Opting for formality when creating a business has several significant benefits that impact both the entrepreneur and the economic environment. Here are some key reasons why it is important:
- Access to Financing: Formal companies have an easier time accessing loans and financing. Financial institutions and investors often prefer to work with formal businesses that comply with regulations and present transparent financial statements.
- Legal Protection: Formality provides legal protection to the entrepreneur and his business. Establishing an appropriate legal structure, such as a limited company, protects personal assets and limits the entrepreneur’s liability.
- Tax Compliance: Formal companies are required to comply with tax obligations. This involves paying taxes, but also gives the business rights and benefits, such as access to government programs and tax credits.
- Credibility and Trust: Formality adds credibility and trust to the company. Clients, suppliers and business partners often prefer to work with formal companies, as it suggests serious commitment and a higher level of professionalism.
- Access to International Markets: Formal companies are better positioned to participate in international trade. Complying with regulations and legal standards facilitates expansion into foreign markets and participation in global supply chains.
- Employment Generation: Formal companies contribute more effectively to the generation of stable employment. Additionally, by being formal, they are more likely to offer work benefits and growth opportunities to their employees.
- Sustainable Development: Formality contributes to sustainable economic development. Formal businesses are an essential component of the formal economy, generating income, contributing to tax collection and participating in corporate social responsibility initiatives.
- Stability and Continuity: Formality provides stability and continuity to the business. By following laws and regulations, the business is better prepared to face challenges and changes in the business environment.
In short, opting for formality when creating a business not only meets legal requirements, but also provides a solid foundation for sustainable growth and long-term prosperity. Are you considering starting a formal business?