Ted Hickman

Why You Need to Formally Register Your Business

Entrepreneurs with business ideas have it a lot easier these days, because getting into some major business can be as easy as setting up a website and then just working (very hard) to make sure it stands out above the millions of competitors. I mean look at something like drop-shipping – if you’re successful at it, you basically have a global e-commerce operation running out of your bedroom, but it’s not as easy as that. That’s perhaps a discussion for another day though, because today it’s all about why people insist on formally registering their businesses, even though it’s easy enough to operate “from the boot of their cars,” as a manner of saying…


There was a time when registering a business formally didn’t do that much more for the credibility of your operation, simply because it became all about just being able to showcase the quality of your work. If you were something like an SEO agency for instance, landing new clients who have to choose between you and a formally registered SEO company wouldn’t be an issue if you could point to some of your previous work that has had you successfully landing clients high in the search engine rankings.

But now things appear to have changed again and a certain bit of “normalisation” seems to have occurred. Because of the huge outsourcing bubble model driving most businesses these days, formal registration comes right back to account for it. A company with its own staff and payroll is less likely to be running off the backs of outsourced freelancers.

Legal implications

If there is only one reason you’re going to choose to justify the formal registration of your business, let it be the legal implications. When you register a business formally, you’re essentially creating a whole new “person” whose legal obligations are separated from you as an individual. So unless there are specific cases in which you took up guarantor insurance or something akin to that, if for instance your business goes bust and owes some money, your personal assets cannot be attached to the business to pay them off.

The same applies for liability in terms of incidents such as on site injuries. You won’t be personally liable, but the business will.

Indexing and listing advantages

Formally registered business can take advantage of some marketing and visibility mechanisms which sole traders and freelancers can’t, such as how Google has an indexing mechanism for local businesses. As a result, you can get discovered better when people simply use features and apps such as Google Maps when they roll into your area.

Compliance matters

If you harbour any ambitions of getting funding from the likes of the government or even some private sector funders, having a formally registered business is somewhat mandatory. It’s just a matter of the associated management elements making it that much easier to move forward with the ground-level operations. I.e. there has to be a set of standards governing the accounting, bookkeeping, reporting, expansion, decision-making etc.

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