8 Considerable Factors for Business Registration and Ownership in Ghana
In Ghana, registration and forms of business ownership go hand in hand, and they are strictly backed by laws. Most entrepreneurs and aspiring business owners usually pay less attention to these legal documentation aspects of their businesses. They are very concerned about reaching more customers, maximizing profits, and ensuring substantial business growth.
However, getting legal backing and acceptance to operate is also very crucial to the success of your business, no matter its size, nature, and location. We understand how complex the registration and ownership process in Ghana might be to some people.
Fortunately, this article will help you easily understand the essential factors to consider first before you visit the Registrar General’s Department for your business registration and ownership. Keep in touch and read through the following lines:
Forms of Business Ownership in Ghana
According to the Company and Partnership Law in Ghana, the Registrar General’s Department recognizes three (3) major forms of business ownership. All businesses are registered and incorporated under one of these major forms of business ownership. They are listed below:
- Sole proprietorship
- Partnership
- Company
It is important to note that each of these forms of business ownership comes with its own individual required documents and fees before the registrar can approve and grant a successful registration and ownership. You can find more about their requirements and fees on the Registrar General’s Department website. Please do this by yourself first before you hand over money to any middleman to register your business for you.
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8 Considerable Factors for Business Registration and Ownership in Ghana
New business owners may have little or no information about how the form of business ownership selected for registration will affect the future of their businesses. Here are 8 essential factors entrepreneurs should consider first for business registration and ownership in Ghana:
1. Capital requirements
In choosing a form of ownership for your business and its registration, both start-up and future capital requirements are very necessary to address. The amount of money needed to start a sole proprietorship form of business may differ from that of a partnership. Entrepreneurs are expected to consider the amount of capital required for the forms of business ownership before they begin the registration process.
2. Cost of formation
Aside from the capital required, the cost involved in forming the business is a factor that needs thorough consideration. Before the legal works and registration can go through, the Registrar will request some documents about the business formation. For the company’s registration, a minimum amount is required before the business will be incorporated. Since the cost of formation varies from one business to the other, aspiring business owners are expected to choose the form of ownership that meets their needs.
3. Tax consideration
Tax payments differ from a sole proprietorship, partnership, and company in Ghana. It is mainly charged on the net amount of income the business makes for a given period. This positions some business types in a better lead than others. But it also comes with its benefits and challenges.
4. Liability exposure
Some forms of business ownership offer owners the opportunity to reduce the risks of their personal liabilities. It may come from financial problems, lawsuits, faulty products, or a bunch of other difficulties. While some forms of ownership provide maximum protection against personal liabilities, other owners to a host of personal liabilities. Entrepreneurs are therefore encouraged to consider this before the business registration kick starts.
5. Control level: Business Registration and Ownership in Ghana
When entrepreneurs choose certain forms of ownership, such as partnerships or seeking investors, they may have to give some control over their business. This is because these arrangements often involve sharing decision-making authority with others. It’s a strategic decision that entrepreneurs have to make early on in their journey. They need to evaluate how much control they are willing to sacrifice in exchange for the expertise, resources, and support that others can bring to the table.
6. Business goals
Plans for the growth and profitability of a business play a significant role in determining the form of ownership you choose. If the owners have ambitious goals for their business’s expansion and profitability, they might opt for structures like companies or partnerships that offer flexibility and attract investors. These forms of ownership allow for easier access to capital and resources needed for growth. You should know this before submitting your business for registration in Ghana.
7. Managerial abilities
Assessing your skills and abilities can help identify areas where you may lack expertise or experience in running a business effectively. It’s important for business owners to be self-aware and recognize these gaps. In such cases, choosing a form of ownership for registration in Ghana is very necessary, since that allows you to bring in other owners who possess the necessary skills. This collaborative approach allows for a diverse skill set within the ownership structure, ensuring that all crucial areas of the business are covered.
8. Succession plans: Business Registration and Ownership in Ghana
It’s crucial to have foresight and think about the future when you will pass on the business to the next generation or a potential buyer. Some forms of ownership make this transition much easier and more swift compared to others. For instance, companies offer advantages in transferring ownership because they allow for the easy transfer of shares or membership. Sole proprietorships or partnerships may present more challenges in transferring ownership due to their less formal nature. It’s crucial for business owners to carefully consider their long-term plans and choose a form of ownership that aligns with their future, making the transition to the next generation or a buyer as smooth as possible.
Conclusion: Considerable factors for Business Registration and Ownership in Ghana
Switching from one ownership format to another can indeed be complex and costly. It may involve legal and regulatory procedures, as well as the transfer of ownership rights. It’s important for entrepreneurs to carefully consider their long-term goals and seek professional advice to navigate any complexities or expenses associated with changing ownership formats. The key is to align the chosen form of ownership with the envisioned growth of the business before the registration starts.
Assigning these legal documents to an expert will help you save a great deal of money when you are financially fit as an entrepreneur. However, if you do not have that much money to hire an expert, you should adequately understand the benefits and potential risks each form of ownership is capable of before you do business registration in Ghana.
Written & Edited By:
Arthur Kwame Philip
