8 reasons you should legalize your business now
What happens if you don’t take the legalize your business? This post is to help you know why you need to register your business now. I will be sharing with you 8 reasons you should take the legal aspects seriously and legalize your business in Cameroon.
Why should you legalize your business?
Having your business registered is a smart choice for entrepreneurs who want to see their businesses grow. Just like I said in my previous post, many businesses in Cameroon focus more on the practical aspects of business and neglect the legal aspects.
See what some people discuss in bars
“The law favors foreign owned businesses in Cameroon more than local businesses”. This is a common phrase I have heard several times in kwata bars. This statement is very true especially when it comes to small and medium-sized businesses.
Where’s the mistake and where’s the truth?
Mistake: We’re comparing businesses that are legally upright with unregistered businesses. Most of the foreigners who own businesses in Cameroon have registered their businesses – from the small Magida to the many Asian shops you can find in Douala and other big cities.
Truth: These foreign-owned businesses are legally registered and are treated like any other registered business. They pay their taxes like any other Cameroonian business and benefit from the incentives put in place by the government.
True, they receive favor from the government because they meet up with the rules and regulations of doing business in Cameroon.
How do you want to receive same favor when your business is not even legal?
Let’s see why registering our business is the smartest thing every entrepreneur should do. Below are some 8 reasons why you need to legalize your business – legalizing your business.
1. Shows professionalism
Having a registered business adds credibility to your activity and enhances your business identity. It helps your customers and other businesses to identify you as a legitimate operator in that sector.
It shows investors and potential customers that you are serious in what you do, and that you’re going to be in it for a long while.
If you didn’t know this, it also makes it easier for you to have more clients and grow when your business is legally established. Customers (B2B or B2C) prefer dealing with businesses that have been regularly registered. They know where to go to in case there is a problem.
2. Have access to business opportunities
Let me start this with a recent happening that I am still working on.
There is a foreign investor who wants to invest in Cameroon with the help of an entrepreneur. The entrepreneur has an unregistered company. However, he didn’t tell the truth to the investor when things turned out to be working.
Since we also help investors verify about the partners they want to work with in Cameroon, this investor got in touch with us to find out if this entrepreneurs company is duly registered. This came after he asked us to incorporate his company in Cameroon.
So we asked him to send us the legal file of the partner in Cameroon. Unfortunately, the partner had given him a worked (forged) document. This is because his business wasn’t registered yet and the time for him to create a company was short (or he still doesn’t think he could create one).
For your information, we can incorporate your company in Cameroon within 14 working days including a business license. That means, after 14 working days, you can start carrying out business activities.
One thing you should note as an entrepreneur is that opportunities only meet those who are prepared. This is only a single case. Many have asked us if it’s possible to create their company and backdate the creation date. Investors usually prefer to work with a company that has a history.
Presently, your business maybe “flourishing”as you may say, but without it registered, you may miss opportunities like this.
You don’t always need a partner before you start thinking to legalize your business. If you’re smart, make sure you do it now with OpenHub Digital and benefit from the many giveaways that we have for you.
For your information, many of our clients have benefited from partnerships and business opportunities with investors who ask on our platform. You maybe one of the lucky ones!
3. Get government support and incentives
Just like I said above, many of us have the feeling that foreign-owned businesses benefit more from the government than local businesses. That’s not actually the case – many local businesses don’t benefit because they are not registered.
There are many opportunities, incentives and support that the government has put in place which unregistered businesses cannot benefit. If you’ve read the 2021 Finance Law of Cameroon, you see many tax incentives.
These foreign businesses inquire about all these advantages, and you know what, they benefit from it. Just yesterday, one client sent me a copy of some of these incentives and asked me if his business can benefit from it.
This is most common with my Asian clients. They have always asked or paid me to research on incentives they can benefit with their companies. That’s one of the reasons they have successful businesses running in Cameroon.
