Starting A New Business – What Should I Do?
Business Names Registration
Are you thinking of starting a new business? The very first thing to do is to think of possible names for your business—advisably about four. You then go to the Office of the Administrator and Registrar General at Roxy Building, Walpole Street to have one of these names registered.
At the Administrator and Registrar General’s Office a search is made of the suggested names for the business to clarify that somebody else had not registered that trade name. The reason we had suggested having about four options is that very likely some of the names you might have thought of would have already been a registered trade name of someone else and so you could not use it.
When a name for the business has been cleared you then buy a Business Names Registration Form which you complete and submit to have that name registered.
After it has been registered, you then purchase a Business Registration Form A at the Administrator and Registrar General’s Office.
You complete the Business Registration Form A and make two copies which you take to your Income Tax District Office with a means of identification to have a Written Statement issued, which will enable you to register and license your business. Your Income Tax District Office will depend on the location of your business:
- If your proposed business is housed from St John to York , your tax office is Freetown West situated at 148 Wilkinson Road.
- If your proposed business is located between St. John and P. Z. Roundabout including the Mountain Districts, your tax office is Freetown Central situated at 29A Percival Street.
- If your proposed business is to be found from P. Z. Roundabout to Kent Village, your tax office is Freetown East situated at 30 Howe Street.
At the Tax Office you will be interviewed by a tax official to enable him/her determine your chargeable business income and turnover for a period of twelve months so as to raise a provisional assessment on your business. At the start of all ensuing years you are in business, you must submit an estimate of your turnover and chargeable business income on or before the 31st January for the forthcoming year for you to be provisionally assessed on your estimates. You will be registered for various taxes provided you fulfill the criteria required.
What is turnover? What is chargeable business income?
Turnover is your total sales for a tax year. It includes all receipts, fees, commissions and interests. It does not however include rent except your business is that of renting and letting of properties. For tax purposes, chargeable business income simply put is your profit. It is your assessable income less allowable expenses incurred to derive that income.
Do things seem hazy ? Where can you go for advice?
You could go to an accountant although this is not mandatory. It is advisable however to have someone guide you on financial matters. An accountant can draw up your accounts, assist you to fill and file your tax returns and claim relief you are entitled to. Accounts presented to the tax office are usually in two parts:
- The Profit and Loss Account which is a summary of the year’s trading transactions.
- The Balance Sheet which shows the assets and liabilities of the business.
It is a must that you keep full and accurate records from the start. You need to do this whether you draw up the accounts yourself, or have an accountant do it for you. It is important for you to remember that figures which are contained in your accounts and tax returns must be correct. As a matter of fact the Sierra Leone tax system is a self- assessing system as the tax levied would depend upon your declared expected turnover and chargeable business income. It is a serious offense to understate your profits deliberately. If you fail to keep proper records to produce proper accounts, your tax is based on an estimate of your business activity and the tax could be higher than need be. It is therefore in your best interest to keep accurate records. For tax issues, you can go to any of our tax offices for advice.
Now you are in business – what else?
Now you are in business, do you have any employees? If you do you have to inform the Tax Office about the number of employees and their salaries and allowances as you should pay their PAYE tax withheld from their salaries. Please note that all PAYE tax withheld must be paid on or before the 15th of the month following in which it was withheld.
Things to Remember.
- To pay your quarterly installment in your Provisional Assessment on or before the due dates.
- If you believe your initial projection of the turnover or profit was high/low to revise it on the 4th and 10th month of your tax year and inform the Commissioner -General immediately in writing, through the Commissioner Domestic Tax.
- To pay the PAYE withheld from the salaries of your employees on or before the 15th of the following month.
- To file your Income Tax Returns not later than 120 days after the end of your accounting period.
- To submit your forecast of your business’ chargeable income and turnover on or before 31st January each year.