The Importance of Registering your Business in Zambia
The world is moving at a fast pace towards the private business enterprise model, a system with its own rules and regulations for promoters. Many, if not all Multi-National Corporations (MNCs) the world over, trace their successes to humble beginnings, in which the owners dared to dream big. In dreaming big, they acted big, in accordance with the legal and statutory provisions of their localities. They had their businesses registered, and started operating legally.
There are two ways of registering your business in Zambia:
1. You can just register the business name with PACRA,2. Or you can form an incorporated company, also registering it with PACRA.
Many business owners initially register their business name only; then, at a later date, as the business grows, they incorporate the company.
Registering your business name in Zambia is very simple. Yet today I still hear quite a number of young business-minded people saying “registering a business name makes no difference at all”. Like many others before you, you might feel you can only register your business name when you start making profits, or when you finally have an opportunity to run the business. But you could be wrong, as there are many benefits of registering your business name early on.
Getting started — registering your business in ZambiaI have come to realise that the most important investment in a business is the business plan. You can only convince financial institutions and other relevant bodies through the business plan you lay on the table. You may only have a plan and a name for your business for now, and that’s fine to get started. Now take that step and register your business name!
Make sure no-one else takes the nameThe more you delay in registering your business name, the more likely you are to find that the name you have really treasured has been registered by someone else. This actually happened to a friend of mine. By the time he got round to having his business name registered, the name had been taken. Many have lost good business names just like that.
The durability of a registered business nameThe registered business name can live longer than the owners. The owners may die, or no longer have the desire to run or manage the business. Others may take over ownership by buying it. This is interesting, because business names that have existed for years and years have developed a certain reputation for services and products. That reputation cannot be built outside of a registered business name. The name becomes a distinguishing brand.
Opening a bank accountRegistering your business name will enable you to open a business bank account. The benefits of having a business bank account cannot be overemphasised. Your business associates will inquire whether you have a bank account because they would prefer to make payments to a well-established business. A business bank account also makes it easier to apply for business loans.
The advantage of incorporating your business in ZambiaIf you haven’t incorporated your business at the start of business operations, you should look at doing so as soon as possible. There is a cost to this, but there are very tangible benefits.
Most of the time when I have gone into offices to lobby for business, the first question I am asked is, “Where are your legal documents for your business?” I am sure some of you reading this article have been asked this question too. When your business has supporting documents from all relevant statutory bodies in the country, you earn respect. The Certificate of Incorporation issued to you by your Government, through the respective agencies or departments, protects your business activities, and your business name. This means that your business will be legally registered, providing security to your business and building confidence for your business associates.
Receiving legal liability protection is another benefit of incorporation. Accidents do happen and individuals are not held liable for incorporated companies. In such cases, insurance covers the damages, and any lawsuits.
The professional way of doing business in ZambiaIn short, incorporating your business is the professional option. The process of incorporation creates a separation between your personal activities, and your business activities. Moreover, when making business payments, it is better that payments are made out to a business, rather than to an individual.
The World Bank summarises the benefits of formally registering your business: “Formal registration of companies has many immediate benefits for the companies, and for business owners, and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts, to banks, as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where Governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government.”
In conclusionRegistering your business name is a must at the start of operating a business in Zambia. You may ask “What’s in a name anyway?” That’s an important point that I will delve into next time. Incorporating your company also has many advantages and you should look at doing this as soon as you can as your business evolves.