Starting a business is rarely a decision taken lightly; this big move to leave the otherwise easy paycheck of employment to embark on the adventure of marketing campaigns, accounting, budgeting, name choosing, paperwork and numerous tasks required to gain the satisfaction and independence of bringing your very own product or service to others takes time, patience, encouragement, confidence and risk.
Apart from designing a logo, building a website, branding your vehicle and finding a business location one of the most vital steps an entrepreneur will take when starting a new business is the legal process of licensing their business.
Here in the Cayman Islands we are fortunate to have a rather straight-forward and reliable business licensing process that is easy to understand and work through. There are two primary categories a business owner can license their local, Cayman Islands business as – the first is “Sole Trader” and the second option is “Registered Company”.
There are a number of differences and benefits to registering your business type under either of these categories. The fees for licensing each business type are the same regardless of the category a business owner utilizes. In addition to the traditional paper application submission, there is also a new online submission process which is extremely easy to use and very reliable.
The primary difference between a Sole Trader and a Registered Company business licensing application is that the the Sole Trader application is licensed under the name of an individual and the business’ licensed name which would appear on the license to be displayed would be something like “John Doe trading as (or T/A) ABC Company”.
This means that the individual to whom the business is licensed would be wholly responsible for any any debts or legal matters which arise during the course of operating the business – AND the business and its earnings can be called upon in matters relating to the personal finances of the individual to which it is licensed as well. Another thing to consider when choosing to register as a Sole Trader (especially if you are a parent who intends to leave your business to your children) is, what happens if the individual the business is licensed to passes away? There are several things to consider when choosing the Sole Trader method to licensing a business in the Cayman Islands, you can learn all about them here.
When licensing a business as a Registered Company, an individual (or group of individuals) would first register a legal entity to which the business would then be licensed – the name on the business license would appear something like “ABC Limited DBA [“Doing Business As”] XYZ Company”.
This legal entity would be in the form of a partnership or otherwise registered company. When a business owner opts for this method he or she separates their individual person from the operations of the business and creates a bit of protection for them and their business through this legal registered entity which holds its own identity and liability separately from the individuals who control it. This is the usual choice for larger businesses or businesses with numerous individuals who have a stake in the business. However, this route is highly recommended for any new business owner who is serious about making their business successful for many decades and perhaps many generations to come.
When deciding which category to register your business there are many things to consider; but ultimately in the Cayman Islands business owners are provided a safe and rewarding environment to bring business ideas to life once they have legally registered their new business locally.
Learn more about licensing a business in the Cayman Islands as a Sole Trader
Learn more about licensing a business in the Cayman Islands as a Registered Company – Subscribe to be notified when this post is added, scheduled for 16 June 2019!