Do I need to register my online business? Does my business need a website? Will I have to pay taxes and SSNIT? How do I find customers online? How much will it cost to start my online business?

These are only a few of the questions you need answered if you want to start an online business in Ghana.

Covid-19 led many businesses online and many more are still coming online even now because it has become obvious that there is a lot more Internet in our future.

And that’s why we’ve created this guide for you, whether you want to start or grow your online business, you’ll get many of the answers you need here.

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What’s an online business?

An online business is any business that provides its products and services via the Internet. They are usually contrasted with offline businesses where products and services are provided via face-to-face transactions.

Currently though, an online business seems to encompass almost every business that doesn’t have a physical shop or presence from where customers can patronise the goods and services offered.

For example, if a customer wants to buy a pair of shoes from an online business, they’ll usually go to that business’ website, select the shoes they want, make the payment and their shoes will be delivered within a day or so.

A customer shopping online
A customer shopping online

On the flip side, if that customer decided rather to buy a pair of shoes from an offline business, they’d get out of their house, drive to that business’ shop or store, find the shoes they want, have a feel of them and even try them on before paying for the shoes and driving home with their new purchase.

Because you’re considering starting an online business in Ghana, this article will lay out some of the pros and cons of having an online business.

Why should I start an online business?

There are a number of great reasons to start an online business. Perhaps you want the freedom to work from anywhere in the world.

Or you want to make sure that you’re able to build an asset you can hand over to your kids. Maybe you just don’t want your earning ability to be capped.

You’ll find below a few good reasons to start an online business in Ghana if you’ve got an idea you want to try out.

Starting an online business isn’t expensive

Of all the business in the world to start, probably the cheapest is an online business. You don’t have to worry about office space and physical store signage and furniture for customers and all that.

You can literally launch your online business in 24 hours or less without spending too much money.

You can have a flexible work schedule

An online business can allow you to work on your own terms. You get to be your own boss and work as long and as hard as you like, whilst also being able to carve out important time for your family.

A small business owner working from home
A small business owner working from home

If your kid has an important event you need to be at, no worries. You can rearrange your schedule to be there.

You can work from almost anywhere in the world

Many online businesses can be run from almost any location on earth. As long as you have a stable Internet connection and a laptop, you can log in and manage your business and be on top of all that’s going on.

You can make a lot of money and grow the business

One of the goals of every business is to turn a profit. If you’re able to serve people with what they need at a great price, the profit potential of your online business can be incredible.

An online business can be a major investment and asset

Everyone is always looking for what they can invest their money in and fads come and go. Today it’s treasury bills, tomorrow it’s cryptocurrencies. The next day it’s stocks and the day after it’s a well polished ponzi scheme.

Investing in your own business can be one of the best investments ever, if you do it right. There is risk with every single investment in the world including a business, that’s why starting one online can sometimes limit your risk and financial exposure.

But if successful, you will have a true asset on your hands.

It can work for you 24/7

Online businesses don’t have to go to bed. Your business systems can be running for you all day and all night without requiring a break.

Jeff Bezos, currently the richest man in the world owns Amazon.com. This is a gigantic online business that makes money for him day and night, when he’s awake or asleep, whether he’s happy or sad.

If you earned $180,000 every day from the day Jesus Christ was born, you would still not be as rich as Jeff Bezos.

logically

Having an online business that does a little bit of that for you can greatly improve the quality of your life.

The future is online

It is quite an indisputable fact that the future is more and more online. Who knew that a worldwide pandemic in Covid-19 would lead to most companies adopting a remote work policy.

If even the largest companies in the world are finding a way to have their employees work online, then you can best believe that more and more of what we do offline is going to continue moving online.

Access to a worldwide market

Depending on who your business appeals to, your online business can grow to be something truly global with customers from China to Canada.

By simply tapping into international payment systems and platforms, anyone anywhere in the world with a Visa or MasterCard would be able to patronize your products or services.

Potential for passive income

One of the greatest benefits of an online business is that it can enable you earn passive income. Passive income is basically income that comes in without you having to do much work.

The way a stock provides you a dividend, or a treasury bill provides you with interest, so an online business can provide you with sales and revenue that you didn’t have to work hard for, as long as you built your business with the right systems in place.

Online business ideas and models in Ghana

Probably the very first thing you need to do when you want to start an online business in Ghana (or any business at all for that matter) is to have an idea of what your business will do.

Actually, most successful people in business didn’t have just one idea, they probably had several. They had several ideas, even tested some of those ideas and at least one succeeded.

It’s a bit impossible for us to provide you with guidance on what will make for a successful or profitable business idea in Ghana though. That’s because everyone considers success differently.

You might not be satisfied with a business that makes you GHc500,000 a year whereas someone else will be over the moon with that same business making them only GHc50,000 a year.

Similarly, you may not have the skills, talent, know-how, marketing chops or contacts to make a particular business idea work whereas for someone else, it’ll be a walk in the park.

But most importantly, almost every innovative company you see today was likely written off somewhere in their history by others thinking that it would never work.

So whilst your business is not guaranteed to succeed, being nimble and starting small is always a good idea to test the waters and eventually scale.

And remember, your online business doesn’t have to do something brand new that has never been done before. You only have to serve a group of people better.

If you’re starting an online shop or ecommerce business in Ghana, we recently did a study on the most popular ecommerce categories which you might want to take a look at.

Pie chart showing the various ecommerce categories and their representation
Pie chart showing the various ecommerce categories and their representation

So whether you’re selling a hard-to-find but effective skincare product, or providing online training on a subject that appeals to your target audience, just make sure you’re serving your customers faster, cheaper or better. The latter is one reason why Amazon succeeded.

Not only do you need to have an idea of what you want your business to do, you’re also going to need to think about how it’s going to make money, or its business model.

