Registration of Business : A Thoughtful Choice Can Turbo Charge Your Business
Why it is Required Registration of Business Name?
Registration of business is the first step to build your brand. When you own a business or if you are thinking of starting one then you should consider registering your company.
Once you register it you will have more flexibility to enable you to develop your business better. Individuals and companies are required to register a business name if they wish to carry on business under any name which is not their legal name.
Simply put, you may do business using your own name (or the initials of your given name(s) together with your surname), and if you choose to do this, you don’t need to register.
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However, should you decide to carry on business under a name other than your own, you are required to register your business name.
For example, if Jane C. Doe is conducting business as “Jane C. Doe” she does not have to register; however, if she conducts business as “Jane C. Doe and Associates”, with “and Associates” as an addition to her legal name, she does have to register.
There are some exceptions to this requirement, most significantly, that registration will not be necessary where the addition merely indicates that the business is carried on in succession to a former owner.
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You can register your company in any country. So choose one where its rules and regulations regarding registration of business are appropriate for your business, your potential customers, or suppliers, or employees.
Registering your company gives you many benefits and you should choose a jurisdiction that gives you the freedom to do business without hassles. But first, you have to get a name for your company and then the next step would be to register it. This would give you the right to run business practices under your chosen company name and is the first step towards building your brand.
Actually registration of business allows you to use your company name to conduct your business legally and in the long run is essential to build your identity with your stakeholders – customers, employees, suppliers, community, lenders, investors and government.
Registration of Business Protects Your Personal Assets.
There are some practical reasons why you should register your company name. Now if you want to do business in more than one state in a particular country then each time you have to register your business in every state that you do business.
However if your company name is already registered once in a country then you are allowed to do business throughout that country. When you do business it is natural for you to desire growth and add more clientele. The registration of business then is a beacon for growth. Moreover registering your company name rather than your business reflects more seriousness on your part and gives an appearance of solidity especially if it is an incorporation.
Although registering your company name can be expensive with annual fees running quite high every year, it still shows your clients and competitors alike that you are serious and that your company is here to stay. Registration of business gives your establishment a solid foundation and branding. One more good thing about registration is that it can bring in more investors who are willing to invest in your company projects. Investors are always wary of uncertain investments and if your business is not registered they might have second thoughts on their investments even if your business is quite lucrative.
Investors as a matter of fact shy away from liabilities but if your business is registered they are more willing to take risks and thereby lend capital to carry forward your business projects.
A registered business means that it is has audited accounts, follows rules of company law disclosure, and follows certain well defined practices.
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Registration of business gives you another benefit; it protects your personal assets. Your registered company is responsible only for its own profits and liabilities. In the event of a company liability becoming overdue, your personal assets will not be called upon to pay for them, legally.
This does not mean that you have to distance yourself from company liabilities or you do not want your company to grow. It means that if ever your company goes bankrupt, your creditors cannot seize your assets to get back their dues, rather they would have only the company property and other assets to sell off to clear debts.
Before the advent of the internet the Incorporation process was long and cumbersome. A process that now takes only a few days. However, the time that has been cut in the registration process has more than doubled by way of the know your client documentation!
The Difference Between Operating Under a Business Name and Forming a Company ?
The registration of business name, merely allows one or more individuals to carry on business in their private capacity, under a name that is different from their own.
Forming a company has the effect of creating a legal personality that is separate and distinct from the persons (shareholders) who own the company. Incorporation is a more expensive procedure and generally takes more time than the registration of a business name. In deciding whether to incorporate or operate a proprietorship it is useful to consider: 1. Whether you want to create a separate legal entity with the potential for perpetual existence, beyond the lives of its owners. If so incorporation will achieve this.
2. Whether you want to limit personal liability. Companies that are operated for profit are owned by the persons that have made an investment in the company, who are known as shareholders.
The personal liability of the shareholders is limited to the amount they have invested in the company and in the event that liability arises in the course of the company’s business, a successful claimant cannot generally recover beyond what can be realised from company’s assets.
The personal property of the shareholders/owners is therefore shielded. By contrast, in the case of a business name, any liability incurred in the course of business is the responsibility of the owner(s) of the business and the assets of the proprietors can be used to satisfy debts and judgment arising from business activity.
A primary factor to be considered in deciding whether to limit personal liability is the degree of risk involved in the type of business. The more likely and the higher the amount of potential liability, the wiser it will be to incorporate, e.g. if providing construction services. The feasibility of maintaining adequate insurance cover against a particular risk may also be included in this analysis.
3. Whether there are tax advantages, e.g. if doing business in sectors in which companies are taxed at lower rates than the usual 40%.
Where a company engages in manufacturing for the local and export markets its tax rate is 15 to 30% of chargeable income. Where a company operates a hotel, the tax rate is 30% of chargeable income. 4. Whether you are interested in raising capital through the sale of shares to the public. This can be done where a public company is formed.
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