You need to register your small business before it can be seen as a business.
In a recent time, I learnt that there are some individuals who claim to be entrepreneurs but have no registered business. Those people that easily fall into this class are those who turned their hobby into business. Examples are artistes, comedians, decorators etc. This is not good enough. There is a need for you to register your small business so that so as to give your business its own identity. Just as a baby is given a name after he is born, your business should have an identity too.
How do you register your small business? It starts by you giving the business a name. The name you give depends on your own choice. But in coming up with the name of your business, there are certain restrictions. You cannot use an existing registered name of a company. Therefore, you need to research the name to ensure that it does not violate somebody’s right..
Some people name their businesses after their own name. This has its advantages and disadvantages. Amongst the advantages is the fact that it ensures that you give your best in building the company. You will like to protect your name. On the other hand, if anything goes wrong with the company, it can equally damage your personal reputation. Therefore, you need to think twice before you give your business your own name.
Read Also: How to Choose a Business Name
In my own opinion, I advise people to give their company a name that describes their business. That does not nullify the fact that your company bears your name. It can be a combination of your name and the type of business your company deals in. Examples of such names are; Phillips Consulting, Dangote Flour Mills. Anybody that hears these names can easily identity the type of business they do. Don’t give your business a name that is totally different from what you do, otherwise people may find it difficult understanding your business. Let your company’s name sell your products or services for you. That is just a bit digression from our main topic, let’s get back on track.
The reason why some people will not register their business is because of the costs it involves. Actually, registering a business does not cost much if only you know the right way of going about it. You can register your small business just as a business name. When you do this, the Commission will issue you a Certificate of Business Name. This means that you carry out your business activities in this business name. This one is less expensive. What you pay depends on what the Commission in your country charges. This varies from country to country. You need to find out this. A business name is not considered a separate entity as a limited liability company which has ability to sue and can be sued. If you carry out business in a business name, any liability incurred by the business is still considered as your own liability. But this one should not serve as a deterrent to registering your business. The question you ask yourself is that what gain do I stand to gain if you don’t register your business. Absolutely nothing! If at all you intend to register your company as a limited liability company and you don’t have enough money to this as a young entrepreneur, you can register the business name first. As your company grows, you can convert it to a limited liability company you earlier desired.
There are some benefits you tend to drive when you register your small business. Some of these are enumerated below:
The only way you can convince people that you own a business or you are business minded is to register it and obtain a certificate. Some jobs require that you register your small business with the establishment giving the jobs. It is when you register you can be allowed to tender your quotation for works. So, if your company is not registered, it becomes difficult for you to seize this type of opportunity when comes on your way.
Ease of Payments
There are some organizations that do not write cheques meant for companies in the name of an individual. This necessitates that you must open a bank account in your company’s name. Obviously, you cannot walk to the bank and open an account for a company that does not exist. It does not matter if you have been transacting with a particular name, if the business is not registered, the simple truth is that the company does not exist. To facilitate the opening of the account, one of the requirements is that you supply your business registration certificate in case of a business name and certificate of incorporation for a limited liability company.
Access to Funds
Sourcing for funds is one of the major challenges being faced by entrepreneurs. Seeking for overdraft from the banks is only possible for individuals or companies that are customers to the financial institution. If you have an account that is operational, you can approach your bank for overdrafts when faced with cash constraints. Though opening an account with a bank does not guarantee that your request for overdraft will be granted, it actually increases your chance.
Having an account for your business promotes accountability. You will be able to track your income and expenses. When you are accountable, it helps your business grow. You can easily measure and evaluate your performance and take necessary action to bring your business on track when the performance is not as expected.
When your business is just starting up, it is not unlikely that you don’t have an accountant on your payroll, which can help you capture, analyse and present your income and expenses in a meaningful way. From the flow of transactions in your bank statement, one can easily draft financial statements of your company. This is preparing accounts from incomplete records.