The following series of articles is being published in order to increase the knowledge base of readers already involved in operating small businesses and wishing to broaden their knowledge base, or else contemplating such a step. We welcome your comments on the Stabroek Business’ ongoing effort to serve the business community.
The Sole Trader
When the first case of COVID-19 was reported in Guyana on 11 March 2020, I am sure that you did not envisage that you would be entering a multi-dimensional crisis. Three distinct dimensions have shown themselves so far, the physical health, the mental health and the economic crisis.
As a result of the economic crisis, many have lost jobs in traditional sectors and new sectors are cropping up as the pandemic has created opportunities to pivot. Before this blemish on human history comes to an end you may find yourself thinking of repositioning yourself from being an employee to being an entrepreneur. You may find yourself thinking maybe you shouldn’t be working at a desk, “pushing paper” anymore. Maybe, you find yourself thinking that you should following that dream and open that (fill in the blank) you always thought about.
But before you act on any of those thoughts you need knowledge of exactly what you are getting yourself into. But how do I do that you may be asking? What do you need to do to start a business? Well, that depends on the type of business structure you wish to start.
What type of Business can I start?
In Guyana business structures permitted by the law fall into the 4-model. Mainly:
1. The Sole Trader
2. The Partnership
3. The Company
4. The Joint Venture
The Sole Trader
“To be successful, you have to have your heart in your business and your business in your heart” – Thomas Watson Sr.
The Sole Trader model is the simplest type of Business structure. The structure consists of one person who owns and manage the Business. A Sole Trader is a one-person business, this structure is very suitable for a person who wants to start a small business without a lot of money to invest. There is no distinction between the person and the business and the owner bears all cost, liabilities, debts and risks personally, and is the only profit participant.
By way of example say you want to start a business to sell children’s clothes. You choose a name “ABC Kids Boutique”. When you apply for that Business Name and it is granted, (a concept which will be elaborated in another article), then your business will be (Your name) trading as “ABC Kids Boutique”. If you have an employee or employees, they are paid by you trading as your business name. The same applies for any obligations you may have whether it be a loan or NIS for employees. The concept of where the responsibility and liability lie are an important for you to keep in mind. You will see the significance as we discuss the other business models.
What do need I start a Business as a Sole Trader?
1. The first thing you should do is find your TIN certificate if you have one. If not you will need to apply for one. You need a TIN for most if not all Government transactions and Commercial ones as well.
2. Another document that you need to have at your fingertips is a valid photo ID Document as this is a document that is almost always required in both Government and/or commercial transactions. A Passport or National ID Card are generally accepted anywhere. The new card Driver Licenses are usually accepted but not always.
3. Some business transactions will require the use of a bank account.
4. You will need to apply for a Business Name at the Commercial Registry.
5. You as a sole trader you would be considered for NIS purposes self-employed and would have to make NIS contributions. Also, if you have employees you would need to register them with NIS and take NIS contribution out of their salary/wages.
6. Your Business will need an address to be registered in most case, especially if it is a licensed trade and for this you may need a fixed address.
7. Any services that need a licence you should acquire before you start to operate.
Example of Business that requires Licences
• Fast food outlets
• Restaurants
• Cigarette Retail shops
• Liquor Retail shops
• Lottery Stores
• Retail Shops
• Battery Shops
• Medical Products
• Pawnshops & Money Lending
establishments
• Butcher Shops
• Tobacco hops
• Cargo Vessel services
• Auctioneer and Betting shops
• Cinemas & Video Clubs
• General Shops
• Lumberyards
• Pharmacies and Drugstores
• Gas stations
