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Helpful
Tips for Entrepreneurs
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Introduction:
More and more people start
up a business in Aruba. However, starting a business involves more than
you would think.
According
to a study by the Chamber of Commerce and Industry Aruba the most common
mistakes made by entrepreneurs in Aruba are the following:
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No
business plan |
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Wrong
location of the business |
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Employment
problems |
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Inadequate
bookkeeping |
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Financial
problems due to insufficient funds |
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Unclear
arrangements with business partners and others |
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Disappointing
sale turnovers versus forecasts |
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Therefore
the Chamber provides you the following information, just to give a
general idea about the things you need to know before starting the
business itself. This information is brief, for more detailed
information you can order brochures by (electronic) mail or purchases
these at the Chamber itself.
Permits
to Establish a Business:
As
an Aruban you do not need a permit to establish a business in Aruba,
when it concerns a sole proprietorship. You still need to register your
business in the Commercial Register at the Chamber. If you are not an
Aruban born Dutch national, you always need a permit to establish a
business. Whether you will receive a permit depends on what sort of
business you intend to start. The main criteria are if the business
provides enlargement of the economic basis and if it is capital
intensive.
Commercial Register:
Each
business is legally bound to be registered in the trade register of the
Chamber of Commerce and Industry. To register a business at the Chamber
you must supply the following information:
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trade
name of the company; |
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line
of business; |
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objective
of the business; |
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capital
investment; |
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legitimate
identification, and |
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a
copy of your application for a business permit (if applicable). |
Besides
that you will also have to pay the initial (and thereafter the annual)
registration fee. The amount of the fee depends on the capital
investment, which can be found in the table below.
| Capital
(In Aruban Florin) |
First
Registration |
Annual
Fee |
|
0
– 25,000
|
80
|
80
|
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25,001
– 50,.000
|
100
|
100
|
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50,001
– 100,000
|
165 |
130
|
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100.001
– 200,000
|
210
|
175
|
|
200.001
– 500,000
|
350
|
245
|
|
500.001
– 1.000,000
|
700
|
280
|
|
1.000.001
– 2.000,000
|
1,500
|
600
|
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2.000.001
– 3.000.000
|
1,500
|
750
|
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3.000.001
– 4.000.000
|
1,500
|
900
|
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4.000.001
– 5.000.000
|
1,500
|
1,125
|
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5.000.001
and more
|
1,500
|
1,275
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Registering
your business will entitle you to benefits, such as:
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the
possibility to obtain affidavits to certify your company; |
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information;
you can receive information about other companies and use it for
market research (potential customers, competitors etc.); |
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mediation
between companies and Government organizations/authorities (not
applicable to "offshore" companies); |
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Chamber
News & Views; you will receive this two-monthly magazine with
information about the Chamber and economic subjects (not applicable
to "offshore" companies); |
Legal Business
Structure:
Each
business has a legal business structure, such as a sole proprietorship,
partnership or corporation (naamloze vennootschap). As an entrepreneur
it is important to determine which legal business structure you wish to
choose in time. Whether the legal business structure suitable for your
business depends on your personal circumstances, such as: your capital
investment, whether you choose to do business alone or with someone else
etc.
Business Plan:
When
you want to start your own company you should be well informed about
your target, the financial possibilities and the feasibility of your
plans. A good business plan provides this kind of information. Writing
your business plan helps you to sort out the necessary information and
expectations. For those who have already started their company, a
business plan may be a suitable instrument to prepare important
decisions. It makes you consider all aspects that are involved when
adapting your company to new markets, customers or products.
It
is advisable first to submit the business plan to an accountant or
consultant and to use their suggestions for further adaptation of the
plan. After completion, your plan can be submitted to the bank or a
credit institution. In order to assess your financial possibilities,
your business plan will provide the capital providers with essential
information on what financial risks and entrepreneurial qualities are
involved in your enterprise.
The
Chamber provides “models” for a business plan, which shows you step
by step how to work out your ideas about your future or existing
company. Consequently, your chances of success will increase, as proven
by the many organizations that advise starting entrepreneurs.
