Guest Contributor | Jul 3, 2019 | 0
How to start a Business – BIPA Guide for Beginners
Compiled by Annemarie Schüllenbach, Manager: Marketing & Corporate Communication.
You know the feeling. A great idea comes to you, and you are wondering whether it can make you some money. You draft a business plan and with some luck you scrape together a bit of funding. You reckon that you should at least have a proper business name to show people you are serious, and a bank account for all the millions that will be rolling in. You want to make your business official. But how?
Registering your business
Having a registered business gives you the right to officially trade as a business person; and it gives potential clients and investors the confidence that you are not a fly-by-night business. Furthermore, registering a business gives you access to legal and financial frameworks that will enhance and protect your operations. For example, you can open a bank account and obtain financial assistance through an overdraft or a loan. When your business is registered, you can pay and claim VAT, you can sell shares in your company and approach investors, you are protected in terms of specific acts and legal instruments, and the list of benefits continues.
The first step in registering a business is deciding what type of business entity you want to register. This will depend on whether you intend to make profit or not. You can register either a Defensive Name (sole proprietorship), Closed Corporation (a CC) or a company.
There are various differences between the types of businesses, but the main ones are:
A Sole Proprietorship or Defensive Name is basically a one-man business. The owner is responsible for the finances of the business and receives all profit. However, in the event that the business fails, the owner becomes fully liable for all debts incurred by the business.
A CC or Close Corporation can have 1-10 owners, referred to as members, who own and manage the CC. Their interest in the CC is indicated in percentages, i.e. you have 25% or 50% interest in the business. Legal responsibility is minimal.
A company is a complex business structure and operates as a separate legal entity. The owners are called shareholders. A Private Company can have a minimum of 1 and a maximum of 50 shareholders, whereas a Public Company can have more than 50 shareholders. A Section 21 company is an Association not for Gain.
The type of business you register will depend on whether you intend to make profit or not; and the number of owners in the business. It is advised that, before you register a business, you talk to a legal or financial person about the positives and negatives of each business type. Some business types require that you regularly submit certain financial statements – this might be an additional financial burden on a small business.
Once you know what type of business you want to register, you must decide on the name that you want your business to be known by. It is important that you register your business name to ensure that no other business can trade with a name that is similar to yours. A business name can be reserved with the Business and Intellectual Property Authority of Namibia, BIPA, which is an agency under the Ministry of Industrialisation, Trade and SME Development (MITSMED). This process can be done at any BIPA office or on-line at ww.bipa.na. One can also search the BIPA website to see what business names have already been registered, in order to minimise chances of applying to reserve or register a business name that already exists. Name reservation applications take about 3 days to be approved, on condition that the application is in order. Depending on the nature of the business you want to conduct, certain names might require approval from other stakeholders such as NAMFISA for Financial Institutions, NEAB for Real Estate businesses and NTB for businesses trading in tourism; before a business can be registered under such a name.
On approval of the name, you can now submit your application to register your business with BIPA under the name that was reserved for you. A business name approval is valid for 60 days to allow you enough time to register your business.
Depending on the type of business you are registering, you must complete the relevant forms and attach the required supporting documents. There are different forms for different types of businesses (i.e. Defensive Name, CC, Company, etc), but the standard attachments to the forms are usually:
Proof of identity of owners or shareholders and witnesses (Foreign Passports must be accompanied by a sworn declaration under oath);
Proof of the approved name reservation;
The prescribed application forms for the respective business type;
Original consent Letter from an accountant (in the case of CCs);
Cell phone numbers of all members/directors and witnesses;
At the time of writing, the option to lodge business applications online is not available yet. However, BIPA, together with MITSMED, are working on a project that will see the launching of such an online functionality in the near future.
Upon the registration of your business, you will also be required to register your employees with the Social Security Commission. Furthermore, you will be required to register your business with the Ministry of Finance for tax and VAT purposes. It is important that you speak to an accounting or auditing firm to understand how tax and VAT work, and whether it is a requirement for your business. Bear in mind that certain business types require that you regularly submit financial statements to the Ministry of Finance. This requirement might be an additional burden on your financial and human resources.
It is also wise to consult with your local authority, i.e. the city or town council, to understand whether there are additional requirements for your business. The city council for example may require that you have a fitness certificate.
Furthermore, certain laws might require that you also register your business with another authority. For example, financial and insurance institutions are required to register with the financial regulatory authority, Namfisa. It is vital that you do research when you want to register your business, to ensure that it is registered with all the relevant authorities.
Lastly, if you registered a company or a CC, you will be required to do annual returns and pay annual duties. Annual Returns are lodged at the end of each financial year by a Company and CC to the Registrar of Companies at BIPA. These are statutory requirements as per the Companies Act of 2004 and the Close Corporations Act of 1988. Annual Duties are the amount payable to BIPA in respect of the annual return that is lodged. For Close Corporations, the amount is set at N$80 per year, while for a Company the amount is based on the number of nominal shares and those with shares of no par value. It is important to pay your Annual duties on time every year, because you can incur fines for late payments.
Protecting your Intellectual Property
As an entrepreneur, you are full of ideas and excitement. You might feel like telling everyone about your new product or service. Some institutions, like banks, and investors, will require that you share your ideas and plans with them. Before you disclose your ideas, it is important to ensure that you have protected your intellectual property rights in the ideas.
What is Intellectual Property (IP)?
Refers to creations of the mind: inventions; literary and artistic works; and symbols, names and images used in commerce.
What are Intellectual Property Rights?
IP rights are enforceable rights over creations of the mind. They are time or use bound, exclusive rights enabling the owner to exclude others from engaging in a variety of acts related to the subject matter, subject to exceptions and limitations defined in national law and allowed by international treaties.
IP rights give the creator the right to prevent others from making unauthorized use of their property for a limited period, in exchange of the disclosure of the creative work.
It is important to note that there are several ways for you to protect your intellectual property (IP), namely through trademarks, patents, designs and copyright. Protecting your IP in Namibia is done through the Business and Intellectual Property Authority (BIPA). IP refers to inventions, literary and artistic works, designs, symbols, names and images used in business.
You can choose to protect your intellectual property through registering:
a Patent or Utility Model. You need a patent if you have created an invention. This can be a product or process that provides a new way of doing something or offers a new technical solution to an existing problem that be used or applied in trade or industry for the betterment of society. Protection can stop other people from making, copying, using or selling their invention. An example of a patent is the Mobile Hand Washing Basin by Joseph Auala.
an Industrial Design. An Industrial Design, or ‘design’, regards the shape of a product, i.e. the distinct shape of the Coca Cola bottle.
a Trade Mark. A trademark is a sign, symbol or a business identity that helps businesses to distinguish themselves from others in terms of their products or services. A well-known example is the KFC logo.
Copyright. This is granted to authors, artists and other creators for the protection of their literary and artistic creations, i.e. novels, poems, films, musical works, computer software etc.
To register your Intellectual Property you need to complete and submit the required forms with BIPA. Forms are available at www.bipa.na under the downloads tab.
For more information: please contact our offices at 061-299 4400 or email [email protected]