Yes, you have the most brilliant idea. And yes, you have the funds. You tell yourself customers will surely look forward to this awesome product.
Excitement hits you.
Then you create a business plan and make prototypes of the product. You start developing it and spending time on it.
Eventually, you started selling it to family and friends. And as the circle gets bigger, you realized that your business is growing.
Then, a hiccup.
This is the usual scenario for entrepreneurs.
However, in this scenario, can you guess what’s missing?
The entrepreneur failed to register their business.
By failing to register your business from the start, complications will arise in the near future that will make it hard for you as an entrepreneur.
5 Reasons Why You Should Register Your Business
1) Establish your business’ identity and reputation
Your business’ reputation will grow positively with your operations. And a good reputation will bring in clients who will rely on you wholeheartedly and will trust you. Take the first step and register your business.
As mentioned above, a lot of entrepreneurs have a lot of bright ideas when it comes to the product they will sell.
By registering your business, you will be able to get a new separate identity for your business. You will be given your own name and identity that no one can steal.
Also, this means that your business name will not be used to any business in the same industry.
This will safeguard your business to competitors that will try to bring your company down.
2) Protection from personal liability
Depending on the business you registered, you should receive some form of protection from personal liability.
What that means is if by any chance, you got bankrupt and owed a lot of money to suppliers, your personal assets won’t be targeted.
For example, you owe PhP 500,000 to a supplier. You can’t pay them off because your contract was canceled but you already paid for supplies.
Should this go through legal proceedings (meaning you can’t amicably come to an agreement on this debt), then you will have to pay that whole amount.
If you are registered as a business (and assuming you bought the supplies using the business), then the supplier can only go after the assets of the business. If, however, you are doing this outside a business, then to fulfill that amount, they can go after your house, your car, etc.
Again, certain “business types” or registrations can give you this protection.
3) Makes you look serious
Some contracts and agreements require you to have your business registration certificates and permits. If you have already registered your business, you are already one step ahead in grabbing that opportunity and raking in your revenues!
We had a couple of clients who are in this situation. They have an awesome product or already have connected with big companies to perform some sort of service.
After the negotiations, the company turns over the discussion with accounting — for billing purposes. The accounting department asks for x number of documents as part of their accreditation process.
The client didn’t have one.
They only had to comply when this was brought up. You know what that meant for the client? Additional stress and revenue loss (opportunity cost).
4) Credit and bank investors
It will be easier for you to apply for loans in the bank and open up the business to investors.
Having a registered business, banks will see you and your business to be more reliable and trustworthy, making it easier for them to grant you the funds you need for your future operations and expansions.
Investors won’t give you their money without protecting themselves. The best way to do this legally in the Philippines is buying shares from your corporation as proof of their investment, and consequently, ownership.
If you aren’t registered, investors won’t even put a centavo in your company.
Think of any big brand names you see daily. Apple, Ford, P&G, Adidas, etc.
Regardless of industry, these names have been there even long after their founders are gone.
So, even if world domination is not in your checklist, it’s still a good idea to keep this in mind. It’s like a legacy that you can pass on to other people.
Maybe there are entrepreneurs who personally choose not to register their business because of the paperwork. But let me remind you that there are a lot of privileges your business can get if you register your business. The long process is definitely worth it.