"I have a business idea and wanted to make sure that I'm on the right track to get it started," said Mrs. Jean Brathwaite to us, when she met with our team one day.
"I was told that I should speak with you guys before making my next move," she informed us.
"We applaud you, Mrs. Braithwaite for coming to us at this phase of your business plans," we said with a smile. "Most people don't even stop to design their structural framework that underpins and support their business rollout."
What are we talking about here?
Well, it's great to have most of your funding and staff hiring processes identified among other key aspects of your business plans but there are other foundational structures that will need to be put in place immediately.
These are centered around the need to ensure that your business is compliant with the business regulations within Barbados.
Here are a few that we shared with Mrs. Brathwaite to consider.
1. Determine the legal structure that suits your business risk, such as the formation of your business as either a sole proprietor, partnership or incorporated company.
2. If you're hiring staff, make sure you seek advice on things like, how to prepare employment letters; understanding the various Employment Acts, like the Holiday with Pay Act and the Employment Rights Act, among others. These will ensure that you are compliant with the employment legal requirements.
3. Record keeping is critical to your business. It accounts for the financial transactions of your business' activities. These in turn result in the compilation of your financial reports which are used primarily for your financial review and forward planning. The secondary use of the financial reports is to be compliant with the reporting requirements to the Barbados Revenue Authority. It's a myth that you only need to report or 'file a tax return' if you've 'made a profit'. No. It's about reporting as a compliant requirement.
4. Reporting to the National Insurance office is another statutory compliant requirement. This comprise providing documentation of monies deducted from your employees' wages or salaries including your employer's corresponding portion of levies. Payment of these deductions and levies must be paid into the department on time to avoid any penalties.
5. Another statutory reporting requirement to the Barbados Revenue Authority, using their Tax Administration Management Information System (TAMIS), is that of income tax deducted from your employees’ pay and collected by the employer. All deductions must be remitted to the department on time in order to be compliant.
6. From income year 2015, the Corporate Affairs and Intellectual Property Office started to enforce an already established requirement, stating that all incorporated companies (except external companies) report certain legal and financial information on their annual returns within a specific timeframe along with the associated fee. Failure to report on time resulted in penalties of $10 per day for each day the filing was outstanding up to a maximum, at that time, of $3,650 per year! Fast forward to income year 2019 and onwards; the maximum penalty is $3,000 for each outstanding year. Most companies don't even know of this compliant requirement and even those that know, often miss their deadline.
7. Here's one more. If you are registered for Value Added Tax (VAT) which means that you can charge VAT on the goods and services you provide and similarly you can claim VAT on the goods and services that you purchase from VAT registrants, you must comply with the Barbados Revenue Authority's reporting requirements. That is, file a VAT report and return once every two months while you're a VAT registrant. That is, even if your business is not buying or selling anything. To cease reporting you must de-register or else you'll pay penalties for non-compliance.
Well, during our 30 minutes, Mrs. Braithwaite was sitting there soaking in all of this in amazement!
And we recall her saying: "I didn't know all of these were compliant requirements with seemingly severe and costly penalties for non-compliance! I'm really glad I took the advice and stopped by to chat with you all."
Mrs. Braithwaite is now armed with the information from us as to what else she needs to sort out in order to be structurally ready for getting her business pillars in order.
Please do not do this on your own or Google it as a means of DIY. Find the right person(s) to advise and guide you along this phase of your business journey! It could cost you more than you think if you don’t.