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 Honduras. 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 | Procure a certificate of deposit at a local bank; pay the registry fee | 1 day | no charge |
| 2 | Constitute the company before a notary public, who is to draw up the instrument of organization | 2 days | notary fees of 5% until Lps.25,000 and 3% over Lps.25,000 of the capital. |
| 3 | Publish the registration notice in “La Gaceta”, the official journal or an ordinary newspaper | 1 day | US$35 for one advertisement in “La Gaceta”; $15 in a newspaper |
| 4 | Purchase the bar stamps from the Banco Atlántida S.A and Banco de Occidente. | 1 day | included in procedure 5 |
| 5 | File the articles of incorporation with the Mercantile Registry at the Chamber of Commerce | 2 days | Lps.1.5 for each Lps.1,000 of corporation capital (Derechos de registro/registration fees) + Lps.30 up to Lps.300,000 of the capital and Lps.10 for each Lps.100,000 after Lps.300,000 (Bar stamps/Timbres del Colegio de Abogados). |
| * 6 | Apply for the tax identification code (Registro Tributario Nacional, RTN) at the Dirección Ejecutiva de Ingresos (DEI), Ministry of Finance | 1 day (simultaneous with previous procedure) | no charge |
| 7 | Acquire legal accounting and minutes books | 1 day | USD 180 |
| 8 | Register with local and national chambers of commerce | 1 day | nominal fee |
| 9 | Apply for an operational permit (Permiso de Operación) from the municipal authorities | 1 day | Lps. 1,250 |
| * 10 | Register for Sales tax and acquire the authorization of the company books | 2 days, simultaneous with procedure 9 | nominal fee |
| * 11 | Register at Social Security Institute (Instituto Hondureño de Seguridad Social, IHSS) | 3 days, simultaneous with procedure 9 | no charge |
| * 12 | Register at the Hand Labor Training Institute (Instituto Nacional de Formación Profesional, INFOP) | 1 day, simultaneous with procedure 9 | no charge |
| * 13 | Register at Social Fund for Housing (Régimen de Aportación, (RAP) al Fondo Social de la Vivienda (FOSOVI)) | 1 day, simultaneous with procedure 9 | no charge |