You have to spend money to make money – So says conventional wisdom. But this is not just good advice for an entrepreneur looking to expand his business. It is a legal and practical necessity to set up your business in the first place.
New entrepreneurs are required to obtain approvals, licenses, permits and registration. Governments often require a company to have a minimum paid-in capital requirement – a certain amount of money in the bank.
These processes are not only expensive, but also time consuming and complex. For example, prior to legislation to simplify start-up procedures and stimulate higher levels of entrepreneurship, Saudi companies had to go through 13 procedures and have 1,057% of per capita income in the bank before opening the store.
The project Doing Business for the World Bank Maintains figures for the cost and procedures required to start a small and medium-sized LLC in each country.
BusinessFinancing.co.uk He converted the numbers into US dollars and compared them to the local average income so he could determine the cost and affordability of starting a business worldwide. We have found that:
- The The United Arab Emirates It is the most expensive country to set up a company, with start-up costs of $7,443.51.
- There are no fees to start a business in Rwanda For the first two years, and in Slovenia The only “cost” is the required capital of €7,500 without taxes.
- Starting a new business is the least accessible thing you can do Congo, where $1,232 in taxes equates to 2,554% of average monthly income.
- at Kazakhstan It only takes 2% of your average monthly income ($12 vs $531) to start a business.
Il Report Doing Business 2020
Doing Business 2020 shows that developing economies are catching up to advanced economies in the ease of doing business.
However, the gap is still large. An entrepreneur in a low-income economy typically spends about 50% of the country’s per capita income on starting a business, compared to just 4.2% for an entrepreneur in a high-income economy. It takes nearly six times longer to start a business in economies ranked in the bottom 50 of the top 20 economies.
There is ample room for developing economies to catch up with developed countries in most of the Doing Business indicators. Performance in the area of legal rights, for example, remains the weakest among low- and middle-income economies.
Doing Business recognizes the importance of the work countries have done to improve their regulatory environments.
Among the 10 most advanced economies, efforts have focused on the areas of starting a business, managing building permits, and trading across borders. In general, the economies with the highest scores share many characteristics, including Extensive use of electronic systems and Internet platforms to meet regulatory requirements.
Meanwhile, the area of least reform was in resolving the insolvency problem. Implementation of reorganization measures reduces the failure rates of small and medium businesses, and prevents the liquidation of insolvent but viable businesses.
How does the accessibility of starting a business differ from country to country
Low wages and high taxes make starting a business in most parts of Africa a challenge. Average monthly wage in Congo It’s just under $50, which puts a $1,232.08 startup fee out of the reach of most freelance entrepreneurs.
There is a similar – albeit not drastic – variation in Central African Republic, at Chad In the Financial, as well as Haiti, at To whom and in Syria. The SurinameIn South America, wages are slightly higher, but higher taxes put Surinamese startups in a similar position.
But not all low-paid entrepreneurs suffer this fate. at Rwanda ($51 monthly income), taxes absent for the first two years, to allow businesses to get started.
income in Azerbaijan It is similar to Suriname, but taxes are only $10.59 or 4% of monthly income. The United kingdom It has the best of both worlds: taxes of just $17 (£12, plus 1% of company share capital and 2% of company share capital), for an average monthly income of $2985.42.
Italy is the most expensive place in Europe to start a business
There are 11 countries in Europe where business start-up expenses are more than $1,000, but all of them have a monthly salary of over $2,000. This is great in a country like this Norway oh no SwitzerlandA salary of about $5.5 thousand covers four times the expenses. But it is not very cheap in ItalyThe highest start-up fee in Europe ($4,895) is double the monthly income of $2,403.
At the other end of the scale, there are 12 states that have taxes under $100. over there Slovenia There is no start-up fee – although you will need 7,500 EUR (9,168 USD) in your trading account to start a business there. The UK is among the cheapest places to start a business, as shown above. The £12 fee is for Companies House registration only.
Affordable Entrepreneurship in the United States
start a business in United States of America It’s not cheap ($725), but it’s definitely not extortionate. With an average monthly salary of $4,458, this is a very decent 16% access rate. It is more difficult to BahamasThe highest taxes on the continent are $1,810. at MexicoThe cost of $1,464 is roughly two and a half times the average salary.
