How to start a business
15 March 2019 | Columns
Registering your business
Having a registered business gives you the right to officially trade as a business person; and it gives potential clients and investors the confidence that you are not a fly-by-night business. Furthermore, registering a business gives you access to legal and financial frameworks that will enhance and protect your operations. For example, you can open a bank account and obtain financial assistance through an overdraft or a loan. When your business is registered, you can pay and claim VAT, you can sell shares in your company and approach investors; you are protected in terms of specific acts and legal instruments, and the list of benefits continues.
1. The first step in registering a business is deciding what type of business entity you want to register.
This will depend on whether you intend to make profit or not. You can register either a defensive name (sole proprietorship), closed corporation (a CC) or a company.
There are various differences between the types of businesses, but the main ones are:
• A sole proprietorship or defensive name is basically a one-man business. The owner is responsible for the finances of the business and receives all profit. However, in the event that the business fails, the owner becomes fully liable for all debts incurred by the business.
• A CC or close corporation can have one to 10 owners, referred to as members, who own and manage the CC. Their interest in the CC is indicated in percentages, i.e. you have a 25% or 50% interest in the business. Legal responsibility is minimal.
2. Once you know what type of business you want to register, you must decide on the name that you want your business to be known by. It is important that you register your business name to ensure that no other business can trade with a name that is similar to yours. A business name can be reserved with the Business and Intellectual Property Authority of Namibia (BIPA), which is an agency under the Ministry of Industrialisation, Trade and SME Development (MITSMED). This process can be done at any BIPA office or online at ww.bipa.na. One can also search the BIPA website to see what business names have already been registered, in order to minimise the chances of applying to reserve or register a business name that already exists. Estate Agents Board (NEAB) for real estate businesses and the Namibia Tourism Board (NTB) for businesses trading in tourism, before a business can be registered under such a name.
3. On approval of the name, you can now submit your application to register your business with BIPA under the name that was reserved for you. A business name approval is valid for 60 days to allow you enough time to register your business.
4. Depending on the type of business you are registering, you must complete the relevant forms and attach the required supporting documents. There are different forms for different types of businesses (i.e. defensive name, CC, company, etc.), but the standard attachments to the forms are usually:
• Proof of identity of the owners or shareholders and witnesses (foreign passports must be accompanied by a sworn declaration under oath);
• Proof of the approved name reservation;
• The prescribed application forms for the respective business type;
• Original consent letter from an accountant (in the case of CCs); and
• The cellphone numbers of all members/directors and witnesses.
At the time of writing, the option to lodge business applications online is not available yet. However, BIPA, together with MITSMED, are working on a project that will see the launch of such an online functionality in the near future.
5. Upon the registration of your business, you will also be required to register your employees with the Social Security Commission (SSC). Furthermore, you will be required to register your business with the Ministry of Finance for tax and VAT purposes. It is important that you speak to an accounting or auditing firm to understand how tax and VAT work, and whether it is a requirement for your business.
6. Lastly, if you registered a company or a CC, you will be required to do annual returns and pay annual duties. Annual returns are lodged at the end of each financial year by a company and CC to the Registrar of Companies at BIPA.