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 Nicaragua. 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 | Sign the incorporation papers before a notary public | 3 days | USD 875 |
| 2 | Buy company accounting books and corporate books | 1 day | NIO 800 |
| 3 | File incorporation statutes (acta constitutiva) with the Commercial Registry (Registro Comercial) at the one-stop shop (Ventanilla Unica) | 2 weeks | included in procedure 4 |
| * 4 | Pay the inscription fees | 1 day (simultaneous with previous procedure) | 1% of capital (Commercial Registration) within a minimum of NIO 1,000 and a maximum of NIO 30,000 + NIO 100 (inscription of internal books) |
| 5 | Register accounting books (sellado de libros) and register as a trader (inscripcion como comerciante) with the Commerical Registry at the one-stop shop (Ventanilla Unica) | 16 days | NIO 350 (registration of accounting books) + NIO 300 (application as a trader) |
| 6 | Register for general sales tax (Impuesto al Valor Agregado, IVA) | 2 days | no charge |
| 7 | Obtain a municipal licence (matrÃcula) | 1 day | 1% of capital (municipal license fee) + 1% of municipal license fee (municipal license document)+ NIO 5 (form for municipal license) |
| 8 | Register for social security and public health with Instituto Nicaragüense de Seguridad Social (INSS) | 2 days | no charge |