Introduction
When starting a business in Bangladesh, one of the most important steps is to register your business with the appropriate government agencies. Registering your business not only gives you legal recognition and protection, but also helps you to obtain necessary licenses, permits, and clearances to operate your business. However, the legal process for registering a business in Bangladesh can be complex and time-consuming. In this guide, we’ll walk you through the step-by-step process of registering a business in Bangladesh, including choosing a business structure, preparing necessary documents, obtaining government clearances, and registering your business with the Registrar of Joint Stock Companies and Firms (RJSC). We’ll also highlight the importance of following legal process to ensure the success and sustainability of your business in Bangladesh.
Understanding the legal framework for business registration in Bangladesh
Before you start the process of registering your business in Bangladesh, it’s important to understand the legal framework for business registration in the country.
The primary law governing business registration in Bangladesh is the Companies Act, 1994. This law outlines the requirements and procedures for registering and operating different types of companies, such as private limited companies, public limited companies, and joint venture companies.
In addition to the Companies Act, there are several other laws and regulations that govern different aspects of business registration in Bangladesh. For example, the Trade Organization Ordinance, 1961, governs the formation and operation of trade associations and chambers of commerce, while the Foreign Private Investment (Promotion and Protection) Act, 1980, outlines the rules and regulations for foreign investment in Bangladesh.
Other important laws and regulations that may apply to your business include the Income Tax Ordinance, 1984, the Value Added Tax and Supplementary Duty Act, 2012, the Labor Act, 2006, and the Environmental Conservation Act, 1995. It’s important to consult with legal and financial experts to ensure that you understand and comply with all relevant laws and regulations when registering your business in Bangladesh.
Choosing a business structure that fits your needs
When registering a business in Bangladesh, you’ll need to choose a business structure that best suits your needs. Here are the most common types of business structures available in Bangladesh:
Sole Proprietorship: This is the simplest and most common form of business structure in Bangladesh. In a sole proprietorship, the business is owned and operated by a single individual.
Partnership: A partnership is a business structure in which two or more individuals share ownership and management of the business.
Private Limited Company: A private limited company is a separate legal entity from its owners, and it requires at least two shareholders and two directors. This type of company limits the liability of its shareholders and has more legal formalities compared to sole proprietorships and partnerships.
Public Limited Company: A public limited company is similar to a private limited company, but it has the ability to issue shares to the public and is subject to more regulations and legal requirements.
Joint Venture: A joint venture is a business structure in which two or more parties agree to pool their resources and expertise to pursue a specific business venture.
When choosing a business structure, it’s important to consider factors such as liability protection, taxation, management structure, and capital requirements. Consult with legal and financial experts to determine which business structure is best suited for your specific needs and goals.
Preparing the necessary documents and paperwork for business registration
Once you have decided on the business structure that suits your needs, you’ll need to prepare the necessary documents and paperwork to register your business in Bangladesh. Here are the typical documents and paperwork required for business registration:
Memorandum and Articles of Association: This is a legal document that outlines the objectives, rules, and regulations of the company. It must be signed by all shareholders and directors of the company.
Certificate of Incorporation: This is a legal document that certifies the registration of the company with the Registrar of Joint Stock Companies and Firms (RJSC).
Form IX: This is a form that includes the particulars of the directors of the company.
Form VI: This is a form that includes the particulars of the shareholders of the company.
Form XII: This is a form that includes the registered address of the company.
Bank Certificate: This is a document that confirms the deposit of the minimum required capital for the company.
Power of Attorney: This is a legal document that authorizes an individual to act on behalf of the company during the registration process.
In addition to these documents, you may also need to provide other supporting documents, such as proof of identity and address of the shareholders and directors. It’s important to ensure that all documents are properly completed and submitted to the appropriate government agencies.
Obtaining necessary clearances and approvals from government agencies
In addition to preparing the necessary documents and paperwork, you’ll also need to obtain necessary clearances and approvals from various government agencies before you can register your business in Bangladesh. Here are some of the key clearances and approvals you may need:
Trade License: You’ll need to obtain a trade license from the local city corporation or municipality where your business will be located.
Tax Identification Number (TIN): You’ll need to obtain a TIN from the National Board of Revenue (NBR) to pay income tax, value-added tax (VAT), and other taxes.
Business Identification Number (BIN): You’ll need to obtain a BIN from the Registrar of Joint Stock Companies and Firms (RJSC) to identify your business in official records.
Environmental Clearance: Depending on the nature of your business, you may need to obtain an environmental clearance from the Department of Environment.
Building Clearance: If you’ll be operating your business from a commercial building, you’ll need to obtain a building clearance from the appropriate government agency.
Import Registration Certificate (IRC): If you’ll be importing goods, you’ll need to obtain an IRC from the Chief Controller of Imports and Exports.
Export Registration Certificate (ERC): If you’ll be exporting goods, you’ll need to obtain an ERC from the Chief Controller of Imports and Exports.
It’s important to research and understand the specific clearances and approvals required for your business, as they may vary depending on the industry and location. Additionally, you’ll need to ensure that all necessary fees and taxes are paid before you can obtain these clearances and approvals.
Registering your business with the Registrar of Joint Stock Companies and Firms (RJSC)
After you have obtained the necessary clearances and approvals, you can proceed with registering your business with the Registrar of Joint Stock Companies and Firms (RJSC). Here are the steps to register your business with RJSC:
Name Clearance: Before you can register your business, you’ll need to obtain name clearance from RJSC. You can do this by submitting an application with a few proposed names for your business.
