6 Reasons Why You Should Have Your Business Registered
If your business is not yet registered, then you should know you have been making a very BIG mistake. Take your time to read these 6 reasons why Register Your you should have your business registered.
Businesses pop-up daily online in their numbers with finely designed logos, irresistible branding and all what not that makes a customer rush the next minute to demand such a product or service. Lo and behold!
I receive calls all the time from friends who have eye-catching ‘virtual companies’ asking if my tax documents were up-to-date. Yes, such sh1t happens frequently and yet they don’t still learn because they come back knocking immediately another opportunity comes.
- Do you ever think one minute when you tell people you have a company when in reality and legally it doesn’t exist?
- Do you know what you may be missing when you don’t have your company legally registered?
- Have you ever thought of why you should register your business?
If your answer to all the questions above is “No”, then make sure you read this article to the end because it’s going to be really long.
I know after reading this, some people will understand what they have been missing. Others will continue to carry out activities illegally. Some people don’t register their business because they don’t know or understand the importance of doing so.
However, there are many out there that know but want to avoid spending in order to register their business. Some are running away because they don’t want to pay taxes. The latter in particular is not a good example for the community.
Anyone can decide to start a business any time. All you need to do is have a business idea, provide a product or service to your target market in other to make profit. Selling a product or service may not actually need you to legally register your company, but it will be for your good if you choose to do so.
By the time you are through with reading this article, you will know exactly why you should have your business registered now!
To help you understand what I will be sharing with you better, it’s necessary for you to know the types of businesses you can registered. It is a prelude to this article so make sure you read in other to understand this better.
Since you now know why you need to register your business, it’s time for us to see the 6 reasons why you should have a registered business as soon as you can.
1. Raise capital
Many entrepreneurs today find it difficult to raise capital to fund their business. Almost all will tell you finance is their greatest problem (which is very true). But are you sure you are ready to get finance? This is the question they first of all need to ask themselves. No one will want to invest in a business which doesn’t exist. Let’s forget about the bright looking brands we see online daily. Very few of these businesses are registered.
As a legally registered business, your ability to raise funds and attract investors will become easier – especially the case of a limited liability company. Investors will not be attracted to invest in a sole-proprietorship (even that which owns a business license as in Cameroon) because the business goes out of existence as soon as the owner dies. Investors know very well that a company has a formal structure to receive their investment and not a partnership or sole-proprietorship.
Investors are interested to buy a share in your business rather than giving you money to finance your lifestyle. In that case, if your business is not registered, what will you give them? They wont take you seriously because that is a pure sign of not being a professional.
Banks give out business loans to registered businesses and not individuals. Even though they give business and personal loans, banks will not give you a personal loan to invest in a business but will do so for you to buy a car, house, etc. Hence for you to qualify for a business loan, you must have your company registered.
2. Builds your reputation with customers
Many online entrepreneurs believe they don’t need to register their businesses because they work online. I don’t know if they tried to check if all those big online businesses aren’t registered. Google, Facebook, etc. are all registered companies.
Once you register your company, the reputation and the way people perceive your business is enhanced. Most corporate customers will work only with registered companies. They don’t carry out transactions with an unregistered business. In Cameroon and many other countries, it’s against the law for both tax and regulatory reasons.
Serious companies will go to the extent of asking your taxpayer’s card or business license. In fact, in Cameroon, your invoice or any company letterhead has to carry the taxpayer single identification number and business registration number. As for customers, they will trust your business more if you can issue receipts that carry your company’s name and proof that you are a registered business.
3. Personal liability protection
If your registered business is a private limited liability company, then it is regarded as an entity different from you. You are therefore protected from legal liability. This means, as a shareholder (business owner) in the business, you are not personally liable for the debts, accident, or other liabilities of the business.
Take for instance, if you are given a loan and you default payment, your bank has the legal right to seize only assets that belong to the company. Your personal property is protected from such seizure.
On the other hand, if you are running an unregistered business, you may not be safe from this. Your personal belongings will be used to settle your debts and liabilities. Your personal property and that of the business could be sold to pay for damages in the case of an accident where someone dies.
It is worthy to note that the legal protection is only for limited liability companies. Partnership (except limited partnerships) and sole-proprietor businesses cannot benefit from legal protection.
What type of business do you want to build? Is it that which will close down when you are not there or one that will continue even in your absence? If you want a business that will continue after your death, then a limited liability company is what you should register.
If your registered business is a limited liability company, then it can be passed down to your heirs or sold by the owners so it can continue to carry out its activities. In Cameroon, upon registration, a limited liability company has a life-span of 99 years which is renewable.
Examples of businesses that have surpassed the life of their owners include: Guinness, Nestle, Mercedes Benz, Toyota and many others. Africa still has fewer businesses in this category, though many have started cropping up.
5. You have a unique identity that is protected
One of the advantages of getting your business registered is to make sure your company name is not used by someone else. Once you choose a company name and ask for it to be registered, the business registration office will verify to see if another business is using that name.
The law doesn’t allow for two businesses to have the same name. You should remember incorporated businesses are considered as legal persons. Once your business name is confirmed, no other person has the right over it except it goes bankrupt or it’s formally dissolved.
After registering your business, you can go ahead and brand by designing your logo, business card or letterhead. That gives you a unique identity which will make you proud. NB: Your logo and brand designs are not protected from copyright when you register your business. You will have to go to the copyright office to protect your brand(s).
6. Begging will stop
This is one very important reason why you should register your business now. You may not find this anywhere because many don’t talk about it. There are some entrepreneurs out there who beg for registered companies when they have an opportunity that demands for a registered business.
I have received such calls many times from my fellow entrepreneurs with well branded businesses. I always remind them what happens when they continue to beg for companies. This is what I tell them:
You are introducing yourself as another company. They will not identify you because you are not the owner of the company you use to supply your services or products
At times you will have to pay high commissions to the company whose documents you are using. This commissions may exclude taxes, bank expenses and other fees or duties that may be levied
The company owner may double-cross you and take over your customer. The moment things don’t move along well, the owner of the company may decide to side-line you and carry out transactions directly with the customer. In such a case, you may have no claim on them because you are not registered and the customer company doesn’t know of your existence.
If you want to be free from such, you should try to register your business as soon as you can.
The above are the reasons why you should register your business. Don’t wait for the moment you have a business or funding opportunity before you start rushing to register your business. Now is the time!
If you found this article useful, don’t hesitate to share with others. You maybe helping someone you don’t know. Don’t hesitate to get in touch with if you need help registering a business.