How to register a sole proprietorship business in Ghana

How to register a sole proprietorship business in Ghana

The knowledge of how to register a sole proprietorship business in Ghana is very important for any person considering to start a business on their own. Increased rates of unemployment in Ghana has led to many people looking for alternatives to earn income to sustain their livelihoods. Young men and women have decided to take the challenge by establishing sole proprietorship businesses which would take care of their daily needs.

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Unlike other forms of businesses, the procedure on how to register a sole proprietorship business in Ghana is very short and simple. The Sole proprietor only needs to have an original identity card to register his/her business. Upon registration, the sole proprietor is given a registration document to confirm registration and enable the proprietor to start business. This simplicity is probably the reason behind existence of many small businesses in Ghana. The following is a detailed procedure involved in registration of a sole proprietorship business in Ghana.

How to register a sole proprietor business in Ghana

Sole proprietorship is basically business owned by one person. Starting a sole proprietorship business in Ghana depends on the type of business you intend to start as well as the availability of resources to run it. The proprietor is the sole owner of the idea and has full ownership right of the business. He or she is responsible for all the debts and profits incurred in the business. In Ghana, sole proprietorship businesses are more common than any other forms of businesses. In order to start and run a sole business, you first need to register your business with the registrar general in Ghana. This therefore means that you must understand all the sole proprietorship business in Ghana registration steps.

If you have been thinking about how to start a sole proprietorship business in Ghana, a number of things ought to be clear. For one to own a business in Ghana, he/she must be a Ghanaian tax payer and therefore must be registered by the Ghana revenue authority. Sole proprietorship is considered to be a single entity and therefore when the owner is registered and is a holder of a Tax Identification Number (TIN), the business can start operating. In case the proprietor does not have TIN, he/she must apply for one. Here is the procedure followed when registering for a tax identification number.

  • Access the internet and download a sole proprietorship form from Ghana revenue authority official website.
  • Fill your details in the form and submit it to either income tax and VAT office or the registrar general department offices.
  • Upon completion of filling in your details, your Tax Identification Number will be ready for collection.

Requirements for registration for TIN

Before registration of sole proprietor business in Ghana is done, the following documents are required:

  • Copy of national Identity card
  • Letter of business registration
  • Copy of a valid driving license
  • Passport size photo

Tax registration certificate is usually released two to seven days after registration.

Registration of business name

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The initial step when registering a sole proprietorship business is the registration of a business name. This is the most critical step that must be done after wide consultation with other business experts. The name of the business is what will either attract customers or will send them away. It is advisable to pick a name that matches the business objectives or one that is in line with the business you want to venture into. A good and attractive name is likely to attract more customers to your business as opposed to assigning your sole business any name. Sometimes, formulating a business name may pose a challenge. In such cases, you can seek assistance from experts who will assign you a good name at a small fee. Sometimes, the sole proprietor may decide to design a logo for his/her business. Logos can add value to the name of the business.

Procedure of registering a business name

The procedure for registering a business in Ghana begins with the registration of a business name. Here are the steps followed in registering a sole business name.

  • Pay for a registration form A at the registrar general department and fill in your details in the registration form A.
  • A well filled registration form A should then be submitted to the registrar general together with the processing fees through their user bank
  • Upon completion of registration, certified true copy and registration certificate will be ready for collection.
  • Having acquired your business registration certificate, you will be ready to complete the registration and start the business.

Requirements for registering business name

  • Principle place of business
  • Name of the business
  • Nature of the business
  • Name, postal address, nationality and other important details

Registration of sole proprietorship business is associated with various charges. The following are examples of different charges imposed for various services:

  1. Registration of business name at 50 cedis
  2. Certified true copy at 10 cedis
  3. Filling of form D at 25 cedis

Other requirements for one to register a sole proprietorship business in Ghana

You will need the following documents for your registration to be complete

  1. Registration Form A
  2. Re-Registration Form A
  3. Form D – change notification on sole business particulars

Registration form A

This is a primary document required to register a sole proprietorship business. It is provided by the act 151 of business name registration of 1962 constitution of Ghana. This form consists of the following information:

  • Business name
  • General nature of the sole proprietorship business (e.g. manufacturing, service, commerce, transport, construction and others)
  • Principle activity of the business
  • Date of commencement of business
  • Business location information (city, region, street, house/flat)
  • Sole proprietor personal details (surname, first name, middle name, date of birth, gender, occupation, marital status e.t.c)
  • Residential addresses of the business person. This includes where the proprietor live; city, street, district among other details.

Postal addresses

This form must be filled by the applicant and sent to the registrar of business names via email or through post. This form must be filled accurately and honestly. Feeding false information may attract severe punishment to the applicant.

Registration of business name and CTC is chargeable. Business name is charged at 50GHC while CTC is charged at 10 GCH. In total, an applicant is required to pay 60 GHC.

