For individual Ghanaians who want to start their business, this form of business is most ideal. The statutory costs for registration of sole proprietorship business is much less compared to a company limited by shares. All things being equal they equally have less taxes as well.

What is a Sole Proprietorship Business ?

A sole proprietorship is a business that is owned and controlled by an individual. There are no partners in the business. It is not a separate legal entity from the business owner. The liabilities of such a business is not limited. In other words, the assets of the business owner may be used in the event of business collapse or bankruptcy to defray business costs.

Individuals that trade or do businesses of such nature must register with the Registrar General’s Department.

Who is Eligible to Register a Sole Proprietorship Business ?

Only Ghanaians above the age of 18 years are eligible to register sole proprietorship businesses.

Requirements for Registration of a Sole Proprietorship Business

The procedure for registering a sole proprietorship business in Ghana is fairly easy. Here are the steps to follow in registering a sole business name.

Step 1 – Business Name Search

A business name is the name by which people know your business. Therefore, it is important to choose a name that is unique and relevant to your business. After choosing the business name you intend to use, the next step is to conduct a business name search. There is a need to embark on a business name search to ensure that no other person is using the proposed business name.

Step 2- Acquire a Form A; Sole Registration form

Form A can be downloaded from the Registrar General’s Department’s (RGD) website https://rgd.gov.gh/forms.html. Alternatively, you can pick up the Form A sole proprietorship registration form at the RGD office in Accra.

Step 3 – Register and Obtain a TIN Number

Before registration of sole proprietor business in Ghana, the sole proprietor needs to apply for a TIN from the Ghana Revenue Authority. A TIN form is easily obtainable online from the RGD or GRA website (https://gra.gov.gh/). You need to attach a copy of your national Identity card/Ghana Card  and submit same. It takes about 1 to 2 days to obtain the  TIN number once the application is submitted.

Step 4 – Complete Form A

The next step, is to carefully complete the Form A with the relevant information. Below is a summary list of information required for completing the Form A.

1. Business name
2. Business activity
3. Address of business (Must Include, digital address, House Number/building name, street name, city, district)
4. Postal address, email address, telephone number for the business
5. Residential address of proprietor/owner of the business
6. Date of birth
7. Tax Identification number
8. Present a copy of your Ghana Card

Step 5 – Make payment

The statutory fee for registering a sole proprietorship business is GHS 60. The Payment should be made at the Registrar Generals Department user bank. An official receipt will be issued

Step 6 – Issue of Business registration documents

Upon completion of registration, the RGD will issue a Certificate of Registration and certified true copy of Form A. The registration process averagely takes 7 working days.

After you have obtained the Certificate of Registration and Form A, you are ready to start the business.

What Is the Cost of Registering a Sole Proprietorship Business?

The official fees for registering a sole proprietorship business in Ghana is GH₵60. This payment is to be paid at the in-house bank at RGD.

How long does it take to register a Sole Proprietorship Business?

The registration process will take not more than 7 working todays. Once the registration is done, the proprietor is issued with the Certificate of Registration and Form A.

Advantages and Disadvantages of Sole Proprietorship

There are be some merits and demerits when you choose to do business as a sole proprietor.

Advantages of Sole Proprietorship

1. Easy to start – A sole proprietorship business is probably the easiest form of business to setup. You do not need any complicated legal formalities.
2. Total Control of the business- A sole proprietorship business is owned by one individual. The individual alone has legal title to the assets and properties of the business.
3. Quick Decision making – The sole owner takes all the decisions himself , hence, the decision making is quick.
4. Flexibility in running the business – The sole proprietor has the ability to make changes in the operations of the business as and when he deems fit.

Disadvantages of Sole Proprietorship

1. Unlimited Liability: In sole proprietorship, the liability of the business is In other words, the personal assets of the business owner may be used in defraying business liabilities. This puts a limit to how much risk he/she can take.
2. Limited Financial Resources: It is difficult for an individual to raise money to fund the business. The inadequacy of finance is a major handicap for the growth of sole proprietorship.
3. Limited Capacity of Individual: An individual has limited knowledge and skill. Hence his capacity to undertake responsibilities, his capacity to manage, take decisions and to bear the risks of business is also limited.

4. Duration of business existence is not assured: The existence of a sole proprietorship business is linked with the life of the proprietor. Illness, death or insolvency of the owner brings an end to the business. The continuity of business operation is, therefore, uncertain.

Difference Between Sole Proprietorship and Company Limited by Shares

1. A sole proprietorship structure offers no legal protection for your personal assets. The individual will therefore bare the cost if the business fails or doesn’t succeed as planned. On the other hand, Company Limited by shares owners are not personally liable for business debts. Therefore, the business owner gets more protection in the event of a business bankruptcy.
2. Registering a Company Limited by shares requires at least two directors, a secretary and at least one shareholder. However, a Sole proprietorship only needs an individual and his/her details to complete the registration.

 Taxation for Sole proprietorship

For tax purposes, the sole business owner and the sole proprietorship are considered as one body. Once the business is registered, it uses the sole owner’s Tax Identification Number. The business owner is therefore required to pay Personal Income Taxes on his salary. The business too is liable to pay all local taxes, not limited to VAT and tax on profits.

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Setting Up Business In Ghana in 2022

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Renewal Of Registration

All businesses registered under the Registrar Generals Department are obliged to renew their registration every year. Sole proprietorship businesses are equally required to also file their annual renewal by doing the following;

• Buy, fill and submit Business Renewal Form
• Payment of a Fee of GH₵25 for a year

Since the registrar already has your business details, you wouldn’t have to go through much stress renewing your business license. Once you are done filling the form, your payment and submission completes the process.

Conclusion

In conclusion, a sole proprietorship business is probably the easiest form of business to setup. This form of organisation is suitable where the nature of business is simple and requires quick decision, businesses where capital required is small and risk involvement is not heavy.