In Pakistan where most of the businesses are unregistered investors are mostly concerned about the need of company registration and whether registration of company can make their business operations more complex than running the business without any registration.
Considering the business conditions in Pakistan, role of Income tax department and other regulatory authorities it is most suggested that the business should be registered and that too preferably as Private Limited Company.
First of all registration of business as Private Limited company is simplest and it is quite cost effective option as well. Secondly when the business is registered as Private Limited Company that means that the liability of the business is limited only to the extent of the amount of paid up share capital.
Another important factor for registration is that successful businesses often need loans from Banks for various contracts and other matters. Therefore Banks and other financial institutions prefer to work if the business is properly registered and working as a corporate entity, Accounts are well prepared and management is done efficiently.
Another factor is often the black mailing powers of income tax department in countries like Pakistan whereby unregistered businesses are often under threat from such departments and are a prime source of bribe for these institutions. Therefore it is quite recommendable that the business should be properly registered and all other compliances are properly met.
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