2023-06-19
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1. Choose the type of business entity
Already started an online business? Registering a business establishes the company as a separate legal entity from its owner(s). This means that the business is its legal person, and can enter into contracts, own property, and be sued in its name. This can be important for several reasons, including:
Registering a business in Sri Lanka requires a few steps.
There are three main types of business entities in Sri Lanka: sole proprietorship, partnership, and company. Each type of entity has its advantages and disadvantages.
A sole proprietorship is a business that is owned and run by one person. It is the simplest form of business entity but the owner of a sole proprietorship is personally liable for all debts and liabilities of the business. This means that if the business runs into financial trouble, the owner's assets may be at risk.
A partnership is a business that is owned and run by two or more people. Partnership, all partners have equal rights and responsibilities. Partnerships are advantageous because they allow for shared responsibility and resources, but they also come with potential conflicts between partners.
A company is a separate legal entity from its owners. This means that the company can enter into contracts, own property, and appeal or be appealed in its name. The owners of a company are called shareholders, and they have limited liability for the debts and liabilities of the company. Companies require more paperwork and legal formalities which offer greater protection for owners' assets.
When choosing a business name it should be relevant and unique to a business niche and market segment. Business owners (s) should have an understanding of the target audience and use keywords ideal for the segment. A short yet precise creative enough would be to help the business to expand its reach through the internet including social media and traditional marketing methods like word of mouth.
The Department of Business Name Registration ensures that the same business name is not used by another. The Department of Business Name Registration in Sri Lanka is responsible for registering and maintaining records of business names. Every individual who carries on a business under a name that is not their own must register it with this department. This applies to all types of businesses, such as sole proprietorships, partnerships, and companies.
One crucial licence when starting a business is the trade licence, which is required for all businesses operating in a particular area. When newly setting up a business, obtaining a trading licence should be done before starting operations. There are several regulations under the Colombo Municipal Council to adhere to in the obtaining process.
Once you have registered your business with the Sri Lankan government, you will need to register for taxes with the Inland Revenue Department. The registration process can be done manually or online. The type of taxes you will need to pay will depend on the type of business entity you have chosen. For example, if you are a sole proprietor, you will need to pay income tax on your business profits. In addition to income tax, you may also need to pay other taxes, such as value-added tax (VAT) and withholding tax.
Here are some of the taxes that you may need to pay in Sri Lanka:
Taxes vary depending on the type of business and the amount of income or profits. You should consult with a tax advisor to determine the specific taxes that you will need to pay and the rates that apply to your business.
Here are some recommendations to consider after registering a business in Sri Lanka:
A business bank account is a separate account from your personal bank account.is used for business transactions only.
To open a business bank account, you will need to provide the bank with some information about your business, such as the business name, address, and EIN. You may also need to provide a copy of your business licence.
A business bank account makes it easier to track your business income and expenses. It is important to keep good records of your business transactions so that you can accurately report your income and expenses on your taxes.
Insurance policies are designed to provide financial protection against unforeseen events such as accidents, natural disasters, and medical emergencies. It is essential to understand the different types of insurance policies available in Sri Lanka and choose the right one that meets your specific needs.
Before purchasing an insurance policy, it is important to research various insurance providers in Sri Lanka and compare their policies' benefits, premiums, and coverage. This will help you make an informed decision and select the best policy that fits your budget and requirements. Some popular types of insurance policies in Sri Lanka include life insurance, health insurance, motor insurance, and property insurance.
When purchasing an insurance policy in Sri Lanka, it is crucial to read the terms and conditions carefully and understand the coverage limitations and exclusions. You should also ensure that you provide accurate information about yourself and your assets while applying for the policy to avoid any future claim rejections.