Sole proprietorship re-registration form A

As provided by act 151 of the Ghana’s 1962 constitution, sole proprietorship applicant is also required to fill the Re-registration form A. This is a legal form which goes hand in hand with registration form A. Details contained in this form include the following:

  • Old registration information. This information includes (old registration number, business name, old TIN, old start date and your current taxation office)
  • General nature of the business
  • Principle activity
  • Principle place of business
  • Personal information (all personal details as provided in the registration form A)
  • Residential addresses of sole proprietor. These include region, house, city, street e.t.c
  • Postal address (all reliable postal code should be given. The form includes contacts, email, website and other existing forms of contacts)

The final and most important step is declaration.

The applicant should read to ensure that all the information given is correct.

The applicant should also attach the following documents.

  1. Copies of registration form A
  2. Copies of certificate of registration
  3. Provide an up to date evidence of a renewed receipts.

Form D

This form is also mandatory. It is to be filled by the applicant in case of change in particulars of the business. The form contains the following details:

  • Taxpayer identification number (TIN)
  • Applicant’s business name
  • Nature of the business
  • Date when change is to be done
  • Signature of the proprietor.

This form should be filled and sent to the registrar of businesses.

Advantages of sole proprietorship

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Sole proprietorship is one of the simplest forms of business ownership in Ghana. It is the most popular form of business in Ghana. This popularity may be attributed to its simplicity when setting up and the ease of management. This form of business has multiple advantages to the sole proprietor. Some of its advantages include the following:

  1. Easy to start – sole proprietorship is the easiest form of business ownership in Ghana. It does not require a large amount of capital like other forms of business ownership. However the exact capital amount will depend on what you are pursuing as a business.
  2. The sole proprietor makes all decisions for the business. Unlike other types of businesses, these decisions are always always made on time since no consultation is needed.
  3. All profits acquired from the business are enjoyed by the owner of the business. He/she is responsible for all the profits incurred in the business.
  4. Sole proprietor can be assisted by a family member or relative. This cutoff on the amount of money which would have been used to pay an employee.
  5. Easy to dissolve in case the need for it occurs
  6. Less papers are required in the registration and commencement of the business.

Disadvantages of sole proprietorship

Although sole proprietorship has numerous advantages, it still has short comings which make it less effective. Some of its disadvantages include the following:

  • Sole proprietorship has unlimited liability. This means that the sole proprietor is responsible for all the debts of the business. In case of bankruptcy, the personal assets of the proprietor may be taken to recover the debts.
  • The business lacks continuity. In case of death of the sole proprietor, the business is likely to die due to poor management and decision making.
  • Sometimes it becomes difficult for the sole proprietor to raise capital required to start and run the business. The business can easily collapse due to lack of money for expansion.

Company registration in Ghana

Ghana is among the most rapid developing countries in West Africa. This is highly attributed to the heavy company growth in Ghana. Business registration in Ghana is simple and does not involve complicated procedures which could also be a reason for rapid business growth and expansion of the sector. Here are the steps followed in registering a company in Ghana.

  1. Search the company name at the registrar general department

This is the initial and most important step in the whole exercise of company registration. In this step, the promoters are required to suggest and search a name which is not owned by another company or enterprise. After the name search, the owners apply for 30-days reservation of the business name.

2. TIN registration for all company promoters and shareholders

All promoters and shareholders are required to have a TIN before the company is registered. All the directors, principle secretaries and shareholders are required to submit their tax information before the company is registered. According to the government of Ghana, all people are required to hold TIN numbers if at any chance they want to own a business. Important details captured in a TIN number include the following:

  1. Names
  2. Details of photo ID
  3. Postal addresses
  4. Occupation
  5. Contact information e.t.c.

3. Completion of form 3 and 4

In this step, the promoters will be required to complete the returns particulars of the company (form 3). This involves all the specific information on shareholders, how dividends will be shared among other details. Some of the details found in forms 3 and 4 include the following:

  • Name of the company
  • Registration address
  • Stated capital
  • Business objectives
  • Authorized and issued shares
  • Principle place of the business
  • Postal address
  • Personal details of the principle secretaries, shareholders and directors

These officials are also required to sign against the forms at relevant places before they are submitted to the registrar general.

4. Pay all applicable fees

The government of Ghana requires any person wishing to register a company to pay the following compulsory fees. Stumpy duty is at 0.5% of the stated capital. Therefore, you will be required to pay 0.5% of the capital upon registration. The second type of registration fee imposed is incorporation and filling tax. This is usually paid when submitting the forms at the registrar offices. Its usually 330 cedis and is advisable to be paid cash.

5. Collection of registration certificate

When the whole registration procedure is followed, the directors should wait for a maximum of 14 days before they can go and collect the following documents.

  1. Certificate of registration
  2. Forms 3 and 4
  3. Certificate of commencement of business
  4. Company regulations.

From here, the company will be fully registered and ready to start operations. With the knowledge on how to register a sole proprietorship business in Ghana, it is possible to start the process whenever you are ready. It is easy to learn how to register a business in Ghana and get yourself started.

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