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 Yemen. 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 | Pick up the specimen application from the Commercial Register | 1 day | nominal |
| 2 | Name reservation, license application, AOA signiture, publication and registration at the Ministry of Trade & Industry | 4 weeks | Registration trade name YER 14,220; Company incorporation fees YER 15,000; Publication of company in official gazette YER 30,000; Publication of company in trade magazine YER 16,000; Publication of trade registration YER 20,000; Trade Registration card YER 1,020 |
| 3 | Register as taxpayer with the General Taxes Department for the payment of income tax, obtain taxation card, and register the employees and register for other taxes | 1 day | no charge |
| 4 | Apply for Chamber of Commerce membership | 1 day | YER 18,900 |
| 5 | Apply to the municipality to obtain license | 1 week | YER 80,000 |
| 6 | Register employees for the social security | 2 days | no charge |