So often people ask the question ‘Do i really need to register my business?’ . While at face value it seems registering a company is not a necessity, years of research has proven that it is indeed important. In fact, your success in business may actually depend on it. Read on and let us know if there is any that we missed in the comments.
Here are the 8 reasons why you should register your business:
1. To be more professional
First impressions are important they say. This is even more true in business. Would you prefer to buy an expensive smartphone that has been created by an individual or by a company? That’s the power of registering a company. It establishes you as a professional in your field. You prove to the world that you are legitimate and are not after a quick buck. It shows your customers that you are serious and will not simply disappear tomorrow.
2. To protect and secure your business name
Registering your business name protects it from being used by other businesses. When you register a company, the name that you choose is reserved to you only. You may not have plans to start operating right away but registering that name that you have always wanted ensures that its available to you when you are finally ready to launch your dream business. Once your company name has been incorporated and registered, you can further restrict its usage by registering it as a trade name or trademark. This ensures that no-one else can legally use it.
3. To get access to funding
One of the advantages you enjoy when you register a company is the increased access that you get to funding sources. There are various government loans available for youths and small businesses. In addition, various economic development agencies, banks and NGOs provide low-interest loans to small to medium enterprise owners who may not qualify for traditional commercial loans.
4. To separate personal and business finances
Most small business owners discover painfully that mixing business and personal finances is a recipe for disaster. The majority of small businesses that fail fall into this trap. If you keep business finances in your pocket you run into the temptation of ‘helping out Uncle Thomas’ when he asks for financial help. And when month-end comes you discover that you don’t have enough to pay for business rentals or suppliers. Having your business incorporated helps you separate these two so that you don’t run into problems tomorrow.
5. To participate in tender processes
In order to apply for both government and commercial tenders you need to be a legalized business entity. All tenders have on their top of the list the requirement to be an incorporated company. Simply put: ‘No registration papers, no tender acceptance’. Most tenders are advertised for big contracts and orders, so this represents a very real opportunity for your business to break out and make some large amounts of cash. Don’t neglect this.
6. Lower taxes
When doing business you have the option to do so as an individual or as a registered business. When you trade as an individual, you pay tax on the additional income you receive from your business. Unfortunately you don’t get any tax deductions on the expenses you incur in running the business e.g. internet costs, telephone costs, transport, rents, etc. These are all regarded as personal expenses more or less. One of the more appealing reasons for registering a business, as opposed to simply reporting your additional income, is the extra money you have left over. In Zimbabwe, businesses receive tax deductions for business-related expenses, including use of your car, a home office or a rented storefront, insurance, and more.
7. Liability protection
There are two types of businesses registered in Zimbabwe and these are the Private Limited Companies and Private Business Corporations. The business is treated as a separate legal entity from it’s owners and enjoys corporate citizenship in Zimbabwe as if it were an individual. Both types of businesses offer limited liability to their owners or shareholders. Both business types provide personal liability protection for business decisions or actions of the business. This means that if the company incurs debt or is sued, its members are not required to satisfy the claims with their personal assets. By registering your business, your business and personal assets are separated from each other. There are many reasons to incorporate but for the protection of your family, this may be the most important.
8. Business continuity
Do the names Irvines, Microsoft, Facebook or Google sound familiar to you? Good. What do they all have in common? They were started by individuals. And because these individuals registered their companies it means their businesses are able to continue without them. They are now separate entities from their person. That’s the power of registering a business. It ensures the continuity of your business beyond just you. Customers are interested in knowing if your company has a future and if the company is able to continue serving them in your absence.
There are more reasons why business registration is a good idea but this is a good start.