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What you need to consider if you are planning to start your own business in Cyprus?
Cyprus undoubtedly employs a beneficial environment for every person out there looking to become a successful entrepreneur and create a profitable company. Although the Cyprus legal system provides everything on the table for new ambitious entrepreneurs, there are a number of important considerations to be taken into account once the decision of entering the Cyprus market has been made. There are four types of considerations to be made by new entrepreneurs and these categories are as follows: a) Goal Oriented Considerations b) Structural Considerations, c) Legal Compliance Considerations, and d) Practicalities. No individual category of considerations is paramount to another, and none should be underestimated if you want to have a dynamic start.
Goal Oriented Considerations
One of the most important considerations to be made by an entrepreneur right after taking the decision to join the Cyprus market is what he/she wants to achieve, and which customers will become a target for the business. Start by requesting legal, financial and marketing advice on building a well-rounded and fully structured business plan. Assuming that a business plan is not needed may be a complete disaster to your business. Experienced professionals will be able to provide you with a complete picture of how the business plan should look like, what it shall actually include and how it should be tailored to fit the island’s market and the firm’s target customer base. Such plan will identify the type of industry your organisation will fall under and address the issue of how your corporation will operate and what you and your business aim to achieve.
The following is a non-exhaustive list of important issues to be answered when building your business plan:
- Having completed an extremely detailed investigation of the market with your legal and financial advisors, you need to be certain about the services or products your business will provide.
- What are the visions of your corporation but also as an entrepreneur? Who are the targeted customers?
- Along with determining your customers, it is as important to pinpoint your competitors. Find out what they are doing and how they are doing it and ensure that there are no significant barriers to entry that competitors will be able to apply when a new firm enters the market. Then, make sure that you can stand out from the crowd.
- Afterwards, the price of your services or products must be determined. This will include investigating any comparable businesses within the local market, analysing their own pricing strategies and finally determining the price you can provide based on competitors prices and any comparative advantage your firm may have.
- An important point to note, you need to ascertain what the possible legal threats for your business are and whether those threats can be overcome.
- Capital structure, profit target, short and long-term goal considerations are also extremely important and once they are set, entrepreneurs need to ensure that they monitor them closely and don’t stray away from them.
Next on your list should be a couple of structural considerations. This denotes that you must be able to ascertain the value of the total amount of shares that your business will have on incorporation. Also, you will have to define how many shareholders and directors your company will have. It is not compulsory to have more than one shareholder or director unless your business activities are regulated and require a specific structure to gain authorisation. However, it will be an excellent plan to identify the management team that will be responsible for running your company. Also, you will need to ascertain the company’s secretary as well as the registered office address which are in fact both compulsory for Cyprus companies. Your legal advisors will be able to provide you with the relevant information about the forms required to be submitted at the Cyprus Registrar of Companies. For example, every company must submit form HE2 which includes the information concerning the registered office address of the company.
Legal Compliance Considerations
At this stage every entrepreneur must make sure to have an excellent understanding of legal compliance matters. For example, entrepreneurs must be aware of how income will be taxed, the turnover which is subject to VAT and which goods or services are exempt from VAT in Cyprus. Other legal considerations include employment legal matters such as the percentage of social insurance contributions payable by the employer in Cyprus but also the health and safety regulations the company must abide with in order to keep its workforce safe. All the statutory obligations of a Cyprus registered limited company, including the annual fees payable to the Registrar of Companies and the annual submission of audited financial statements, must be examined in detail.
Finally, practicalities like opening a corporate bank account must be considered. Certainly, your legal representatives and advisors will be able to undertake the procedure related to the opening of a bank account for your company but also provide you with related information on the documentation needed to support the procedure. Also, it is as important to do your research on the Cyprus infrastructure and make sure that there is a satisfying labour pool from which you can choose the best possible employees that will perfectly align with your business culture and strategy.
And remember, building your network in Cyprus before incorporating your company may prove to be a huge advantage for you and your company’s financial status. Even at the start of incorporation, organising and attending networking events will be very beneficial for your company’s brand name.
New entrepreneurs in Cyprus must make sure they understand all the obligations and responsibilities that a new company may have. From building an extensive business plan to opening a simple corporate bank account, a brand-new company must ensure that all the facets analysed in this article are deeply investigated in order to ensure that a commercially viable solution for the company exists. At A.G. Paphitis & Co LLC, our experienced corporate law team will be able to assist current and future clients on a wide array of issues including incorporating their business, complying with the corporate law in Cyprus, opening their bank account and even drafting their very first employment or shareholder agreements. We are able to administrate your Cyprus company and act as your corporate secretary. Our aim is to make your corporate experience easier, simpler, and cost efficient. We ensure this by providing you with all the necessary information and corporate advice which in turn allows you to avoid and overcome obstacles that may appear in the path of your company while it strives to achieve its corporate goals.
The information provided by A.G. Paphitis & Co. LLC is for general informational purposes only and should not be construed as professional or formal legal advice. You should not act or refrain from acting based on any information provided above without obtaining legal or other professional advice.
Should you have any questions please contact us.