Business registration in Sri Lanka: Sri Lanka is, without doubt, one of the easiest countries to set up a business in. Setting up a business in Sri Lanka does not entail a long and tedious procedure, as is the case for many Asian countries. Instead, it involves very quick and easy steps you can complete in a matter of days.
If you are planning to start a business here, here is the right place to begin. Read the following business registration in Sri Lanka guide to help you get started. It is detailed, comprehensive and straightforward, needing no professional walkthrough. Without further ado, let us go straight to the steps:
- Understand Your Company Options
Sri Lanka allows a number of business structures, which are as follows:
- Sole proprietorship.
- Public limited company.
- Limited liability company.
- Overseas company.
- Offshore company.
You can choose from any one of these business structures, depending on your own preferences.
One of the most common types of business structures in Sri Lanka is a sole proprietorship. Many entrepreneurs go with this because it is the quickest and simplest way to set up a business. As a sole proprietor though, all the company obligations rest on you not to mention the fact that you are taxed at a personal income level.
A public limited company is one that is registered under the country’s Companies Act, with statutory minimum capital requirements as well as shares offered to the public with respect to conditions of limited liability. One of those conditions is that there must be two directors and two shareholders.
The most common type of business structure in Sri Lanka is Limited Liability Company (LLC). Unlike a public liability company, an LLC requires one director and two shareholders. Most importantly, the company secretary must be a resident of Sri Lanka.
The only difference between a registered partnership and a sole proprietorship is that in the former, the ownership is shared between partners. Legally, all partners share the obligations of the company. What’s more, they are subject to personal income rates.
An overseas company business structure allows you to open a branch of your company in Sri Lanka even when you are not a resident of the country. However, your operations will be defined by your parent company, which is based outside of Sri Lanka. Most importantly, you must register the branch with the Treasury and be ready to pay 10% of the profits generated by the branch.
Last but not list is an offshore company business structure. With this, you are allowed to business registration in Sri Lanka, but not to conduct business within the country.
- Register Your Company
After you have decided on one between these six company options, it is time to register your company. To do that, go to the Registrar of Companies online. Assuming you have already figured out your company name and trademark, search for those here and reserve those. Do note, however, that you will need to figure out another company name or trademark if the current one already exists to avoid potential legal problems. This will cost 1,000 Sri Lankan rupees (LKR), which is equivalent to 5.81 United States dollars.
After checkout, you will receive the registration confirmation in 24-48 hours. Do note, however, that the reservation will remain valid no more than 90 days.
- Prepare the Appropriate Forms and Documents
Next, prepare the relevant forms and documents, including:
- Registration of company (Form 1).
- Consent and certificate of director (Form 18).
- Consent and certificate of secretary (Form 19).
- Two copies of your Articles of Association.
Forms 18 and 19 must be individually signed by their respective signatories. What if I don’t have a secretary yet? You can locally source one from an entity that provides secretaries for a small monthly fee. Many such entities exist throughout the country.
- Sumit the Forms
Then submit your forms through the Registrar of Companies. The process should take around 3 days or so at a total cost of 17,000 or so.
- Public Notice
At this point, it is time to notify the public of your company’s incorporation through the government newspaper. You may also publish your notice on the daily papers if you like. Most importantly, you must do this within 60 days of incorporating your company. The newspaper, on the other hand, has 14 days to publish your notice. The process will cost around 7,000 LKR.
- Make a Date with the Tax Department
Now it is time to get a Tax Identification Number (TIN) for your business. Company TINs are issued by the Tax Department free of charge. The process typically takes a day to conclude.
- Obtain an Employer’s Provident Fund (EPF) Number from the Labor Department
The labor department requires employers to pay gratuities to employees who have served them for more than five years. This is done through the Employer’s Provident Fund program, to which employers must sign up. Sign up for this to get an EPF number, which will enable you to abide by this regulation from the Labor Department. Getting an EPF number is free and typically takes no more than a day.
The process of business registration in Sri Lanka is as easy as following the above steps. It is important to note, however, that some of the steps may not be necessary, depending on the type of company you are registering. For example, if it is a sole proprietorship, which will be run solely by you, then you may not need to submit Forms 18 and 19 or to obtain an EPF number. Good luck in setting up a business in Sri Lanka.