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 Sri Lanka. 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||Apply for approval name||2 days||LKR 500|
|2||The company Secretary signs a consent||1 day||There is no specific fee schedule company secretaries. The fees vary from firm to firm, and is generally based on a quarterly retainer|
|3||Register at the Companies Registry||2 days||LKR 10000 as the registration fee for Form 1 and LKR 500+ for Forms 18 and 19 and the articles of association.|
|4||Register with tax authorities to obtain a TIN||1 day||no charge|
|5||Register with Department of Labor to obtain EPF and ETF registration||1 day||no charge|