Now that you know what a registered business is and the different types of business formations that exist, it’s time to look at five strong reasons you should register your business soon.
As a result of the things we explained earlier, some of these reasons should be very obvious to you. Here they are…
1. It gives you a unique identity (and protects it too)
There is a certain pride that comes with the identity of your own business.
It’s no longer that big idea you’ve had in your head all these years. It’s now a real thing that legally exists; with its own name and address.
Some people choose their business names on emotional grounds (like their father’s, mother’s, wife’s or child’s name or even their own name). Some other people prefer to choose names that inspire while some other will go with names they want to portray good qualities about the business.
Whatever name you choose, and for whatever reason, is totally up to you.
Once you’re ready to register your business, the first thing the Business Registration Office does is to check that no other business already exists with the same name. Under law, no two businesses should have the same name to avoid confusing the public.
2. It protects you from personal liability
This is arguably the biggest reason why many people have to register their business.
Without the legal protection of limited liability, you could lose your business and personal property if something goes wrong (say somebody sues you to court for heavy damages).
3. It makes you look serious and attracts more customers
In today’s modern world, most customers, especially corporate customers, expect a serious and responsible business to be registered.
In fact, most companies will not do business with an unregistered business. In certain cases, it’s against the law for regulatory and tax reasons.
4. it’s easier to get bank credit and investment from investors
For banks, there are basically two categories of loans; Personal and Business loans. They’re both totally different and one cannot be used to represent the other.
As a result, most banks will gladly lend you money to buy a new car or house but none will give you money to fund a business that isn’t registered. To qualify for a business loan, the Number 1 and non-negotiable requirement is that your business must be registered. Period!
For investors, it’s the same thing. Investors are interested in giving you money for a share of your business, and not to finance your personal lifestyle.
If there’s no registered business, what exactly will you be giving them a share of?
Investors want to know that your business is organized, exists legally and is separate from your personal life and finances.
No investor would take you seriously if you’re asking for investment but you don’t already have your business registered. To them, it’s a sign of unseriousness and a lack of professionalism. You don’t want anybody to have that impression of you.
5. it’s important for continuity sake
Nestlé, Cadbury, Shell and Toyota. Do these names ring a bell?
Of course they do.
These names are big multi-billion dollar businesses that have existed for decades. In fact, most of the people who formed these companies have been dead for a long time.
Nevertheless, these businesses, which were quite small when they started many years ago, remain very big and successful today.
It’s called continuity; human beings live and die but businesses have the ability to last forever as they are transferred from one generation to another.
In Africa, it’s hard to come across businesses that outlast their founders. Just a few have.
A registered business is an asset (like a house, car and other properties) that can be passed down (as an inheritance) or sold by its owners to a new generation of people who can continue to own and run the business.
Registering your business will help you achieve your dreams of continuity.
Now you know the reasons why you should register your business. It’s time to do the right thing!
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