Businesses in Bangladesh are booming right now. The country has experienced a steady GDP growth in recent years. Both The Government and The Non Profit Organizations have taken many initiatives to promote entrepreneurship in this country. So If you are an entrepreneur and starting a business in Bangladesh, the following information can help you through.
There are four ways you can operate a businesses in Bangladesh
However, in this article we will be covering the proprietorship, partnership and private limited company formations which will be the case for most startups.
Proprietorship: Proprietorship is the simplest form of business structure in Bangladesh. As long as you are 18 years old and a Bangladeshi citizen, you are allowed to be a sole proprietor of a business in Bangladesh. In order to get started first thing you need is a trade license from the local authority.
Trade License: A business trade license is issued by the city corporation if your business location is in big cities, otherwise it will be issued by the local union parishad. Following are the requirements to obtain a trade license as a proprietor.
Trade licenses are valid from 1st of July to 30th of June of a year and needs to be renewed every year. The government fees for trade license varies based on the business category you have selected. For most businesses the average cost of obtaining a trade license is around 10,000 -15,000 BDT and takes about a week to get.
Company Seal: A Company seal will be required with your name and proprietor written on the seal with a gap in between to put your signature. A company seal would cost you approximately 1,00 BDT for a rubber seal and an automatic seal would be around 5,00 BDT.
Tax Identification Number / TIN Certificate: Personal TIN certificate is used to operate a proprietorship businesses since it’s owned by just one person. If you don’t already have a TIN certificate, it can easily be obtained from NBR for free of charge. Make sure to have a mobile phone, as verification’s are done via SMS.
VAT Registration: Most businesses operating in Bangladesh are required register their business for VAT. VAT in Bangladesh is calculated based on business yearly turnover. As of now any businesses that have a turn over of less or equal to 30 Lacs, do not require to pay any VAT. Anything above 30 Lacs to 80 Lacs would be required to pay 3% of the yearly turn over. If your business turn over is above 80 Lacs, you will be required to pay 15% VAT on your yearly turnover.
VAT registration is completely free of charge but the process of obtaining a BIN (Business Identification Number) in order to pay VAT widely varies based on the type of business you are in. For most proprietorship businesses it would be pretty simple and will not take more then a week.
Partnership Company: If you are starting a business in Bangladesh and have more then one owners, still undecided on the paid up capital required for the business to grow, it is best to form a partnership company where the partnership agreement is registered through RJSC. In order to form a partnership company, it is best to seek legal help from a corporate lawyer who will draft the partnership agreement based on your partnership arrangements. Following are the requirements to form a partnership company.
It may take about 6-8 days to complete the registration. Once you have the RJSC registration certificate for your partnership company, you can then obtain other necessary documents your business may require to operate such as trade license, VAT registration etc. You can also later upgrade your company to a limited company if you wish to do so.
Private Limited Company: Most medium size companies in Bangladesh are registered as private limited company. Private limited company requires a minimum of two shareholders and as much as 50. There can be company directors from share holders or appointed, who will be actively involved in the business and shareholders who will not be involved in the business operation but entitled to receive profit from their investment in the business. Followings are the procedure to register a private limited company in Bangladesh
The government fees of registering a private limited company depends on the paid up capital of the business and can be calculated here. The whole process may take from 6 to 8 days. Once the company is registered, you will receive a certificate of incorporation, certified copy of MOA & AOA and Form XII which lists the directors of the company. You will then be able to obtain other necessary business documents such as trade licenses, VAT registration etc.
Public Limited Company: Public limited companies follow through the same procedure as private limited company, however in order to enlist your company in the stock market to offer IPO, your paid up capital must be above 15 Corer in BDT. SEC in Bangladesh is the governing body authorizes and monitors all the company that wants to go public. You will also be required to find an Investment Bank that you will work as a bond and underwrite your company shares.
Above are the basics of getting you started and form a company. Depending on the type of business you are in, you may require additional documents such as: