If you’re considering registering a company in Pakistan, it’s important to be well-prepared before starting the process. Making an informed decision can save you time, and money, and prevent a potential failure. Before beginning your application, consider these ten important points. Remember, starting a business in Pakistan can be a long journey, so it’s essential to weigh the pros and cons carefully.
Profitable Industry/Sector to Register a Company in Pakistan
The industry or sector you want to do business in is the most important point to consider. Aren’t you looking for profits through your intended business? If the industry or sector you choose is not profitable you will waste your time, money, and efforts.
So, before doing anything to register a company in Pakistan, do proper market research to find where the profits are good and consistent. You can choose a market based on area, products, and delivery channels.
While you search for a profitable market, you must also evaluate the competition level, entry requirements, and capital required for smoothing start and scaling.
Investment You Need to Register a Company
If you have done your market research, the next step is to consider the amount of investment you want to bring in. You may start with a small amount or you may start with a big blast. But starting small and growing gradually would be a prudent approach. You should not push all the money at once. See if you can do good and then expand.
Type of Company
After deciding the market and the investment, you should now consider what type of company your should register. There a quite a few types of companies in Pakistan.
You can register a Single member company (SMC), a private limited company, or a public limited company. Your decision will be based on the number of persons who want to register a company in Pakistan.
If you are alone taking the challenge, an SMC would be a good option. In case you have partners to collaborate with, you may go for a private limited company. These options are for privately held equity.
However, if you have plans to go public, you should consider registering a public limited company from the very beginning. It will save you a lot of money, hassle, and time in conversion.
Name of the Company
Since your company will have a separate legal entity, it should have a name. You are free to choose or copy any name. But choosing a name by copying another’s name will put you in trouble, sooner or later.
So, you must choose a name that is unique and corresponds to the business of the company you are planning to register. For a suitable name for your company, you can use SECP Company Name Search. There are also some points that you should consider while choosing a name.
However, you must understand that only an SECP company name search may not be enough. Any other business with the same or similar name may be in the market, though in any other form of business like sole proprietorship, partnership, or LLP.
There is a possibility that the name you choose is registered by someone else as a trademark in Pakistan. If you choose a name that is already trademarked, you are making a fatal decision to take up that name. No one will allow you to get the benefit of his trademark, as it’s an asset that is built with years of hard work, nor should you.
So, before choosing a name for your company check if you can it as a trademark or not. You must conduct a trademark search also before choosing the name for your company. Don’t sleep over it, or else you will lose a lot.
Capital Structure of the Company
The next point you must consider before your register a company in Pakistan is the Capital structure of the company. The total capital of the company for which a company can issue shares is called “Authorized Capital” – also called Nominal Capital. When the company issues any shares to the members/shareholder that is called “Paid up Capital”.
At the time when you file your application to register a company, you will have to choose the amount of Authorized Capital with a value for each share. In addition, every person who signs the memorandum and articles of the company shall subscribe to a specific number of shares.
Your authorized Capital must be as per your business plans. If you want to do business with an amount of 10 million, your Authorized Capital must be 10 Million. It can be more and keeping in view the future expansion plan you must keep it even higher.
However, you can start with a lesser amount of Authorized Capital if you have financing opportunities to run or expand your company.
Licenses and Approvals
Though you are free to do any business in Pakistan by registering a company, however, not all businesses are easy to start. Certain business activities require a license. For example, banking, security services, or any kind of financing business requires a license from the relevant ministry/department.
So, before you register a company in Pakistan, you must check if the business you plan to do requires any license. This initial survey of licensing requirements will save you a lot of time.
Doing business is a legal activity and involves a lot of legal input from experts. Right from the beginning almost every step of your business operations would have legal implications.
You must check what labour/employment laws may apply to you. You must also have a fair idea about business laws to run your operations (especially when money is involved).
You must be aware of the laws that may apply to your business so that you do not indulge in any illegal activity. For a safe (risk-free) business, you must have a lawyer on board who can guide you through each step.
When you make money, the government gets a share. Like individuals, a company, being a legal person, has to pay taxes.
Before your register a company in Pakistan, you must consider the tax implications. You may be liable to income tax, sales tax, and other financial liabilities towards the local provincial, or federal government.
Having on board a tax consultant would be a wise approach who can advise you on bookkeeping practices, accounting, and tax for your company.
Lastly, you must consider compliance obligations related to your company. Every company may have compliance requirements; some may need a little compliance obligation and others may have to implement specialized compliance programs and appoint experts for compliance functions in the company.
Therefore, you must evaluate your compliance obligations before you register a company in Pakistan.
To sum up you must consider the different points discussed above before you take steps to register a company in Pakistan. In order to evaluate, you must engage with experts to get sound advice that will save you time, money, and hassle.