How to register a individual business in Sri Lanka | Sole proprietorship | Small business

How do I register a single owner business in Sri Lanka ?

Step 1 – Obtain the Relevant Forms from Your Provincial Council – Department of Business Names Registration

Visit the provincial council based on your residential address and inform them of your intention to register a sole proprietorship business. You can register the business using your own name or opt for a fictitious name, which facilitates brand-building.

Step 2 – Submit the Completed Grama Niladhari Report and Other Applications.

Complete the registration form and obtain a report from Grama Niladhari. Submit these documents, along with the necessary registration fees, to the provincial council. Additionally, include the following documents:

• A copy of your National Identity Card (NIC)
• Ownership documents of the business premises (choose one):
  
  • Deed to prove ownership
  • Lease agreement if the premises are rented
  • Consent letter if the premises are owned by someone else who has given permission for business operations
  • Varipanam assessment notice
  • Affidavit confirming the initial capital of the business

For certain business types, additional documents are required. Please provide the relevant documents if your business falls into any of the following categories:

• Ayurvedic-related dispensary, hospital, storage, planting, and manufacturing: Provincial Ayurvedic Commissioner’s certification
• Gems and jewelry-related: Recommendation from the Gem and Jewelry Authority in Sri Lanka
• Vocational businesses: Certifications received from a recognized institution or authority
• Tobacco-related business: Recommendation from the Excise Department of Sri Lanka
• Pharmacy: Certification from the Sri Lanka Medical Council
• Consultancy: Certificates related to your consultancy practice
• Nursery: Recommendation from the Provincial Nursery Director
• Daycare centers: Recommendation from an Early Childhood Development Assistant employed in the relevant divisional secretariat
• Gas station: Recommendations from the Central Environment Authority and the Ceylon Petroleum Corporation
• Polythene, paint, plastic, and acid-related business: Recommendation from the Central Environment Authority
• Wood-related business: Recommendation from the Forest Department
• Printing business: Recommendation from the Department of National Archives
• Rooms, guest houses, spas: Reports from the Police division and Divisional Secretariat
• Animal farms: Recommendation from the District Veterinarian
• Food-related business: Recommendation from the Public Health Inspector
• Pesticides and fertilizer-related business: Recommendation from the Department of Agriculture
• Agency or distribution business: Certification from the relevant agency

Step 3 – Obtain the Certificate of Registration of Business Name.

After submitting all the necessary documents and paying the required fees, the Divisional Secretary will issue a Certificate of Registration of Business Name. Display this certificate prominently at your business premises.

Advantages of Individual Business Registration in Sri Lanka:

1. Simple Registration and Maintenance: Registering your business as an individual is a straightforward process that can be completed in three easy steps.
2. Full Profit Retention: As the sole owner, you retain all the profits generated by your business since there are no other owners or stakeholders involved.
3. Decision-Making Autonomy: Registering as an individual business owner grants you the freedom to make independent decisions without any interference or influence from others.
4. Ideal Starting Point: Many large corporations started as small individual businesses. Therefore, individual business registration in Sri Lanka provides an excellent opportunity for local entrepreneurs to quickly establish their businesses without undergoing lengthy registration procedures.

Disadvantages of Individual Business Registration in Sri Lanka:

1. Unlimited Liability to Creditors: As the sole proprietor, you are legally responsible for all business debts and obligations. If your business fails to repay a creditor, they can pursue your personal assets, such as homes or vehicles, to settle the debt.
2. Limited Funding Options: As the sole owner, you cannot raise capital by issuing shares or involving other individuals in your business. Consequently, your financing options are restricted, often relying on loans. However, obtaining loans for individual businesses without significant collateral can be challenging in Sri Lanka.
3. Limited Business Duration and Credibility: Individual businesses are directly tied to the lifespan of the owner. If the owner passes away, the business ceases to operate, potentially affecting the trust and confidence of consumers and investors. In contrast, private limited businesses without a specific duration inspire greater trust, ensuring continuity even in the absence of the owner.
4. Lack of Expertise in Decision-Making: While independent decision-making offers flexibility, the absence of knowledgeable advisors can increase the risk of making incorrect decisions. In industries requiring specialized expertise, the lack of technical knowledge may lead to unfavorable outcomes for your business

Conclusion:

By opting for individual business registration in Sri Lanka, you can benefit from a simplified process, decision-making autonomy, and the potential for rapid business growth. However, it is essential to consider the unlimited liability, limited funding options, credibility concerns, and the need for expert guidance in decision-making. By following the outlined step-by-step process, you can successfully register your individual business and embark on your entrepreneurial journey.