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Steps To Establish A Business in Botswana
In case you are considering starting or setting up a business in Botswana this article gives you the steps to take to complete the process.
Your business
To register a business in Botswana the Companies and Intellectual Property Authority (CIPA) is the designated authority to start and facilitate the process. You have to be 18 years old and above, or be a corporate entity, to register a company and business name; which can be facilitated by a shareholder, a director, a company secretary or authorized consultants.
Your business structure
There are two structures for businesses in Botswana – business names and companies.
A. Business Names
A business name gives an identity to your business. It is a trading style, the title to your business, a description under which you carry on your business. A business name is not an entity under law, but you its proprietor.
B. Companies (4 types)
When selecting a structure for a company it is important to consider some factors such as, the size of the operation, share of profit, liability, funding, ownership and accountability. According to the CIPA guidelines there are four company types to choose from when you establish one:
- Private company – formed with the aim of creating a profit, and has a maximum of 25 shareholders; does not offer shares to the public; the name ends with (Proprietary) Limited
- Public company – has an unlimited number of shareholders, usually listed with Botswana Stock Exchange; sells shares to the public; the name ends with Limited
- A close company – formed by 1-5 members only; each member makes an initial contribution; not expected to meet international financial reporting standard (IFRS) requirements but expected to keep books of accounts; name ends with ‘CC’
- A company limited by guarantee (typically used by NGOs, etc) – does not declare dividends or share profits among members; you should state its mandate, donors, projects being undertaken; any profit is to be used for the same objectives not earned for personal benefit
The 9 Steps to registering a business in Botswana
Currently there are 9 steps to follow when you establish a business in Botswana, reflected in an online country economy profile for Botswana entitled Doing Business 2020 by the DoingBusiness forum, a project of the World Bank.
Step 1
Reserve a unique company name
Duration: 3 days
Service charge: P20
Agency: CIPA
A new or prospective business searches the online database for Ministry of Trade and Industry to check if the desired company name is available for registration and use. If not there, the entrepreneur comes up with a name and submits it via the Name Reservation Form (Form 1) to the Registrar of Companies (CIPA) and expect to receive a notification within 3 days. Once the name is approved by the Registrar, the company name is reserved for a period of 30 days, for adoption of the reserved name during the period. If 30 days elapses without the entrepreneur registering/adopting the name the reservation falls off and the name becomes available for anyone who wants to reserve or use it.
Step 2
Declaration of compliance for Incorporation
Duration: 1 day,
Service charge: P0 (nil)
Agency: CIPA
The entrepreneur or company representative must submit:
- A limited liability company registration form (form 2)
- Declaration of compliance of statutory requirements (form 3)
Step 3
Registration of the company
Duration: 6-8 days
Service charge: P300 for registration application/P60 for certificate of incorporation
Agency: CIPA
The entrepreneur must submit a company registration application form, together with the name reservation certificate and the declaration of compliance for incorporation.
Step 4
Receive inspection of company premises
Duration: 7 days
Service charge: P0 (nil)
Agency: Industrial Affairs Department, Ministry of Trade and Industry
The company premises are inspected by health, environmental and town planning authorities, with no payment required from the entrepreneur.
Step 5
Obtain an industrial license or trade license
Duration: 3 weeks
Service charge: P50 for industrial license if applied by self/P1500 if applied by agent; P100 for trade license if applied by self/P2000 if applied by agent
Agencies: Industrial Affairs Department, and the City/Town Council
An entrepreneur may obtain their industrial license from the Industrial Affairs Department, and a trading license from a local city/town council.
Step 6
Open a bank account
Duration: 1 day
Service charge: P0 (nil)
Agency: any commercial bank
All new businesses must open a company account with a bank in order to register for a tax identification number.
Step 7
Obtain a tax identification number (TIN) from the Tax authority
Duration: 7 days
Service charge: no charge by self/P1500 by agent
Agency: Botswana Unified Revenue Service (BURS)
The new business applies for a tax identification number (TIN) using the BURS form. The business then completes a tax registration form to enroll in the employee withholding Pay-As-You-Earn tax (PAYE).
Step 8
Register for Value Added Tax (VAT)
Duration: 7 days
Service charge: no charge by self/P1500 by agent
Agency: Botswana Unified Revenue Service (BURS)
**(PS. This applies only to businesses with an expected P1,000,000 or more turnover as amended by the VAT (Amendment) Act of 2015)**
A new business registers for VAT in BURS if there is assurance that the business will meet or exceed the above-stated turnover threshold.
Step 9
Register employees for workplace injury insurance
Duration: 2 days
Service charge: P0 (nil)
Agency: any insurance company
Under the Workers’ Compensation Act, businesses must provide their employees with workplace injury insurance. Companies may choose to pay a security deposit to the Commissioner for any associated claims; however, most of them often purchase their own insurance.
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