So you have a business idea. You’ve thought it through, done your research, crunched your numbers, have a clear business plan and you are positive that your arrangement of resources are going to make a successful business. When you are confident enough to try it out, it’s time to get registered.
Knowing the Rules
It is important to decide what type of registration your business is going to have. Going through the Laws & Regulations will give you an idea of the pros and cons of the different types of registrations for businesses. It gives perspective on the laws and regulations your business will be subject to. Having the law on your side grants added security to your business and its transactions.
This article will go through the course of registering a Sole Proprietorship with the Registrar of Businesses under the Sole Proprietor Act 2014 of the Constitution of Maldives.
Download Maldivian Business Laws
Download Maldivian Business Regulations
What is a Sole Proprietorship?
The sole proprietorship, or sole trade, is the simplest business form to operate a business. The sole proprietorship is not a legal entity and the business owner is personally responsible for its debts. A sole proprietorship can operate under the name of its owner or a business name registered for the purpose.
If you are an entrepreneur starting out small, this is the perfect model for you. A sole proprietorship is easy to setup and carry little legal and accounting formalities that other types of businesses have to comply to. Owners can freely mix business and personal assets without legal consequence. Over time, if your business model is operating successfully, you can always decide to incorporate the business as a partnership or private limited company.
Due to the unlimited liability feature of sole proprietorships, the owners can gain more debt than the capital invested if the business runs into financial trouble. The business is not allowed to raise finance through the sale of its shares. Additionally, some large public organizations may be hesitant to work with this form of businesses due to the unincorporated nature of sole proprietorships.
In the Maldives, Sole Proprietorships can be registered only by a local citizen of over 18 years of age for 5 years for a fee of MVR 500.
Securing a Business Name
The first step to registration is coming up with a name for your business. To check if the name you chose is already registered, search the online Business Registry.
It’s noteworthy that even if the name is not already registered, It may not be a valid name. The Ministry of Economic Development has their own set of guidelines. The following are some instances where the ministry MAY not deem a business name valid;
- A one word business name using a common word in English or Dhivehi
- Failure to provide the meaning of the submitted business name.
- Business name includes or depicts something inappropriate
- Extensive similarities to existing registered organizations
The Paperwork
Once an unused business name has been decided on, it’s time to prepare the documentation to register as a sole proprietor. The paperwork is fairly simple in contrast to registering other forms of business.
- Fill out the Name Search & Reservation Application Form. You can reserve a valid name for 14 days with the Ministry of Economic Development, or you can register your business name instantly after the name search.
- Next, fill out a Business Name Registration Form. You can leave the Approved Business Name field on the form blank if you want carry out the name search process with the name registration process in one go. This saves you time as you will only have to go to the ministry once.
- Now, for the most important step; filling the actual Business Registration Form. The Ministry of Economic Development uses the same application form for the registration of all types of businesses. For the Sole Proprietorships, this is a fairly simple process with only very few sections of the form to be completed.
- In Section 1 tick the box next to Sole Proprietorship and write down the business name approved from the name search and reservation form. Leave it blank if you wish to carry out these processes together. For Section 1.1, provide the address where the business is going to be registered. Complete Section 1.2 with the mailing address for your business or leave it blank if it is the same as the registration address in Section 1.1. In Section 1.3, provide the contact information of your business.
- Moving to Section 2, fill out the personal and contact information of the business owner and provide the business owner’s current address in Section 2.1. Section 2.2 only needs to be filled if someone other than the business owner is responsible for communications with the government. Enter the date and sign the owner’s declaration in Section 2.3.
- In Section 7 provide the details of the person responsible for tax purposes. This can be the business owner as well. Enter the current address of the responsible person in Section 7.1 and provide the details of the persons authorized to sign tax returns for your business. Fill out the details for yourself and the responsible person (if any) in Section 7.3 along with the respective signatures.
- Refer to Annex 1 of the form for a list of business activities and write down the relevant codes in the respective fields of Section 8.
- If you entered a responsible person in Section 2.2 of the form, a Taxpayer Consent Letter is also required with the respective details and signature along with a copy of the person’s national identity card.
As business owner, a copy of your national identity card is also required for submission of these forms. Now you are ready to apply for the registration of your Sole Proprietorship
Need help registering your business?
Our Business Registration services are designed with you in mind, because we understand that the first steps in establishing your business are critical. We guide you through the entire business registration process, ensuring that every step is taken care of.
Submitting for Registration
Once you have prepared the necessary documentation visit the Ministry of Economic Development. The ministry typically opens at 8.00 am on weekdays, and a lot of time can be saved if you go early. At the token dispenser, collect a token for Business Name Reservation/Registration and a separate token for Sole Proprietorship Registration.
Get the name approved and registered and follow through by registering your Sole Proprietorship using the tokens. Make sure you have MVR500 in cash as the ministry does not accept card payments to date. The ministry will provide the certification for your business instantly.
Now you are the proud owner of your Sole Proprietorship business and can legally commence business in the Maldives.
A Few More Things
It is important to note that some business activities require special licenses in addition to the business registration.
Your GST registration will be processed automatically and you will receive notification via email or letter (as you specified in the forms) from Maldives Inland Revenue Authority to pick up your Tax registration certificate.
If you plan to use a corporate seal for your business activities, you will need to authorize it by submitting a Sole Proprietorship Seal Registration Application. Alternately, you can register a Logo and a Seal for your business via a Logo/Seal Registration Form. Refer to these forms for details of fees and the documents required for the process.
Find a collection of forms related to sole proprietorships for your reference.
Last and most importantly, have fun with your start up. I wish much success for your new business.
