Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government.
Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Federated States of Micronesia. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.
This information was collected from World Bank: Doing Business
|No.||Procedure||Time to Complete||Associated Costs|
|1||Check the uniqueness of the proposed company name and reserve a name||1 day||USD 20|
|2||Notarize the company documents||3 days||USD 2 per page|
|3||File the incorporation documents with the Registrar of the Companies||7 days||no charge|
|4||Obtain the payment receipt (four duplicates) and pay the registration fee and license fee at the Finance Office of the state government||1 day||see comments|
|5||Obtain the certificate of corporation||1 day||included in procedure 4|
|6||Apply for a business license from the municipality||2 days||depending on numbers and types of licenses, $100 for retailing|
|7||Register for social security||1 day||USD 10|