To
fill out a model the entrepreneur must avail of basic information in the
following areas:
| Personal
information |
The
success of a company is primarily determined by the personal
characteristics of the entrepreneur. |
| Description
of the plan |
For
some sectors the entrepreneur has to meet certain legal
requirements in order to establish the company. Non compliance
with these requirements may cause legal problems or other
problems with official organizations/authorities. |
| Marketing
approach |
What is your target
market and who are your potential customers? What are their
buying considerations? You should explain your marketing
approach in terms of products/services, prices, location of
business, competitors etc. |
| Investments
and financing |
You should give a
clear picture of the extent of investments in buildings,
renovation, machinery and stock, of debtors, finances and
initial expenses. You should also explain how you are going to
finance these investments. |
| Operating
budget and redemption capacity |
The
annual operating budget will show whether you plans are feasible
or not. The expected turnover, gross profit, company costs and
net profit should be quite clear. The net profit forms the basis
for consumption, investments and reservations. Part of the net
profit should be used to support your own cost of living. |
| Specification
of private account |
You should have a
clear idea of the total private expenditures, as these may not
exceed the net returns. |
| Liquidity
prognosis |
You should be aware of
the quarterly fluctuating needs for credit. If you based your
figures on information from/about a specific branch you should
mention this. You should also take the losses that you will
suffer in the initial period into account. |
Business
Accommodation:
When
you have to look for a business accommodation you have to ask yourself
several questions, such as:
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Should
I rent or buy a business accommodation? |
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Where
should I settle? |
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Can
I start a business in my own home? |
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How
about the contract? |
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Do
the business activities fit with its direct surroundings or the
zoning plan? |
The
entrepreneur should as a good corporate citizen see to it that the
business activity should not be an inconvenience to the direct
surrounding area (noise, smell, smoke, dust, traffic etc. may cause
nuisance).
In
the near future the Government proposes to introduce a zoning plan.
For
application or more information on the requirements concerning the
Nuisance Ordinance (“Hinderwetverordening”)
contact:
| Central
Agency for General and Legal Affairs
Vondellaan
19-C
Oranjestad, Aruba
Phone: (297) 583-5002,
Fax: (297) 583-1772
Email: cbjaz@setarnet.aw |
Employees:
When
you decide to hire personnel there are several methods for recruitment.
First of all you can put an advertisement in a newspaper or outsource
the recruitment to a professional organization. Another option is a
temporary manpower agency. This may provide you certain advantages, such
as the hiring of staff for a certain period of time (days, weeks,
months) without having all the paperwork and the overhead costs. If you
want to hire foreign employees there are several agencies in Aruba which
are specialized in the handling of applications for residence and work
permits.
As
per January 1, 2002 the legal minimum wage for a person 18 years and
older (excluding household personnel) is AWG 1,200.00 per month.
According to available statistics from 1997 the average monthly wage was
AWG 2,186 and the median wage was AWG 1,735. A workweek is maximum 48
hours for the hospitality sector and 44 hours of all other sectors.
Administration /
Accounting
As
an entrepreneur you are legally bound to keep an administration of your
business. Besides, you must be able to determine and assess your
financial position on a periodic basis. Annually you are require to file
your tax return. Aruban corporations are required by the Commercial Code
of Aruba to prepare annual financial statements and keep all books and
documents pertaining thereto for a period of ten years.
If
you are unable to provide for a proper financial administration for your
company it is highly recommended that you hire a bookkeeper or an
accountant.
Taxes and Social
Security:
In
terms of corporate taxation there are basically two important taxes,
income tax and profit tax. Sales taxes are not used in Aruba. For
entrepreneurs operating under a sole proprietorship or a partnership
their business operations fall under their income tax assessment.
Enterprises operating under a legal entity will be assessed under the
profit tax ordinance. For more information on tax issues related to
enterprises visit the
website www.siad.aw
When
you hire employees you are legally responsible to transfer the
contributions to the social security benefits system to the government
and the Social Insurance Bank. The system presently comprises old age
pensions, widow and orphan insurance, severance pay, accident insurance
and health care. For more information on the mechanism of these schemes
and thereto related issues
visit the website
www.siad.aw The government
reformed the various health care schemes into one general health
insurance fund, called AZV (“Algemene
Ziektekosten Verzekering”). AZV will provide health care coverage
for the entire population and implement a contribution system. To
request detailed information on this universal health insurance (AZV)
visit the website: www.uoazv.com
Insurance:
It
is wise to check with a consultant what sort of insurance you need when
you start your own business. The following are the most important types
of insurance: medical insurance, disability insurance, liability
insurance and fire and theft insurance. |
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