While the process of registering your business might seem unnecessary and cumbersome in most countries, it is definitely worth it if you plan to build a business that stands the test of time. Oftentimes, business owners think that registering the business will bring with it additional regulatory oversight and red tape. This is quite untrue and very far from the truth.
Registering your business brings with it quite a few advantages that will help you manage your business better, make it more attractive to your customers and more importantly, help reduce your day to day headache.
Let's go through the advantages below -
1. Simple to obtain a loan and open a business bank account
Registering your business enables you to open a corporate bank account and apply for a business loan. One of the most valued properties of any early-stage business will be its corporate bank account, as it delivers credibility in the eyes of client, enables access to cheap credit/ loans, and help you avail any benefits from the government or business ecosystem.
2. Tax Benefits
In almost all countries corporate tax is lower than individual tax. If you register your business, then the profits that you generate get taxed at the lower corporate tax rate rather than your individual tax rate. Tax exemptions are also available from the government which can be availed once the business is registered
3. Building a brand
Company formation allows you to establish credibility with your clients and stakeholders. A registered entity is a respected and trusted entity. Allowing your business to be trusted not just by clients and customers but by your employees and staff also.
4. Limited liability protection
One of the most significant advantages of registering a business (in most countries) is the limited liability protection. If you do not register your business and are a sole proprietor, then you are liable for all facets of your business including debts and losses. This exposes you to various market events like recession, supplier issues, among others. But in the event of a corporate loss, the directors are protected.
5. Transfer of Ownership
It is simple to transfer ownership for a registered organisation whenever appropriate. Unregistered businesses face a lengthy and often complex share transfer process in most countries.
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Please consult a local lawyer to understand the policies around business registration and the benefits in your local area. The above are not intended as a legal recommendation and should be verified with a competent local entity.