4. Get necessary permits & licenses
There are many lucrative businesses you cannot run in Cameroon without a license. For you to obtain such a license, you need to first of all have a registered business and a business license.
Examples of such businesses are forestry, mining, petroleum, bars, restaurants, hotels, and many others. There are some that you need a permit from the local council to carry out operations. If you did not know, many council areas have land that you can rent very cheap to carry out your business operations. However, for you to be able to benefit from this, you need legalize your business(have a registered business).
5. Protect your intellectual property
The first stage in protecting your business name, product, brand, and any other thing that needs protection is by registering the business. Most of you having great brands and brand names with unregistered businesses are at risk of loosing them to smart entrepreneurs.
Unfortunately, you will have nothing to say if you haven’t registered the business. There are people watching you online. They see what you’re doing and how popular your product or brand name is making waves.
Once they notice your model, product or service is becoming very popular, and they know you’ve not registered the name, they can go ahead and do so without your knowledge. They can even go as far as taking you to court for using that brand or name.
In this case, you can’t take any action against someone using your business name, logo or your trademark. You may see it as funny, but it’s real.
Just do a search on Social Media on the Mr Leo and the Lion’s Production saga, then come back to OpenHub Digital and take action before it’s too late.
6. Helps you grow your company smoothly
Many will be wondering how legalizing your business will make it grow. There are many reasons from the legal as well as practical aspect.
As for the legal aspects, once you register a company, you need to carry out regular accounts. You need to record both your expenses and your income. It may not be new to you that carrying out regular accounting helps you know the position of your business at a specific point in time.
Your accounting helps management in taking decisions that will be of great benefit to the company. You will be able to know where to reduce some charges as well as where to carry on some improvement in your business.
In Cameroon, every registered business is obliged to carry out regular accounting and file in a statistical and tax returns at the end of the year.
It doesn’t end only there – other third-parties, other than the tax authorities like investors, banks, partners and most importantly, customers will want to deal with a legally registered business.
In fact, most customers that are businesses are obliged by the law only to deal with businesses that are legally registered and up-to-date with their taxes.
Those who have always run to registered businesses for their documents because they have had an opportunity know this better. I will be writing about this in the days ahead.
As for banks and investors, we all know they wont take a risk to put their money in any business that is not legally registered.
7. Access to financing
The most common financing partners of businesses are banks and investors. In effect, none of these two will want to put money in an unregistered business. This is very risky for them.
Investors are more likely to take your business serious and invest in it when it’s legally registered. Prominent shareholders who may like your idea and want to invest if they’re ensured you’ve legalized your business.
We’ve had a lot of investors cry foul after putting in their money into unregistered businesses.
One reason they may finance your business is that you legalize your business – legally registered, carry out proper accounting and pay your taxes regularly.
8. Protect your finance & assets
If you have been following this blog, then this should not be new to you. However, if this is your first time, then it’s very important for you to know about limited liability.
For those who register their businesses as a limited liability company, they benefit from this. Their liability to the debts of the business is limited only to the investments they have put in the business. This means, they’re protected from personal liability. Legal issues will be treated as separate from your personal affairs.
Unlike the sole proprietor who has unlimited liability, their private assets and finance may not be used in covering the debts and other liability of the business.
You could be wondering why I used may! Yeah! There are certain cases where their assets can be used like in the case of criminal or corrupt activities.
It’s time for action – legalize your business with OpenHub Digital!
If you’ve not been taking the legal aspects of growing your business important, it’s better you think twice and take action now. The process to legalize your business maybe stressful and complicated due to the preparation of the legal forms and paperwork, which is overwhelming.
Many don’t know how it’s done and where to get information. You’re lucky not to be one of them, for you’re in the right place. Many have used our services and are happy.
Our trusted business advisors may just be what you need now to take action in order to start, run and grow your business in Cameroon.
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This content has been prepared for information purposes only. It is not intended to provide, and should not be relied on for, tax, accounting or legal advice. You need to consult your own tax, accounting or legal advisors before engaging in any transaction.