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Why Is It Important To Register Your Business?

Updated on August 11, 2017

When you are busy running your business and you have no free time, managing your permits and business license can be a bit of a pain in the head. But many of you know that registering your business can be fun. How? Well first because when you register your business, you are officially a business now, and thinking that your business that you have built from your hard work and sweat is now legal and registered is a fulfilling feeling. Secondly, registering your business can get you a bit of experience in terms of managing your business on the government side. But few entrepreneurs often forget that this part of their business journey is important. It is one of the most common mistakes of new entrepreneurs.

Most of all you cannot operate a business if you do not have a license, whether it is local, country or worldwide. Each of this has some sort of requirements, which will depend on the kind of business you have or that nature of your business.

Why is registering a business truly important?

A Quick Question

If you are just starting as a business, what would you choose?

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It is better to have a low-income legal business than having a high income generating business.

It is better to have a low-income generating business than a high-income generating business. What I mean by that is it is better not to be rich that to be illegal. Have you heard of imitations? It is the perfect replica of original products, in other words, "Fake". Piracy is spread throughout the world, and people dig it, why? Because fake products are cheap and cheap people want cheap products. What they don't understand is a certain someone has worked all through his life to produce a high quality and amazing product to serve people. It is great if we could repay him by purchasing his or her products if we want it or can help us in a certain way. But if you buy fake, you did not help, instead, you are stealing, and you are stealing the profits of that company.

By registering your business, you can have the legal rights to complain if someone stole or replicate your idea or products, moreover, you cannot fake or replicate if you are a registered legal business.

When you are not legal, you cannot get investors to invest in you.

An investor can invest in you if you are registered because they are sure that you are not some entity that is created just for fun, instead, you will be perceived as a serious business, and if your products or service is good, they may fund your business. But if you are not a registered business, no matter how good your product or service, if you are not legal, an investor will certainly not invest in you. They need proof that you are not just doing this because you want or for fun. They will invest their money and time for you; their hard earned money is carefully protected so choosing a business to invest in for them is needed to be secure.


When you are a registered business you can get clients and partners pretty easily. It tells them that you are not just here for fun; it tells them that you are here for the long term. You are here because you are serious. It can get your customer to trust you; they will feel secure about you. Having your business legalized will help you convert more customers; therefore, you can get more sales.

It is also related to investors investing in you, having your business registered will make your business look professional, so investors will be attracted to invest in you. Having that professional look will certainly help you in the long run. Instead of just sticking to the illegal side because you don't want to pay taxes, you can get more by having your business face people that will be attracted to your business and if you are lucky they may find a way to be a part of your journey by investing in your business.

You can have a separate bank account

I did not know this at first but separating your business life from your personal life is important not for the business, but for you. By you having a registered legal business, you can have a different bank account from your personal one. Having that, you can separate your personal money from your business money; therefore, you can manage better your business.

Also, if you have a separate account, if your clients made a direct bank transfer to pay your services or products, they do not need to see your name when paying. They can see the name of your business, therefore, making you look more professional and serious which increases the probability of investors investing in your business.

Now in order for you to create a bank account for your business, you need to have a legal entity, a registered business. Also, if your business goes south or fails, you do not have to lose any of your personal saving to pay the debt you owe.

You can hire employees

Anyone who has business wants to have his or her business succeed. Who doesn't want a big business? Having a successful business means that you have succeeded as an entrepreneur, but you can't build a business if you don't have employees, and in order for you to hire employees you need to be a registered, legal entity. Having that, you can build your business. If you want to build a big business you need to have many employees, thousands of employees. You can build a big business just by yourself, so, therefore, you need to hire employees. One of the many mistakes of an entrepreneur is they leave the business registration last. But as many successful entrepreneurs say, you do not feel the need of hiring an employee until you desperately need one. It's not that easy because hiring an employee is critical to the success of your business, so you need to be sure that when you hire, that person is perfectly fitted to the need of the business. If you hire and don't seriously think about it because you desperately need one, you are risking the business that you are building.

Get loans

You can get loans if you are a registered business. Banks don't just make loans; they needed to be sure because we are talking about money here. Not that money is so important that banks needed to be perfectly sure, but they needed proof that you have the guts to make your company successful and therefore can pay a loan. They will not see that if you are an illegal entity. That’s why it is important to have your business registered.

Supplier discounts

If you are a registered business, this will make you eligible to make agreements to suppliers. Having agreements to suppliers is critical because you can get huge discounts when you order supplies. It will not only help you lower the cost of your products or service because of the discounts but it will help you make your business successful because it can earn more profit. Suppliers most commonly reserve the whole sale for those who are a registered entity who can show legal papers from the state. Also, it is important because if you plan to get a government contract for your business, that official paper work is required by the government.

That’s why having your business be registered is important because it is a critical part of whether your business will succeed or fails.

Watch this video about when should you register your company?


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