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 Palau. 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.
|No.||Procedure||Time to Complete||Associated Costs|
|1||Deposit the legally required capital in a bank and obtain deposit evidence||1 day||no charge|
|2||Check the uniqueness of the proposed company name and reserve a name||1 day||no charge|
|3||Notarize the company deeds||1 day||USD 10|
|4||Pay the registration fee at the National Treasury||1 day||USD 250|
|5||Register the company with the Corporate Registrar at the Office of the Attorney General; obtain a certificate of incorporation||14 days||included in previous procedure|
|6||Register employees for social security and obtain an employer identification number (EIN)||1 day||USD 15|
|7||Apply for a business license from the relevant licensing authority||5 days||USD 50|
|8||Apply for a business license from the state government||3-5 days||USD 50, depending on numbers and types of licenses|