10 Reasons to Legalize Your Business or Non-Profit Organization

In the Haitian context, this is indeed a controversial subject but deserves some attention and perspective. We all know that the Haitian economy is more informal than formal for many reasons: lack of education for citizens, lack of infrastructure on the state side, insufficient information, problematic service and customer service in State offices which leaves room to criticize, without forgetting the phenomenon of corruption.

These facts should not, however, be a discouraging factor when it comes to legalize your business, or a non-profit organization. Uninformed people make bad decisions, and for this reason you should know before you formalize, which legal business type is appropriate according to your expectations, your aspirations, your financial conditions, the agreement if necessary, that there is between you and your associates and colleagues. This also includes shareholders in the case of a public limited company).

Here are ten (10) reasons for legalizing your activities in Haiti. This should encourage anyone to put their hands in the paw and decide to go ahead with registration, in order to develop, grow or make fruit whatever the idea. This may contribute to the creation of wealth, to the reduction of poverty, and to the fall in the unemployment rate:

1- Ability to Open a Bank Account in the Name of Your Company or Organization

It’s not something new, but the fact that you didn’t think about it at the start makes it new. Once your business is legally registered, you can open a bank account. However, we advise you to make sure that you have enough transactions that will be generated on this bank account. Otherwise, you will end up paying monthly fees for nothing. That is to say, your availability will be deducted even when you have not had any transactions during the month. What every entrepreneur hates is having to pay for a service they don’t even use.

Finally, you should know that each banking institution has their own tariff (application fees, service fees, account management fees etc.).

2- Reduce the Risk of Theft from the Company’s Bank Account

Now that you have obtained your certificate of recognition and your operating license, you have a bank account in the name of the company or in the name of the organization you represent. This should encourage you to have your deposits (sales made) or make your payments by check or online transfer. By this approach you will reduce the risk of theft or robbery.

3- Presenting your Company During an Interview at the Embassy 

It is a fortuitous fact that someone who wishes to obtain a visa most of the time (American, Canadian, French etc.) learns that he should have thought of presenting his business or his gainful activity (for nonprofit too) in order to increase their chances of obtaining this visa since the type of profile refers to the type of person who produces (tangible or intangible) goods/ services for their community.

4- Dealing with large institutions, especially the government

In Haiti, for many young Haitians, as soon as  they receive an invitation from a well-known institution to send proposals (quote / pro-forma), they quickly discover that they need a bank account under the name of the activity they are undertaking in order to withdraw money from the institution.  Many entrepreneurs do not know is that institutions will not sign any checks under the name of a natural person. This is often the case for small or medium-sized enterprises which, transacting with the government, are quickly obliged under a whim to legalize their activities. Because without a patent, there is no contract.

5- Entrepreneurship Programs such as YLAI, BEL Initiative of the Georgia Haitian-American Chamber of Commerce, Hultz Prize among others

This is one of the things you really need to be ready for. Participating in several contests gives you the opportunity to test your business model and see how far your startup is capable of going. It also gives you the chance to gain new customers, new partners, and be part of new entrepreneurial communities. Apart from that, when you’ve already formalized, it gives your business more opportunities. In other words, your startup may be ready for potential investors if you attracted their interest thanks to the program in which you participated. Finally, you will certainly be taken more seriously by the managers of the competitions mentioned above.

6- Benefit from Supporting Programs

When your institution or business is formalized, you are more likely to benefit from financial and entrepreneurial training programs. People are ready to support you because at least you make them feel like you are taking what you do seriously, and want to stand out from the crowd.

7- Insure you in Case of Vandalism

Recognition from the tax authorities allows you to report your situation in the event of loss or breakage (theft). You can make a statement, by a justice of the peace. In addition, if you (the company) have been insured you may be compensated by the insurance company. Faced with an unstable and risky environment, it is better to ensure that the company is certified and above all, if you have the means, be insured by a company.

8- To protect your trademark

Let’s take the case where you have a product that sells very well and whose name also sounds pretty good to your consumers. It would be wise to consider registering this mark on behalf of your business. This is even more urgent if you are sole proprietor (still informal) and have started your operations under a trade name not yet registered / verified with the Ministry of Trade and Industry (MCI). So don’t waste your time, go protect this name or trademark that is so original and important to you. Take some time for this. Growing Your Business Initiative (GBI) can also support you in this work.

9- Protect your finances and Personal Property from Creditors and other Potential Risks

We talked about the legal form that you will choose before starting the legalization process. Note that for a sole proprietorship, the identity of the company corresponds to that of the manager, which means that the owner’s personal property merges with that of his business. In other words, creditors can demand accountability from the owner directly. For a general or limited partnership, the partners indicated in the constitutive act are all united for all the commitments of the company. This implies that creditors in the event that this company is unable to settle all of its debts, may require partners to intervene directly to settle the bill. For a public limited company (S.A), it differs from SCS (Société en Commandite Simple) or SNC (Société en Nom Collectif), by its governance which is suitable for large accounts and companies wishing to go public. With this legal form, the shareholders’ own properties are fully protected and distinctive from that of their company.

10- This forces you to discipline yourself

Any activity carried out by someone who really wants to succeed requires concentration, determination, discipline. Most of the time when you have an income-generating activity or informal non-profit organization, the tendency to be uninterested in getting your business in order is constantly present. If you have a personal problem, you have the reflex to draw money out of the business (ti kès biznis lan) to meet the needs of money for your family, your children.

We are aware before formalizing, it is best to be sure that you are able to generate cash, and that your product or service has a real market. On the other hand, we believe that all citizens must be aware of any type of information that could help them make better and more objective decisions when it comes to managing and developing their commercial or non-profit activities. For a society, this will lead to a more dynamic and responsible youth.

Author bio: Since 2010, Hans Michel Beaugelus has been working to strengthen Haitian startups through EAPES (Entrepreneurs in Action for Economic and Social Progress). He founded and participated in various startups such as GBI, Caravane Entrepreneriat Scolaire (CES), the Haiti Business Shower concept and recently launched the Lonbrit platform which is revolutionizing how people organize events. Hans is also a contributor to the “Biznis Dekole” magazine.