According to the World Bank Doing Business Report for 2018, Jamaica is ranked number 5 in the World for ease of starting a business. The Companies Office of Jamaica should be commended for continuously improving its procedure. Over the next few weeks we will examine the various legal structures and factors influencing Entrepreneurs’ choice of registration.
Registering a business as a sole trader is the easiest form of registration in Jamaica. The Registration of Business Act stipulated in section 3(1) that this registration is for any individual or firm buying or selling goods from an established address or any individual or firm offering services from an established address in a name other than its/their own, for example: Joan Pitters offering services in her name need not be registered. However, Joan Pitters operating as Joan’s Meat or Joan Pitters & Associates must be registered. A business name will not be registered if it is identical or too close to the name of an existing trader, individual or firm registered under the Business Names or Companies Act 2004.
There are both advantages and disadvantages of registering a sole trader.
- Absence of formalities in the organisation of the business
- Absence of regulation, lower cost ($2,500jmd) and privacy
- No requirement to file annual returns
- Personal liability for all debts incurred. Because the sole proprietorship is in essence the proprietor, there is no distinction in law between so called business assets and personal assets. Likewise, there is no distinction between business debts and personal debts.
- Limited options for financing opportunities- the organisational structure of the sole proprietorship provides no mechanism by which other investors may participate in the business. Therefore, one cannot sell shares to raise capital for the business. The only source of financing other than him/herself would be through bank loans or grants.
The Business Registration Form (BRF1) otherwise called the “Super Form” is used for registration. If you are unsure about the best legal structure for your business, contact an Attorney-at-Law for guidance. Registration of your business is imperative to operate legally within the jurisdiction.
Abi-Gaye White-Thomas B.A., LL.B (Hons)