While sole traders might still be so popular, they are missing out on the many advantages of registering a company in Zimbabwe. This exhaustive article will thoroughly explain most of the advantages of registering your company in Zimbabwe.
So what are the advantages of registering a company in Zimbabwe
Let’s take a look at ten advantages of registering your company in Zimbabwe than operating as a sole trader.
1. Tax advantages
As a registered company, you are probably going to pay less tax than when you are operating as a sole trader. All Zimbabwean registered companies are liable to income tax on your profits. Income tax is currently pegged at 24.5% for the 2020/21 tax year.
As a director of your own company, you can opt to take a small salary from the business and then take more income in the form of shareholder dividends. By doing this you can reduce the amount of tax you will need to pay.
As a company dividend payments are taxed separately, they are not subject to PAYE. This means that you could end up taking home more of your earnings from your business.
2. Professional image
Registering a company also give your business a professional image. This can help greatly to build customer trust and belief in your products or services.
Many big businesses refuse to do business with businesses that are not registered but will be happy to work with you if you are registered.
2. Separate legal entity
A registered has its own existence separate from its owners i.e. it is a separate legal entity. It is its own being in its right. This means that everything held in the company name from its own business bank account to loans, credit agreements and assets is completely separate from those of the company owners (shareholders).
This means that your own personal assets will be protected should the business need to fold for whatever reason (other than when there are criminal activities involved such as fraud).
An unregistered business or a sole trader has no limited liability protection so they will be held personally responsible for paying back any debts run up in their business name. However, with a registered company, you get ‘limited liability’ protection.
With limited liability protection, any losses made by your business will be paid off by the company rather than you personally. This may involve selling off your company assets and recovering security deposits to pay off creditors, but your own personal money or assets will not be touched.
Easier access to financing
Its easier to access funding when you are a registered company/ You will also get cheaper and favourable terms when you are registered.
Your business name is protected
When registering a company you will conduct a name search and a name has to be approved. Once that name is approved, no one can use that name for their company because it is protected by the Zimbabwean law.
This is great because you will know that no-one can undermine your business by pretending to be you to temp away your customers or set up in direct competition with an intent to confuse customers and ride off the back of your hard work and success.
Most people think its extremely expensive to register a company in Zimbabwe but it is actually very affordable if done with company registration agents. You can register a company in Zimbabwe from as little as US$65.00.
By using a professional company registration service such as Register Your Company, you will get the benefits of working with a team of experienced registration experts that have been working with the Companies Registry for years.
As a registered company, your business can fund your pension and claim it as a legitimate business expense. What this means is that you will be gaining a huge tax advantage that wouldn’t be open to you as a sole trader.
Let’s say that you were to meet with an unfortunate accident that leads to your death or leaves you unable to work. As a sole trader, you can understand how devastating this would be.
However, if your business is registered as a company you can put plans in place to transfer ownership of your company to another person.
Should you choose to retire, you can sell your shares to other shareholders or family members so you can retire knowing that all of your hard work building your business hasn’t been a wasted effort and it will live on in your absence.
So now that you have a good understanding of the many advantages of registering your company in Zimbabwe, why not take a look at our Private Limited Company Packages or Private Business Corporation Packages and get your company registered quickly and professionally with Register Your Company. If you are a non-Zimbabwean resident, take advantage of our Non-Resident Packages.
We are here to help you with any questions you may have – feel free to contact our friendly team for more information.