Entrepreneurship Skills Development: Registering a Business

Business Documents

The main business documents include formation documents, such as the certificate of incorporation and constitution; licences and permits; contracts and agreements, such as leases and employment contracts; and trading documents, such as quotations, purchase orders, delivery notes, invoices, credit notes, receipts, statements of account and payment vouchers.

Purpose of Books of Account

The cash book records all money received and paid through cash and the bank. The sales and purchases day books record credit sales and purchases. The ledger contains all the accounts, classified as assets, liabilities, capital, income and expenses. The petty cash book records small cash payments. Together, these books show how much the business has earned and spent, what it owns and owes, and provide the figures for the financial statements and tax returns.

Importance of Business Documents

Business documents provide evidence of transactions, support the records in the books of account, help settle disputes with customers and suppliers, meet legal and tax requirements, such as ZIMRA's requirement to keep records, support applications for loans and tenders, and help management control the business, for example by checking deliveries against orders.

Meaning of Company Registration

Company registration (incorporation) is the legal process by which a business is entered in the official register of companies and becomes a separate legal person, able to own property, enter contracts, sue and be sued in its own name, with its members enjoying limited liability.

Types of Companies and Entities that Can Be Registered

The main types are the private limited company, whose name ends in '(Private) Limited' and whose shares cannot be offered to the public; the public limited company, which may offer shares to the public; the company limited by guarantee, often used by non-profit organisations, where members guarantee a set amount instead of buying shares; and the private business corporation (PBC), a simpler form for small businesses with a small number of members. Sole traders and partnerships do not need incorporation, but they still need licences and tax registration.

Requirements for Registration

The usual requirements include an approved company name, a constitution (memorandum and articles, or the standard form), details and identification of the directors and shareholders or members, a registered office address, a company secretary where required, and payment of the prescribed fees. The exact forms and fees are set by the Registrar and change from time to time, so they should be confirmed with the Companies Registry or a registered agent.

Procedure for Company Registration

Registration generally follows these steps:

Name search and reservation

Apply to the Registrar to check that the proposed name is available and acceptable, and reserve it.

Prepare the documents

Prepare the constitution and the prescribed forms giving the registered office and the directors' and secretary's details.

Lodge the documents

Submit the documents and fees to the Registrar of Companies, in person, through an agent or through the online registration system.

Incorporation

The Registrar checks the documents and, if they are in order, registers the company and issues the certificate of incorporation.

Post-registration steps

Register with ZIMRA for tax, register employees with NSSA, open a business bank account, and obtain a trading or shop licence from the local authority.

Documents Received after Registration

After registration, the business receives the certificate of incorporation, which proves that the company exists; the registered constitution; and copies of the registered forms showing the registered office and the directors and secretary. Later, it receives a tax clearance and taxpayer number from ZIMRA, an NSSA registration number, and the trading licence from the council. These documents are needed to open bank accounts, apply for tenders and sign contracts.

Factors in Choosing a Place of Business

An entrepreneur considers nearness to customers and to suppliers of raw materials, rent and cost of premises, availability of utilities such as electricity, water and internet, transport and access for customers and deliveries, security, zoning laws and council approval, availability of labour, competition in the area, and space for future expansion. For example, a bakery near a busy bus terminus gains many passing customers.

Macro and Micro Environmental Factors

The micro environment consists of factors close to the business that it can influence to some extent: customers, suppliers, competitors, employees, intermediaries and the local community. The macro environment consists of wider factors beyond its control, often summarised as PESTLE: political (government policy, stability), economic (inflation, interest rates, exchange rates), social (population, culture, tastes), technological (new equipment, mobile money, internet), legal (laws on tax, labour and licensing) and environmental (climate, pollution rules). Entrepreneurs must monitor both and adapt.

Small and Medium Enterprises

Small and medium enterprises (SMEs) are businesses that are small in size, measured by the number of employees, annual turnover and value of assets, below limits set by government. The exact limits are set in regulations and vary by sector, so the current official definition should be checked. SMEs include many shops, workshops, salons, transport operators and small manufacturers.

Roles of SMEs

SMEs create employment, especially for young people and women; contribute to economic growth and GDP; promote entrepreneurship and innovation; supply goods and services to local communities, including rural areas; support large businesses as suppliers and distributors; use local resources and skills; reduce poverty by spreading income; and contribute taxes to government once formalised.

Meaning of Rules and Regulations

Rules and regulations in business are the written standards that govern conduct and operations. External regulations are imposed by law and authorities, such as tax laws, labour laws, health and safety rules and licensing conditions. Internal rules are set by the business itself, such as a code of conduct, working hours, cash handling procedures and dress code.

Compiling Guiding Rules

To compile rules, the entrepreneur identifies the areas needing control, such as attendance, cash, stock, safety and customer service; checks the relevant laws, so that rules do not conflict with them, for example the Labour Act; writes clear and simple rules with the consequences of breaking them; consults employees where possible; communicates the rules in a handbook or notice; and reviews them regularly. Examples include: 'Staff must clock in by 7:00 am', 'All cash sales must be receipted', and 'No stock leaves the store without a signed requisition'.

Importance of Rules and Regulations

Rules create order and discipline, ensure fair and consistent treatment of employees, protect the business's assets from theft and misuse, ensure compliance with the law, avoiding fines and closure, promote safety, improve efficiency because everyone knows what to do, and protect the business's reputation with customers and the community.