Tips of the week #1 – Benefits Business Registration

Tips of the week # 1 – Benefits of Business Registration

Registering a business in Malawi can be difficult and it costs K61,000, a prohibitively high sum of money. Additionally, taxes can account for up to 30% of company revenue in Malawi. However, registration is an important step in establishing formality and unlocking pathways to growth. Obtaining a Business Registration Certificate (BRC) and Taxpayer Identification Number (TPIN) allows you to do the following:

  • Open a bank account for your business
  • Establish a credit history and apply for a business loan
  • Register land under the business name
  • Receive an export license
  • Avoid harassment from government officials
  • Apply for public and private tenders
  • Apply to be a member of the Malawian Chamber of Commerce

It is important to note that registration by itself does not guarantee increased sales and revenue and general financial success. Indeed, a study using randomized control trials (RCTs) by the World Bank on business registration in Lilongwe and Blantyre demonstrated this point. The study used the following treatments: (1) Costless business registration (2) Costless business and taxpayer registration (3) Costless registration combined with bank information and financial literacy sessions sponsored by NBS (ex. how to use a bank account, illustrating issues businesses face etc).

Only businesses with the third treatment (registration & information), exhibited a statistically significant improvement in profits and sales in the long-term. This group also was more likely to have used financial products such as loans, insurance, and bank accounts. Therefore, registering your business should act as a stepping stone and be part of an ongoing process of establishing successful financial and legal practices.

Sources:

World Bank. “Business Registration Impact Evaluation in Malawi.” July, 24, 2017. Francisco Campos, Markus Goldstein, and David Mckenzie. http://pubdocs.worldbank.org/en/504711518539160506/OW4-1312-BRIE-Malawi-Final-Report.pdf

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