Sometimes, people are oblivious to the fact that a Not-for-Profit or Non-Governmental Organization (NGO) is also termed as a company limited by guarantee.
A private company limited by guarantee is a form of business structure often used by non-profit organizations, clubs, co-operatives, social enterprises, community projects, membership organizations and charities to serve social, charitable, community-based or other non-commercial causes.
Non-profit organisations or Guarantee companies typically retain any surplus income for re-investment or use it to promote the non-profit objectives of the business rather than distribute profits to members. Most NPOs are not within the tax net of the central government. We are happy to share with you procedures to follow as well as the requisites for registering a Non-profit Organization at the Office of the Registrar.
Requirements for registering a company limited by guarantee (NPO / Not-for-profit)
- The name of the organisation
- The names of the directors
- An official fee of Two hundred and Seventy Ghana Cedis.(GH₵ 270)
- Particulars of Directors and Secretary (including names, nationality, age, residential address, and designation).
- Name and address of Auditors
NB: The auditor or auditing firm must be credible.
- Address of registered office, principal place of business
What is the cost of registering an NPO / Non-Profit Organization or Company limited by guarantee?
The total statutory cost for registering an external company in Ghana is 270 Cedis. This fee is payable directly to the Office of the Registrar.
Procedures for registering a company limited by guarantee (Not-for-profit / NPO)
Applicants may purchase a set of prescribed regulatory documents and a set of form 3s from the Office of the Registrar at GH₵9.50 or download all business registration forms online, http://rgd.gov.gh/index.php/forms/ . To register a company limited by guarantee, these are the necessary steps that applicants must undertake;
· STEP 1 – Company name search
A business name, also known as a company name, is simply a name or title under which an organization or other legal entity trades. If you want an exclusive right to that name, it is vital to do a name search of your intended name to check if a similar or identical name of an organization in your field does not exist before you can proceed.
In choosing the name for a Non-pforit organization, one must make sure that the name is;
- Meaningful– Does the name support the positioning and reflect the essence of the organization?
- Relevant– Is the name relevant to the key audiences you are trying to reach.( target market, donors, volunteers)
- Distinctive- Does the name stand out from the names of other organizations in your community?
The Office of the Registrar may reject names which in its opinion are too similar to existing names, misleading, offensive, and undesirable or violate existing trademarks. It is advisable to submit alternate company names. Be creative with the company names in order to avoid all being similar to existing company names or trademarks registered by the Office of the Registrar.
· STEP 2- Apply for a Tax Payer Identification Number (TIN)
All secretaries are mandated to secure a TIN in order to successfully process registration. Applicants would be required to provide the TIN of the board members and secretary on the form provided. In case the board members and secretary do not have it, there is a taxpayer identification number form applicants must complete in order to secure a tin.
Information required to complete an individual TIN form include;
- Name of applicant
- Photo ID details
- Mother’s maiden name
- Residential and postal
- Contact of applicant
· STEP 3 – Complete Company limited by guarantee form 3
Information required to complete the form 3 include;
- Company name
- Principal or business activity of the company
- Business address information
- Principal place of business ( physical address of business)
- Address of other places of business (if applicable)
- Postal address of the company
- Particulars of the Executive Council Members/Directors/Secretary (this may include; nationality, date of birth, occupation, residential address)
- Particulars of the auditor of the company
According to the Companies Act, 2019 (Act 992) , all companies are required to have at least two initial directors and a secretary during the company registration process. At least one of the company directors or secretary must be resident in Ghana.
· STEP 4- Company limited by guarantee regulations form
Information required to complete the regulations form.
- Name of company
- Nature of business
- Name & TIN of members of the Executive Council
- Address description of the subscriber. This includes;
- Date of birth
- Business occupation
- Postal address of the applicant
- Signature of applicant
· STEP 5-Submission of forms
After completing the forms, an applicant should submit the forms to the office of the Office of the Registrar with an official fee (in cash) of GH₵270. After a successful registration, the applicant would be given a Certificate of Incorporation, Certificate of Commencement, Form 3, and the Company’s Regulations.
Licensing requirements for NPOs from the NPO Secretariat
After registering the company with the Office of the Registrar, all NPOs are mandated to register with NPO Secretariat before the commencement of business. Below are the procedures for registration with NPO Secretariat.
Apply for NPO status at the NPO Secretariat which is the regulator of NPOs in Ghana, by submitting five copies each of the following documents to the NPO Secretariat.
- Certificates of incorporation and commencement of business.
- Application letter on the organization’s official letterhead
- The organization’s constitution
- An NGO profile form
- Memorandum of understanding between the NPO and the Government
- Articles of incorporation from the country of origin
- Brochure or publication about your organization.
Taxes for Companies limited by guarantees in Ghana
Companies limited by guarantee including NGOs are exempted from paying corporate taxes. Corporate tax is the tax imposed on the net income of the company, in other words, it is a levy placed on the profit of a firm to raise taxes.
Moreover, they are exempted from paying Value Added Tax (VAT). This is because Companies limited by guarantee do not have tradable goods and services that attract VAT. VAT is charged on the supply of goods and services in Ghana, imported goods and the supply of imported services at a rate of 15%. In a case where the NPO starts to engage in buying and selling, the company is obliged to comply with the law and pay tax as the law demands. In other words, it does not become NPO anymore since the activity does not include trading for profit.
However, all Companies limited by guarantee are mandated to pay income taxes on the earnings of their employees. Thus Pay-As-You-Earn commonly termed as PAYE. In Ghana, tax is deducted from an employee’s personal income at source through a ‘pay-as-you-earn’ scheme. The highest income tax rate payable by an individual resident in Ghana is 25%.
It is the employer’s responsibility to file monthly tax returns on behalf of its employees. The employer is required to withhold the employee’s taxes and pay to the Ghana Revenue Authority. The tax withheld must be filed and payment made by the 15th of the month following the month in which the tax was withheld. Failure to do so attracts penalty.
In order not to be caught up with the law, Investors, businessmen and all charity organization who wish to set up a business or company in Ghana must endeavor to comply with all the laws of Ghana. This adds up to the credibility of the individual and the company as a whole.
The registration process is fairly easy and not significantly different from other forms of business registrations in Ghana.
Let us know what your experiences have been in starting a non-profit organization in Ghana.