If you are thinking about starting a business in Sri Lanka, you had been shrewd to land with an arrangement and a touch of capital. Be that as it may, Sri Lanka has seen the rise of more new companies in the previous decade. The legislature has tried endeavors to empower exchange and business enterprise.
While setting up a company involves minor administrative hurdles, the process is quick and straightforward. Registration is best done in-person, not online. Here are some important tips for the potential entrepreneur in Sri Lanka.
What are the company options in Sri Lanka?
There are several types of business structures in Sri Lanka. These are:
- Sole Proprietorship
- Private Limited Company
- Public Limited Company
- Overseas Company
- Offshore Company
The structure of a sole proprietorship is similar in most countries. When you register as a sole trader, you’re taxed at a personal income rate. You’re responsible for all company obligations. This is the easiest and quickest business to set up. As a sole trader, you’ll still be able to employ other individuals.
In the event that a sole proprietorship is directed in a name other than the full name of its Owner, it is required to enroll. Enlistment center of the particular Provincial Council is the approved officer to enlist business names. The application shape required for the enrolment can be gathered from the workplace of the Divisional Secretariat. The Registration expense will be dictated by the individual Provincial Council inside the Authority was given to them. Further, it is required to present an application to enroll the business name within 14 days of beginning a sole proprietorship.
A registered partnership is similar to a sole proprietorship, but the ownership is shared. From a legal and tax perspective, all partners share the obligations of the company. Partnerships aren’t taxed as separate legal entities, so partners are subject to personal income rates.
Private Limited Company (PVT)
The Private Limited company is the most common type of business in Sri Lanka. If you are interested in registering a private limited company, you can read our previous post on I want to Register a Company in Sri Lanka. How do I Register Private Limited Company?
Public Limited Company (PLC)
A public limited company doesn’t require minimum share capital, either. This type of business is required to have two shareholders and two directors. Directors are required to file annual returns, along with audited accounts and financial statements. Shares are allowed to be issued on the stock exchange.
An overseas company can be foreign-owned and can serve as a branch. This type of company’s operations is defined by the parent company. The company must register with the Treasury and is subject to a 10% branch tax on profits. If you are interested in registering a private limited company, you can read our previous post Form an Overseas Company in Sri Lanka.
An offshore company can conduct business outside of Sri Lanka. However, it cannot conduct business within the country, but will still be registered there.
How do I register my company in Sri Lanka?
The process for registering a company in Sri Lanka is straightforward. On average, the entire process takes about ten days from start to finish.
Here are the steps by steps:
- Through the Registrar of Companies, you will need to search for and reserve your company name. This reservation will remain valid for three months. It costs 2,300 Sri Lankan rupees (LKR). Your registration will be confirmed within two days.
- Next, the company secretary and director must sign a consent form. This is done in person and only takes a day. If you don’t have a secretary in mind, local organizations will serve to provide a company secretary for a small annual fee (between 15,000 LKR and 25,000 LKR).
- Submit the following forms through the Registrar of Companies: Form 1 (Registration of a Company), Form 18 (Consent and Certificate of Director), Form 19 (Consent and Certificate of Secretary) and two copies of your Articles of Association. This process is typically completed within 3 days. The cost is a flat fee of 4,000 LKR for Form 1, plus a flat fee of LKR 2,000 plus 15% VAT for each of the other forms.
- Give public notice of your company’s incorporation at the Daily Newspapers and Government Publication Bureau. You must give this notice within 60 days of incorporating, and the newspaper will publish your notice within two weeks. It will cost LKR 7,500.
- Obtain a Tax Identification Number (TIN) from the Taxpayer Services Unit of the Inland Revenue Department. There’s no charge and it takes one day. This must be done in person.
- If applicable, register for Value Added Tax (VAT) with the VAT Registration Branch of the Inland Revenue Department. It takes one day and there’s no cost. If you turn over more than 3,000,000 LKR per quarter you may obtain permanent VAT registration.
- Obtain an (EFP) Number from the Department of Labour. Companies register here in order to pay gratuities to employees of more than five years through Sri Lanka’s Central Bank. This takes one day and there’s no cost.
As this is all best done in bookers.lk, and if you need to register a Private Limited company in Sri Lankan, you’ll get the best deal with bookers.lk.
What if I need more help setting up my business?
There are many public bureaus, private companies, and documentation available to assist entrepreneurs in Sri Lanka. There’s also a robust entrepreneur community within the country. Here are some of your options:
- The Sri Lankan Central Bank has created a guide for entrepreneurs. They walk you step-by-step through the process of setting up a business in the country. You can also explore their website for general articles about transacting business within Sri Lanka.
- The Sri Lankan Government Information Centre will guide you through the registration process for each type of company if you get stuck.
- The Sri Lankan Department of Labour can educate you on labour legislation, statistical information, important forms, current events and news.
- If you’re willing to pay a little bit, bookers.lk will work with you to sort out your needs, provide you with company secretary and answer any questions you may have.
Now you’re at a great starting point to make sure your Sri Lankan business is a roaring success.