Starting a new business, or moving your current one, to a new country can feel like a daunting prospect. Fortunately, starting up a business in Barbados is relatively simple, especially if you are well informed and prepared.
This country has a history of stable economic performance. Moreover, the Government of Barbados has refined its legislation so that foreign investors can establish an international business entity easily and enjoy maximum returns.Invest Barbados (IB) is a government agency that has been entrusted with the task of landing foreign investments. This agency offers a range of facilities and services to foreign investors who are looking to start up their business in the country.
Thorough knowledge of running a business in the US will help to a great extent, as the organizational formations of both nations are very similar. Below are five essential points you need to think about if you want to run your own business in Barbados.
Choosing your line of business
In the current economic setting, there are four main sectors that rake in the maximum foreign exchange earnings. These are tourism, agriculture, manufacturing and international business services. The main sectors that contribute to the country’s GDP include retail trade, wholesale trade, tourism and government services.
Tourism is one of the main economy drivers in Barbados. Most foreigners who are setting up a small business open up bars, cafes, clubs, retail shops, travel agencies, estate agencies and art galleries to attract tourists and other expats.
Determining the type of company and name that you want to register
Depending on the nature of business you run as well as the product/service you are offering, you’ll need to register your company as a corporation or a limited liability firm.
Business liabilities are transferred to the owner and partners of a company. It is therefore beneficial to run a corporation because it creates a separate legal entity and thereby decreases the liability of the shareholders.
Foreign investors can also choose to operate under the International Business Company (IBC) status. This status is common among offshore operations in Barbados. IBC licenses are generally granted to companies that participate in international trade, commerce or manufacturing. The core activities of the company should take place in Barbados while the exports go to nations that are outside of the Caribbean trade area.
Alternately, you could apply for a Business Name Registration Form, which costs only about US$ 20 or so. Submit your request for Name Search and Name Reservation form to the Corporate Affairs and Intellectual Property office to look for and reserve company names. This can also be done online, through the Form 33. In this form, you will need to suggest 3 names in order of preference. The registrar will check if these names are available before returning the form to you with a check mark on the available name. The entire procedure takes no more than three working days and this reservation will be valid for about 90 days
The approximate cost for incorporating a business in Barbados is US$ 150 to US$ 200.
Drafting the Articles of Association (or Articles of Incorporation)
The standard form for the Articles of Incorporation can be downloaded by anyone through the company registrar’s website. However, it is recommended that a lawyer be hired for drafting the Articles. The filled form is then submitted to the registrar along with:
– The notice of directors
– The notice of address
– The notice of secretary appointment
Once all the documents are submitted, the registrar of Corporate Affairs files the application along with the Articles. A Company Number is also assigned to that file, which will be included in the Articles as well as the Certificate of Incorporation.
The entire procedure should take around 15 to 20 working days and costs approximately US$ 1200. The fees are paid at the same time and location but at a separate counter.
Registering for Income Tax, Customs and Excise duties
All companies in Barbados have to register for Income Tax with the Inland Revenue Department. The documents required include the CIT Registration Form, the Articles of Association copy and the Certificate of Incorporation.
It is also mandatory to submit the VAT Registration Form along with a copy of the Certificate of Incorporation to the VAT Division of the Customs and Excise Department.
Barbados is an excellent location for investors to reduce processing and manufacturing costs, as they take advantage of the duty free options. Some of the other advantages of establishing a business in Barbados include:
– Exemption from import duties
– 10-year tax holidays (and 2.5% tax rate thereafter)
– Full repatriation of profits, dividend and capital
– Free consulting services offered by the Barbados Investment and Developing Corporation (BIDC)
For additional information on the advantages of running different kinds of businesses in Barbados, log on to www.barbados.org
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