Companies Office warns start-ups
Published:Sunday | March 20, 2011 | 12:00 AM
McPherse Thompson, Assistant Editor - Business
The Companies Office of Jamaica is going after some 2,000 start-ups and other small operators to immediately register their businesses or face prosecution and to act now before fee increases, ranging from 25 to 150 per cent, are implemented.
The move comes against the background of a decline in the registration of new businesses, despite ongoing public education, propelled primarily through field officers encouraging them to do so, says Heather Sutherland, attorney-at-law and compliance manager at the Companies Office.
Although Sutherland could not say how many companies in total are unregistered, the Companies Office estimates that about 80 per cent of small businesses, partnerships, and sole traders currently trading or offering services are not.
The agency is targeting those three groups in particular given that larger businesses are usually registered, she said.
More than 3,000 in operation
The Statistical Institute of Jamaica (STATIN) estimated in 2009 that there were some 3,456 small businesses operating in Jamaica. STATIN said the figure is based on statistics compiled by the Planning Institute of Jamaica (PIOJ) with information received from the Taxpayer Audit and Assessment Department based on GCT returns.
The Companies Office has adopted the criteria used by the PIOJ in identifying a small business and micro enterprise: a small business carries an asset base, excluding land and building, of US$10,000 - US$100,000 and an annual turnover of US$125,000 - US$1 million; micro enterprises carry an asset base not exceeding US$10,000, and a turnover not exceeding US$125,000 annually.
However, Sutherland said the Companies Office does not take those classifications into consideration when registering a business.
"We are primarily concerned with registration of all unregistered businesses irrespective of category," she said in her written response to questions posed by Sunday Business.
"Once you are operating a business, once you are trading or offering a service, you need to be registered under either a business name or as a company, but it's the owner who determines the best formulation for the business," she said.
As of April 4, the fee to register or renew registration as a sole trader, that is, a sole individual, will be increased from J$2,000 to J$2,500; the fee for partnerships comprising six to 20 persons will be increased by J$3,000 to J$5,000, and the fee to register or renew a trade name rises by J$500 to J$3,000.
Sutherland said the Companies Office expects to capture 2,000 small businesses, partnerships, and sole traders under the current drive, but there was no breakdown in terms of numbers among the categories.
One office only
Asked whether there are offices or other facilities outside of Kingston and St Andrew to facilitate registration, the compliance manager said they had only one office at Grenada Way, New Kingston.
Out-of-town registration is facilitated primarily through the Companies Office's mobile units which visit select parishes every month. In April, mobile units will be in Montego Bay, St James; Lucea in Hanover; and Savanna-la-Mar and Negril, Westmoreland.
In addition, the Companies Office has signed a memorandum of understanding with Jamaica Trade and Invest to facilitate registration through its Montego Bay offices.
Jamaica Business Development Corporation, a technical adviser and financier for small operators, also offers assistance with registration.
Registration forms are also available online.
Asked how many small business owners have been prosecuted for failing to register in the past few years, Sutherland said, "We have now embarked on enforcement of Section 12 (3) of the Registration of Business Names Act" as amended.
Under the act, three notices must be served and a grace period of a year allowed to the business owner following service of the final notice before action can be taken in the Supreme Court.
The attorney said that unregistered businesses were prohibited from advertising, and where they did, could be fined up to J$20,000, or imprisoned for three months.
Advertising for the purpose of the act refers to any form of communication put out by a firm, an individual, or trader to notify the public of the business of that person or the products of that business.
Sutherland, noting that all unregistered businesses advertise in one way or another, said it was common practice to publicise their products and services whether by way of signs, business cards, flyers, or other means, many of them being aware that given their status, it is a criminal offence to do so.
Moreover, she said, "If an unregistered business has brought action in the courts, they may not be able to obtain redress against someone if that person brings the fact of the business' unregistered status to the attention of the court and asks that the action be thrown out on that basis."