The cheapest place to set up a company in North America is Belize. However, the taxes — which are just under $100 — are still about a third of the average monthly wage.
The hardest place to start is Haiti, where $937 represents 1.397% of the local salary of $67. However, Haitians are passionate entrepreneurs who are ready to devise ways to operate. “Haiti is not open for businessAs Christine Sovrant Ntem, Haitian American Entrepreneur puts it:Haiti is open to turmoil“.
Starting a business with little money in Venezuela
In addition to taxes of at least $3,030, Surinamese entrepreneurs are required to pay an additional 8% of the total final fee for notary service. Even before these additional expenses, the minimum tax equates to 1,114% of monthly income.
It is by far the most expensive place in South America to start a business, althoughEcuador Its reach rate is 423%.
at Venezuela The picture is different. Reservation of the company name, registration, announcing one’s presence in a local newspaper, and various other formalities, all add up to a real 21 cents.
until the Chile It has very low fees, while accessibility is less than 100% in ColombiaAnd the PeruAnd the ParaguayAnd the Brazil e Argentina.
African business potential is growing
Low wages make it difficult for the average wage to start a formal business in most parts of Africa.
The most expensive place there is Equatorial Guinea ($2,322), where a $324 paycheck means an access rate of 718%. Taxes are lower elsewhere, as are wages. In fact, the Congo It’s the least expensive in the world, with taxes of $1,232 for a salary of $48, putting affordability at 2,554%.
However, the repairs make the process cheaper and easier. “I believe that before starting business 13 years ago, there were very few high-ranking politicians who knew how many days it would take to start a business in their country.Rita Ramalho, former Doing Business Director says.
“Now they know how many days it takes. Surely this brings them back to reality, so they better relate to the hurdles the average businessman in his country faces.“.
Middle Eastern country has the highest start-up taxes in the world
The The United Arab Emirates It is the most expensive place in the world to start a business, but it is far from the least accessible. You can cover your $7,444 taxes with two paychecks of $3,332 and a quarter. LebanonAnd the Iraq e Syria They have four-figure taxes, but much lower wages. In Syria, you have to save 10 salaries to start a business.
at Kyrgyzstan I know he can start a business for as little as $10, which is helpful because the average monthly salary is only $84.
You’ll find better access (25%) at KazakhstanIt costs just under $12 for a $531 paycheck. Furthermore, the process only takes five days, which is less than half the average time for Europe and Central Asia.
New Zealand is the best place in the world to start a business
P ceania and Southeast Asia are relatively cheap and convenient to start a business, with no four-figure fees and no four-figure costs. In fact, the only country with extremely exorbitant numbers is there Cambodia, where you’ll need seven and a half unspent salaries to cover $746 in taxes.
The cheapest place is Timor Leste, although you’ll still need 9% of your salary to cover the $10 cost. over there new Zeland It has the best affordability in the region: 2% of the $2,838 tax payout is $43. Actually, The World Bank ranks New Zealand first in the world for the ease of starting a business. There is only one basic procedure, which takes less than a day to complete.
Remove barriers to success
As Rita Ramalho (Senior Director of the World Bank’s Global Indicators Group) noted above, government awareness of the needs of entrepreneurs is of paramount importance to a country’s business landscape.
countries like Kenya And theSaudi Arabia They have gone to great lengths to spur growth by removing unnecessary obstacles – including huge costs – from the path of startup founders.
But all this is far from being a global movement. The ease and affordability of starting a business depends a lot on the country you are in.
An ambitious journalist, investment advisor, born 1968.
I have a degree in foreign languages and a degree in biological sciences inUniversity of Pisa. I have MA in Investment Advisory I am a professional coach on behalf of siscot. I have collaborated for several years with many Italian websites and blogs (and related companies) by writing articles for publication and financial culture starting in 2010. I am very present on social networks, and for three years I have been one of the faces and commentators very much appreciated TV sources.
My motto is? “Buy, win and don’t regret.”