There are several legal requirements for every business registration in Ghana. The legal requirements mean any statute, Act, law, rule, regulation, order or other requirements, standard to procedure enacted, adopted, or applied by any governmental authority, including judicial decisions applying common law or interpreting any other legal requirement. For a company limited by shares in Ghana, the key requirements generally include at least two directors, at least one director ordinarily resident in Ghana, a qualified company secretary, at least one shareholder and an auditor, subject to any applicable statutory exemptions. Companies must also maintain required records and file annual returns.
For example, when registering a company limited by shares in Ghana, Under section 171 of the Companies Act 2019 (Act 992), a company must have at least two directors, and at least one of them must be ordinarily resident in Ghana, a secretary, shareholder(s), and an auditor for the company. Additionally, every registered company is required to file their annual returns eighteen months after the date of incorporation. The Companies Act 2019 (Act 992) does not prescribe a minimum number of board meetings each year. Directors should meet as often as necessary to manage the company and in accordance with the company’s constitution.It is at the Annual General Meetings that the audited accounts of the company are approved by the shareholders to enable the filing of the Annual Returns at the Office of the Registrar of Companies. A company generally holds an Annual General Meeting (AGM), but section 157(5) of the Companies Act 2019 (Act 992) allows the company to dispense with an AGM for a year where the auditors and all members entitled to vote agree in writing. Sole Proprietor businesses are exempted from organizing these meetings; however, they are required to file for annual renewal a year after registration of the business.
What happens when you don’t register your business?
Why business registration is important in Ghana.
Registering your business gives the business a legal identity. Once a business is registered, it projects a legal brand to its customers to enhance credibility. It enhances access to business contracts and financial loans and support. It also helps employers to hire employees and partner with other legal entities or brands. Registering your business enables it to enter into legal contracts with other companies. You may stand the risk of losing your business brand or name if you fail to register it. The same or similar name can be registered by another party and will be considered legal. Business registration helps to secure Taxpayer Identification Numbers for other compliances like bank account opening for business transactions. Business registration is an essential requirement for acquiring business properties. In other words, Company’s properties cannot be acquired without company registration.
Types of business structures in Ghana.
The type of business structures in Ghana are;
- Sole Proprietor Business.
- Company Limited by shares.
- Company unlimited by shares.
- Partnership.
- Company Limited by guarantee.
- External Company.
See Also: What You Need to Know about Company Registration 2023
What is the best type of business to register?
The best type of business to register as a foreign investor or expatriate is either a company limited by shares or an external company. Ghanaian-owned businesses may consider Sole Proprietor businesses because it is the simplest and more affordable compared to the other business structures. Ghanaians may as well consider registering a company limited by shares or guarantees depending on their objectives.
For a detailed guide on choosing the best type of business, you should read our article on…..
- Conduct a name search
- Apply for Taxpayer Identification Numbers for the directors, shareholders and secretary.
- Complete the required set of business reg
- Registration forms with the right information. (The forms are downloadable at Registrar General’s Department (https://orc.gov.gh/)
- Pay the applicable statutory fees at the in-house bank at the Office of the Registrar of Companies.
- Submit forms at the Office of the Registrar of Companies
- Collect your business registration documents after 3-4 weeks.
What are the documents required for Company registration?
- Company Name
- Nature of Business (Give a brief description of the company’s business activities)
- Address of business (House Number or Building Name, Street Name, City, District, Region.
- Personal details of directors, secretary and shareholders (nationality, date of birth, occupation, contact, email and residential address)
- Tax Identification Number of directors, secretary and shareholders
- Authorized Shares
- Stated Capital
- Shareholding Structure
- Auditor’s details (Name, Address, Email and Telephone Number)
See Also: Registering a Sole Proprietorship Business in 2023
Costs of business registration in Ghana
How much do I need to register a business in Ghana?
- The cost of registering a Sole Proprietor is GHS130.
- The cost of registering a company Limited by share is GHS585 plus 1% stamp duty on stated capital.
- The cost of registering a partnership is GHS270.
- The cost for External Company registration is US$1,400.
- The cost of NGO registration is GHS570.
Tips for minimizing costs and avoiding common mistakes.
- You must not go ahead to register a business name without conducting a name search.
- Know the scope or the activity of your business.
- Know the capital requirement and statutory fees applicable to your type of business.
- Make sure you have all the information needed to complete the form
- Do not leave any part of the forms uncompleted.
- Indicate Non-Applicable (N/A) where the option on the form is not applicable to you.
- Where you do not understand any part of the form, seek help.
Benefits of business registration in Ghana
Business registration makes the business a legal identity. It helps mitigate risks such as penalty or financial losses that comes with non-compliance. Once you register your business, you project a legal brand to your customers, and it enhances credibility. It gives you the flexibility to access business opportunities such as contracts and loans. It helps employers to hire employees.
Conclusion
Can I start a business without registering it?
In order to stay compliant and prevent any penalty or fine that comes with non-compliance, you need to register your business before you start operation. Business Registration provides several investment opportunities for the employer as it gives the business a legal identity and brand. Business/company registration enhances the credibility and the brand of the business/company and makes it competitive in the market.
Depending on the nature of your business, you may need to obtain a business license from another relevant regulatory authority before starting your business, especially if you operate in a regulated industry such as mining, construction or telecommunications. You may need a certificate from the Ministry of Works and Housing, Environmental Protection Agency, and Ministry of Communication amongst others.
FAQs
What permits are needed for a small business?
Small businesses (Sole Proprietors) must register with the Ghana Revenue Authorities for tax compliance. Also, depending on the nature of the business, it is required that the business is registered with other government agencies like Food and Drug Authority, Environmental Protection Agency, Ghana Standard Authority, and Ghana Export Trade Promotion.
What are the disadvantages of registering a company limited by shares?
The disadvantages of registering a company limited by shares in Ghana are;
- It is very expensive to manage
- The accounting requirements are more complex and time-consuming.
- The company registration process is cumbersome
- companies are required to adhere to strict record-keeping requirements, including taking minutes of meetings and recording all decisions taken by directors and shareholders
- You must maintain and make the company registers and records available for public inspection at your registered office.
What are the disadvantages of a Sole Proprietor Business?
The disadvantages of Sole Proprietor registration are;
- It is limited to only one person.
- It has unlimited personal liability for debts and claims.
- It is more challenging to acquire huge loans and contracts with this type of business.
- It has limited opportunities as most big firms are reluctant to do business with sole proprietor businesses.
Does Ghana require a minimum number of board meetings each year?
No. The Companies Act 2019 (Act 992) does not prescribe a minimum number of board meetings per year. Directors should meet as often as needed to manage the company and as required by the company’s constitution.
Does a company in Ghana need a resident director?
Yes. A company must have at least two directors, and at least one must be ordinarily resident in Ghana under section 171 of the Companies Act 2019 (Act 992).
How much does it cost to register a business in Ghana?
The fees are GHS 130 for a sole proprietor/business name, GHS 585 plus 1% stamp duty on stated capital for a company limited by shares, GHS 270 for a partnership, GHS 570 for a company limited by guarantee, and the cedi equivalent of approximately US$1,400 for an external company.
What happens if I do not register my business?
Operating without a registration or licence required for your activity may expose you to penalties and make it harder to enter contracts, open a business bank account, access finance or protect your business name. The requirements depend on the business structure and activity.
