How Uganda’s SMEs can register a business

Starting a business in Uganda can begin with something as simple as selling a product to a few customers. The paperwork often comes later. But as the business grows, being formally registered can become important. Bigger customers may ask for company documents. Banks may want to see formal business information when an owner applies for finance. Some tenders and supplier agreements also require a registered business. For SMEs that want to move into that market, registration is one of the things they eventually have to deal with. In Uganda, the process is handled by the Uganda Registration Services Bureau (URSB).

It starts with the business name

The first step is deciding what the business will be called and checking whether that name is available. URSB charges UGX35,000 to reserve a business name. Registering the name costs a further UGX55,000. That is something worth checking before spending money on branding. An SME that has already printed packaging, put up signs and created marketing material may have to change all of that if the name cannot be registered.

Business name or company?

Not every small business needs to start as a company. Someone running a business on their own may choose to register a business name. A company may make more sense where there are several owners, shareholders or plans to bring in investors. URSB provides registration services for both business names and companies through its online platform. The decision should come down to how the business is being run and where the owner expects it to go.

What it costs

The registration fees are relatively straightforward. URSB currently charges:

• UGX35,000 to reserve a business name
• UGX55,000 to register a business name
• UGX35,000 to reserve a company name
• UGX105,000 to register a company with nominal share capital of up to UGX5 million

Company registration fees increase for businesses with higher nominal share capital. These are not the only costs an SME may face. Depending on the industry, there may be other licences, permits and fees to deal with. URSB has an online registration system where entrepreneurs can search names, reserve them and register business entities. The owner will need to provide information about the business and, depending on the structure, its owners, partners or directors. Having this information ready can make the process easier. For an SME owner who is doing everything themselves, knowing exactly what is needed before starting the application can also save a few trips and delays.

Registration does not cover tax

Once the business is registered, there is still the tax side to deal with. The Uganda Revenue Authority (URA) handles tax registration and administration. What an SME needs to register for depends on the business and how it is structured. This is also where keeping proper records becomes important. An owner should be able to separate business income from personal money and keep track of sales, expenses and other transactions. For a very small business selling directly to customers, registration may not seem urgent. The situation changes when the business starts looking for larger customers. A small manufacturer may want to supply a supermarket. A construction company may want to work as a subcontractor. A technology startup may want to sign its first corporate client. In these situations, the customer may ask for proof that the business is registered. The same can apply when an SME approaches a bank or other lender. Registration does not mean the business will automatically get funding or win a contract. It simply puts the business in a position to apply when those opportunities come up.

There may be more paperwork depending on the business

An SME also needs to look beyond URSB. A retailer, restaurant, transport company and financial-services business will not all have the same requirements. Some businesses may need additional licences or approvals before they can operate. That means an entrepreneur should check the rules that apply to their particular industry rather than assuming that a registration certificate is all they need.

There is no single point at which every small business in Uganda has to formalise. Some owners may register from the beginning. Others may do it after the business has found its customers and started generating steady income. What tends to push the issue higher up the list is growth. Once an SME wants to work with larger companies, apply for certain types of finance, hire more people or bid for contracts, formal registration becomes harder to ignore. For the owner, the decision is therefore not just about getting a certificate. It is about deciding what kind of business they are building and making sure the registration matches it.