With the increase of unemployment in the country, starting a business is a sure way of earning income and becoming an employer eventually, thereby, decreasing the rate of unemployment.
Having settled on a business idea that is feasible and secured the necessary funding, you need to start operating it. There are various things to note when starting a business in Ghana. This includes knowing the type of business you want to start and how to legally register it. In this article, we take you through the various process to launch your business.
What is a Business?
A business is simply an organization or economic system where goods and services are exchanged to meet needs and earn profits. If you are planning to start a business, then you should have a product or service to sell.
Products are tangible objects that satisfy people’s wants. A service is an action done for a person at a cost. Examples of products are food, clothing, houses, furniture etc. Services are actions such as teaching, providing accommodation, medical check-ups, car repair etc.
Types of Companies in Ghana
Companies in Ghana differ in several ways. Some are national while others are multinational entities. When setting up a business in Ghana, it is important to check your business needs and match them with the legal entities legally recognized in the country.
- A company limited by shares
This structure is characterized by the presence of two people who act as the directors of the company. Furthermore, there is at least an individual recognized as a shareholder in the same company. Companies limited by shares aim to make a profit from its dealings with its member’s liability limited by the share value.
A company limited by shares must be registered at the Registrar General’s Department.
It is worth noting that a company limited by guarantee and a company limited by shares are both known as “Limited Liability Companies”. This is because the individual assets of the members are protected from liability.
- Company unlimited by shares
They are made up of two directors and other members who own shares in the company. However, the value of their shares is not limited by liability. Law firms are the prime candidates suited to this category of companies.
Businesses under this structure are usually registered under the Registrar General’s Department.
- A company limited by guarantee
In this type of business, the owner cannot establish their organization to make profits as is required by the law. Therefore, under this structure, only a non-profit business can be established.
The best thing about a company limited by guarantee is that they do not pay corporate tax. Usually, non-profit firms are actively involved in community development projects. However, the owner of the business must file income taxes especially if they have employees who are salaried.
- External company
Most foreign companies in Ghana fall under the external company category. An external company is one that is incorporated in another country but wants to settle in Ghana.
These types of businesses must pay corporate and income tax as is recommended by the Ghanaian tax law. However, they follow the regulations of the country of their origin.
- Sole proprietorship
A sole proprietorship type of company is owned by individuals. The sole proprietors are entitled to the profits made in the business as well as being liable for their company’s liabilities. Unlike other structures, businesses that fall under this category do not have to be registered by the Registrar General’s Department.
However, when the company seeks a name, it must visit the RGD’s office to obtain one.
- Incorporated partnership
Incorporated partnerships are businesses that are developed by a group of people.
The number of business owners can range from two to twenty people as required by the Company and Partnership Law in Ghana.
Since the partners act as one entity, there is no protection to their personal assets. An incorporated partnership must be registered with the Registrar General’s Department office.
Before starting a business in Ghana, it is important to know where it will fit in the various categories. This enables you to narrow down on the relevant offices you must visit to get you started.
How to Register A Business Legally in Ghana?
Business registration varies depending on the structure of the business. Here we look at the different requirements for the different types of legally recognized companies in the country.
- Incorporation of limited liability companies
The process of a limited liability company registration in Ghana is a fast process taking only 3 days to complete. Initially, you will have to buy the limited liability forms. The in-house bank sells them at GH 10 cedes.
Next, you have to deliver a declaration form and a letter of consent to the Registry. You have to pay GH 230 Cedes and 0.5% of the capital for stamp duty.
Following which, you will be given a certificate permitting you to start your company. However, note that each and every year, the certificate must be renewed at GH 50 cedes.
- Companies limited by guarantee
Registering a business in Ghana; a company limited by guarantee takes 5 days to obtain a certificate and be permitted to transact with it. First, you need to buy Form 3 RGD forms which go for GH 9.50 cedi at the in-house bank.
Upon complete filling of the forms, the Registrar General Forms should be submitted to the registry with an additional payment of GH 270.00 cedi. You must attach the declaration and consent form.
Renewal of this certificate must be done annually at GH 50 cedes.
- External company
As an applicant, you are expected to purchase Form 20 and Form 21. They can be found at the Ghana Publishing Company Limited in Accra.
While submitting the forms to the registry, you must attach a certified copy of the memorandum and the Association articles. The certificate of incorporation and the power of the attorney must also be submitted. You might further choose to submit the external company’s constitution which must be endorsed by the Ghana Mission.
External company applicants must pay US$1200. The annual fee for renewing the certificate is at US$600. The registrar carries a thorough investigation to determine the features of the business and the incorporation terms.
- Incorporation of partnership
The first step is to purchase Form A form the in-house bank Ghana where is sold at 3.50 cedi. The form should be submitted to the registry together with the stamped partnership agreement.
Usually, a certificate of incorporation of a partnership type of company is given after 3 business days. An applicant pays GH 160.00 cedi.
- Sole proprietorship
Even though sole proprietorships do not have to be registered under the Registrar General’s Department, the sole proprietors need to register their business names.
The applicant picks Form A at GH 3.50 cedi from the in-house bank. When submitting the files, he must pay GH 60.00 cedi for processing the documents. After complete examination by the Ghana registrar general, they issue the certificate and a certified true copy.
A sole proprietorship certificate is renewed yearly at GH 25.00 cedi.
Things to Do Before You Start A Business
Initially, you must conduct a registrar general name search before starting a company in Ghana. The reason being, it enables you to come up with an original name for your business.
What follows next is the registration for a TIN number Ghana. This tax identification number Ghana is a must for company directors, secretaries and shareholders as they must pay taxes. TIN forms are available for download.
When submitting TIN forms, the applicant must attach their photo ID. More so, you should not pay any charges for TIN numbers as they are given out for free after signing the Ghana Revenue Authority forms. Corporate organizations can also create TIN numbers- when the corporate entity holds the shares of the company that is being registered.
Other information required when acquiring a Taxpayer Identification Number includes the name, occupation, and the maiden name of the mother, the residential and postal address and the contact details.
Upon the acquisition of the TIN number, applicants should pick forms based on the structures of their businesses as is outlined above. For incorporation purposes, the following information must be submitted.
- Company name
- Postal address
- Type of business activities
- Auditors’ information
- Stated capital
- Structure of the shareholders and
- Personal details of the owners and leaders of the institution.
There are certain fees that must be paid and the duration of processing the certification varies from one business structure to another.
Online business registration in Ghana
Nowadays, people do not have to move from one office to another seeking business registration. The Registrar General Department came up with an online platform that individuals can use to register their start-ups.
The online portal is also linked to the Ghana Revenue Authority e-tax portal. This portal has made the processing of information very fast. A person looking to do business should make use of this online form of registration. It is convenient and saves on time. As long as a person meets the requirements, they do not have to wait for long before their business is certified.
Registered companies in Ghana are able to conduct their businesses without the fear of being sued for non-compliance. These legal cases can be disadvantageous as they can cause a firm to incur losses. Therefore, it is important that people yearning to start new companies in Ghana follow the recommended procedures to avoid violating company law in Ghana.
Source: Techpreneurinsider.com [Techpreneur Insider helps young entrepreneurs who want to build their brand, increase the number of inquiries, and wish to increase their bottom line sales through business consulting, website design and marketing.]