operate from the regulator of the industry.

It is essential to consult an experienced accounting consultant to ensure that the registration process is completed correctly and efficiently.

Authors

Samuel Osae Ansah, CA, MBA, B.Sc.
Samuel is a business and finance enthusiast, a chartered accountant and licensed audit practitioner. He consults for businesses and individuals in the areas of accounting, tax, business advisory and personal finance.
Tel: +233 (0)59 863 2806

Lydia Badu Danquah, MBA, B.Sc.
Lydia is a seasoned finance professional with an MBA in Finance and a second MBA in Management. She is currently a doctoral candidate at Carolina University (USA).