What do you consider to be the main justifications why you need to register your business? You should carefully read this article.
When a company isn’t actually and legally in existence, how can anyone claim to be its owner? Some of these individuals are simply ignorant; they are unaware of the significance of registering a business. The others, who aren’t completely stupid, simply decide not to pay the upfront fee for registration when they first open their businesses.
This article will provide you with 7 reasons why you need to register your business and reasons to regret your action or ignorance if you have been operating an unregistered business for some time.
To avoid missing out on the advantages of a legally registered business, use the reasons why you need to register your business in this article if you intend to launch a business soon.
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You ought to be fully aware of the steps required to register your business by the time you have finished reading this article.
What Business Registration is
A business must register with the government. The general public can learn who runs a company thanks to this type of registration. By registering a business, you can make sure no one else can run a business with the same organizational structure.
In general, the state is able to identify and recognize your business as a distinct legal entity thanks to a business registration certificate. When the filing procedure is successfully completed, the state will grant your company the legal advantages of registration.
Why you need to Register your Business – Benefits of a Registered Business
These are the reasons why you need to register your business today:
1. It creates a distinct identity for you (and protects it too)
With ownership of your own company comes a certain sense of pride.
It’s not the grand concept you’ve been holding onto for so long. With its own name and address, it now has legal existence as a real thing.
Some people chose the names of their companies based on sentimental considerations (such as their own name or the names of their father, mother, wife, or children). Others favor names that evoke inspiration, while others opt with names they wish to highlight the positive aspects of the company.
You are entirely free to choose the name you want and why.
When you’re ready to register your business, the Business Registration Office checks to make sure there aren’t any other companies with the same name before registering yours. No two firms are allowed to share the same name by law in order to prevent consumer confusion.
Depending on your country, this search could take a few minutes or several days.
You will be able to continue with the other steps of the business registration procedures if it has been determined that the name you’ve selected for your ideal company is available (that is, no one else is already using it).
Additionally, no one else may ever use or register the same name unless your company declares bankruptcy and is properly liquidated.
2. It safeguards you from individual liability
Probably the main justification why you need to register your business is due of this.
If something goes wrong, you risk losing your business and personal property without the legal protection of limited liability (say somebody sues you to court for heavy damages).
Consider starting a hauling and trucking company with two trucks that transports bulky commodities for clients from the seaport to the inner cities.
Unfortunately, one day one of your trucks was involved in a horrific collision and fire that resulted in the deaths of five persons.
Even while the lost vehicle has hurt your business, that doesn’t seem to be the worst of your issues.
The lawsuit filed against you in court by the kin of those who died in the accident is your biggest issue. They are suing you for up to $250,000 in damages. You couldn’t settle the large amount even if you sold the other truck that was left.
The type of your firm will ultimately determine how much money you lose in this situation.
The worst that may happen if your company is registered as a limited liability entity is that only your company will be liable for the damages as it is a different legal entity from you.
However, you could not be completely secure if you were operating an unregistered firm. Why? Because any outstanding debts that the firm is unable to pay may be settled using your personal property (home, cars, money in the bank, etc.).
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3. It gives you a professional appearance and draws in more clients.
If you’ve ever asked why you need to register your business, the majority of clients in today’s contemporary world, particularly corporate customers, anticipate that a serious and responsible firm will be registered.
In actuality, the majority of businesses won’t work with unregistered businesses. It may be illegal in some circumstances for regulatory and fiscal reasons.
Consider this for a moment: How can you provide customers with receipts for the goods you sell or the services you provide if your firm is not registered?
Not at all!
And who exactly makes a purchase today without asking for a receipt? You only need to register your business to draw in more affluent clients, unless your goal is to turn it become and stay a petty trade operation that peddles goods on street corners.
Nobody asserts that operating an unregistered firm cannot be profitable. You might not develop normally and will probably stay a little size for a very long period.
4. Investor investments and bank credit are simpler to obtain.
There are essentially two types of loans available from banks: personal loans and business loans. They cannot be compared because they are completely distinct from one another.
One of the reasons why you need to register your business is because as a result, the majority of banks are happy to lend you money to purchase a new car or home, but none will do so to finance an unregistered firm. Your business must be registered in order to be eligible for a business loan; this is the first and only criteria. Period!
5. It’s crucial for maintaining continuity.
Toyota, Nestlé, Cadbury and Shell, are these names familiar to you?
Naturally, they do.
These companies have been around for many years and are large, multi-billion dollar enterprises. In actuality, the majority of those responsible for founding these businesses have long since passed away.
These companies, which were rather little when they first began many years ago, are still very profitable and large now.
Humans live and die, but because businesses are passed down from one generation to the next, they have the potential to survive forever. This is what is meant by continuity.
6. A Business Bank Account.
Maintaining a company bank account gives you the ability to segregate your personal finances from your business affairs, which is a valuable tool.
7. Equity financing
It will be simpler for you to draw in investors and raise capital for your company. Investors are more willing to fund a registered corporation than an unregistered business with no clear organizational structure. If your company is registered, equity financing, which is selling shares of your company to potential shareholders, angel investors, or venture capitalists, can be used to raise money and ultimately make your business a scalable one
Requirements for Business Registration
1) Proposed Name. Get at least two potential business names chosen.
2) Information about your company, such as the office address
3 ) Telephone
4) A working email address
5) Last name
6) Initials
7) Additional Names
8) Birthdate (day, month, and year)
9) Contact Information
10) Telephone
11) Offer a way to identify yourself. Any of the following could apply: the International Passport, National ID, or Driver’s License
12) The owner’s signature
13) The proprietor’s passport photo
Note: Clearly list the information for other owners under the proprietor’s details.
14) The nature of your business is the final section, where you must provide business terms like business classification and describe the precise tasks that your company will perform.
Frequently Asked Questions on Business Registration
What is the Cost of Registering a Business?
The kind of business you wish to register also depends on the country.
Simple business structures, like partnerships and sole proprietorships, are typically less expensive than something like a limited liability company.
What do I Need to Register a Business?
To register a business in certain nations, you must be at least 18 years old and a citizen of that nation; in other nations, there are no restrictions on business registration based on citizenship or age.
A business address is typically a necessary need for business registration, which is more significant. All official mail will be delivered to this address. And if your firm is just getting started, you can absolutely use your home address.
I want to Register my Business, but do I need to Engage a Professional?
Well, that relies on the national legislation and the demands of the responsible government agency.
You don't necessarily need to hire a person to register your business in other nations. In fact, you can complete it on your own by logging into a website.
To register a business in several other nations, you will need to employ a qualified professional (often a lawyer or an accountant). To learn more about the precise criteria, you should get in touch with the neighborhood government office.
What are the Disadvantages of Registering a Company?
The following are some drawbacks of registering a company:
1. It can be expensive to start, run, and close the business.
The requirements for reporting can be intricate.
2. Your financial matters are in the open.
3. Directors may be held personally responsible for the debts of the firm if they breach their legal commitments.
Conclusion
A registered business is an asset (much like a home, car, or other property) that can be sold by its owners to a new generation of owners and operators, or it can be inherited.
Even while it could cost you some money, time, and effort, it’s really a minor thing to pay to prevent expensive damages and future regret. In today’s complex and rapidly evolving business environment, registering your firm is not only the correct thing to do, but it’s also the wise thing to do. We hope you have learnt some reasons why you need to register your business.
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