Memorandum and Articles of Association: Once you have obtained name clearance, you’ll need to prepare the Memorandum and Articles of Association and have them signed by all shareholders and directors of the company.
Submission of Documents: You’ll need to submit the Memorandum and Articles of Association, along with the completed registration forms and other required documents, to the RJSC.
Payment of Fees: You’ll need to pay the required registration fees at the designated bank.
Verification and Approval: The RJSC will verify your documents and, if everything is in order, issue a Certificate of Incorporation.
Tax Registration: After obtaining the Certificate of Incorporation, you’ll need to register your business for tax with the National Board of Revenue (NBR).
Once your business is registered with RJSC, you’ll receive a Business Identification Number (BIN) that identifies your business in official records. You’ll also be required to file annual returns with RJSC and comply with other legal and regulatory requirements as applicable to your business structure.
Obtaining trade licenses and permits to operate your business
Obtaining trade licenses and permits is one of the crucial steps to legally operate your business in Bangladesh. Here are the steps to obtain a trade license and permits to operate your business:
Apply for a trade license: To obtain a trade license, you need to apply to the local City Corporation, Municipal Corporation, or Union Parishad of your business location. You’ll need to submit your application with the relevant documents, such as your business registration certificate, rental agreement, and proof of identity.
Inspection and verification: The respective authority will inspect your business location to ensure that it meets the required standards for health and safety.
Payment of fees: You’ll need to pay the required fees for the trade license.
Issuance of trade license: After the inspection and verification process is completed, you’ll receive the trade license from the respective authority.
Obtaining other permits: Depending on the nature of your business, you may need to obtain additional permits and clearances from different government agencies. For example, if you’re starting a food-related business, you’ll need to obtain a food license from the Bangladesh Food Safety Authority (BFSA).
It’s essential to comply with all the regulations and obtain all the required licenses and permits before starting your business operations. Non-compliance with legal and regulatory requirements may lead to penalties and fines, which can adversely affect your business reputation and operations.
Registering for tax identification and obtaining necessary tax clearances
Registering for tax identification and obtaining necessary tax clearances are critical steps in the process of registering your business in Bangladesh. Here are the steps to follow:
Tax Identification Number (TIN): To register for a TIN, you need to apply to the National Board of Revenue (NBR) with the required documents, such as your business registration certificate, Memorandum and Articles of Association, and proof of identity of the directors and shareholders. You can apply online through the NBR website or in person at the designated tax office.
VAT Registration: If your business turnover exceeds the threshold limit, you’ll need to register for Value Added Tax (VAT) with the NBR. You’ll need to apply with the required documents, such as your TIN certificate, business registration certificate, and Memorandum and Articles of Association.
Tax Clearance Certificate: To obtain a tax clearance certificate, you’ll need to apply to the tax authority with the required documents, such as your tax returns, financial statements, and proof of payment of all outstanding taxes. You may need a tax clearance certificate for various purposes, such as obtaining a loan from a bank or participating in government tenders.
Other Tax Clearances: Depending on the nature of your business, you may need to obtain other tax clearances, such as Advance Income Tax (AIT) clearance, withholding tax clearance, and tax exemption certificate.
It’s essential to comply with all the tax regulations and obtain all the required tax clearances to avoid penalties and fines. Non-compliance can lead to legal and financial consequences that can adversely affect your business operations.
Opening a bank account for your business
Opening a bank account for your business is an important step as it allows you to keep your personal and business finances separate and also facilitates the smooth operation of your business. Here are the steps to open a bank account for your business in Bangladesh:
Choose a bank: Research and choose a bank that offers business banking services that meet your requirements.
Gather the required documents: You’ll need to gather the required documents, such as your business registration certificate, Memorandum and Articles of Association, and proof of identity of the directors and shareholders.
Submit the application: You’ll need to submit your application for opening a business bank account, along with the required documents, at the nearest branch of the chosen bank.
Verification and approval: The bank will verify your documents and, if everything is in order, approve your application for opening a business bank account.
Initial deposit: You’ll need to deposit the minimum required amount as an initial deposit to activate your business bank account.
Accessing your account: Once your account is activated, you’ll be able to access your account using the provided online banking credentials, chequebook, and debit card.
It’s essential to keep your business bank account active and up-to-date with all the necessary documentation to avoid any issues in the future. Additionally, it’s important to maintain accurate financial records and ensure timely tax payments to avoid any legal and financial consequences.
Conclusion:
Importance of following legal process for business registration in Bangladesh
Following the legal process for business registration in Bangladesh is crucial for the success and sustainability of your business. By complying with legal and regulatory requirements, you can ensure that your business operates in a legally recognized and authorized manner, which can help you build trust and credibility with your customers, suppliers, and other stakeholders.
Moreover, obtaining the necessary licenses, permits, and tax clearances can help you avoid legal and financial penalties that may arise due to non-compliance. Additionally, having a legal and recognized business structure can provide you with various benefits, such as limited liability protection, tax benefits, and access to financing.
Therefore, it’s essential to understand and follow the legal process for business registration in Bangladesh and seek professional help if needed to ensure that your business operates in compliance with the law and regulations. This can help you establish a strong foundation for your business and pave the way for long-term success and growth.