For example, let’s take the media and entertainment industry. That’s one big industry with lots of players.

Some people have an entertainment business that:

  • creates entertaining video content
  • sells equipment needed to create video content
  • trains people in how to create entertaining content
  • connects advertisers to businesses that need sponsorship for their content
  • provides actors, props, locations for recording videos and skits
  • provides editing, animation, sound and video effects for movies and videos
  • provides cinematography and recording services
  • helps with distribution of entertainment content locally and internationally

As you can see, having a business in entertainment can mean many, many different things. And that’s before we come to the business model and how the money would be made.

Whether through advertising, sponsorship, donations, investor funding, sales of merchandise, income from streaming, royalties, sales of DVDs, sale of the company itself and a whole lot more.

If you want a list of online business ideas you can study on and think through, you’ll find a few below:

  • Blogging
  • Affiliate marketing
  • Freelancing services
  • Starting a YouTube channel
  • Ecommerce
  • Selling courses, ebooks, audio tracks, music, photos, digital downloads, etc
  • Sell a service like coaching, consulting, training, etc
  • Software-as-a-service business
  • Buying and selling websites or domain names

Want more? Here’s an article on 106 Online business ideas you can start today

How much does it cost to start an online business in Ghana?

Depending on the type of online business you’re starting, it could cost you absolutely nothing to get started. Alternatively, if your business model is complex or has major barriers to entry, it could easily cost you upwards of GHc100,000 or even much more.

The variables impacting the cost of starting your online business in Ghana include:

What type of business entity will you be registering as?

If you’re running your business in your own name, you might not need to register at all. If as a sole proprietor, it’ll cost you approximately GHc60. As a limited liability, you’ll incur approximately GHc280 in filing fees.

How much capital will you be starting up with?

If you’re starting your online business as a limited liability company, you’re required to pay 0.5% of your stated capital as part of the registration fee when registering with the Registrar General’s Department.

Some businesses with foreign participation in the trading industry for example, will end up paying at least GHc29,000 in stated capital fees alone.

What’s the business model of your online business?

If you’re starting small, you might be able to bootstrap your business, needing little capital. Other businesses need to grow fast and furious and capture a significant share of the market to have any chance of survival.

Such companies might need to raise capital just to start.

Will you require a simple or a complex website?

Some online businesses require a GHc100,000 website, others can make do with a GHc1,000 website. Some choose to skip the website requirement entirely.

There are various factors that influence the cost of a website, including:

  • Website Type and Function
  • Creation Method
  • Design
  • Domain Name
  • Hosting and Security
  • SSL
  • SEO
  • Meetings
  • Revisions
  • Payment Terms
  • Delivery Time
  • Website Maintenance
  • Others

We have a terrific article breaking down the cost of website creation in Ghana. We do recommend you give it a read.

Get your business website today!

We create amazing websites for both online and offline businesses and we’d be happy to help you get one too.




    Do you need any special licences or permits?

    You may be starting a business in an industry that requires a special permit or licence. A few examples include food manufacturing, health, oil and gas, accounting, law, architecture, construction, etc.

    Acquiring these permits or licences and staying in compliance with their requirements is another cost to factor in when starting your online business.

    Do you need any special technology, software or equipment?

    If you’re planning on starting a software-as-a-service company, or a Ghanaian search engine for example, you might need some special or proprietary technology, software, equipment or inventions to help make that happen.

    Are you starting alone or do you require employees?

    Different businesses have different requirements when it comes to labour. If you’re a solopreneur, you can get things done yourself. But if your startup needs a team of 50, you’ll have to factor in the cost of employees, salaries, taxes and SSNIT contributions.

    Do you need to stock inventory?

    If you’re starting up an ecommerce business, you may need to stock up on the various products you sell in order to deliver the moment you open your doors. If you’re into dropshipping though, you might not need inventory.

    Are you boostrapping the company or do you need investors to start?

    Some people like to build their companies slowly. Others need to move really, really fast and so they need to raise capital or have investors.

    Other expenses

    This list could probably go on a bit longer but these are a few of the things to consider, aside initial marketing costs, payment processing fees, legal fees, professional fees, office space, etc.

    Not all of these will apply to your business, but you should certainly look into the ones that do.

    Do I need to register my online business?

    We get asked this question by quite a few people when we’re creating websites for them.

    “Do I need to register my online business?”

    In the vast majority of cases, the answer is yes. Whether you’re doing business online or offline, you most likely must register your business.

    The only situation under which you do not have to register your business, is if you do business in your own name. This is stated in the Registration of Business Names Act, 1962 (ACT 151)

    So if you do business in your own name as a freelancer, blogger, author, etc, you most likely do not have to register a separate business name. Disclaimer: you would still have to pay personal income tax on all income that you make.

    Let’s look at 3 scenarios quickly.

    In the first scenario, you are doing business or a side hustle as an individual. For example, let’s say you’re a teacher by profession and want to help other school children around the country with Math.

    You decide to provide online tuition sessions via Zoom. You have a few students, parents start paying you and there you go, you’ve got a small business going on right there. Congrats!

    Your business does not have a legal name though because it’s just you doing business as you. You accept any payments either in cash or to your Mobile Money wallet or bank account that’s all in your name, no problems.

    If this works for you, that’s fine. You just have to make sure you file and pay your personal income tax to the GRA (Ghana Revenue Authority) each year and that you don’t go parading yourself as a business under any other name but your personal name.

    Now to the second scenario. Business is booming, you’re getting more and more students to teach but you can’t handle them all. So you’re expanding your business a little.

    You’re hiring two other people to help with teaching students one-on-one. But you’re also building a website where students can watch and playback the various lessons you’ve taught and get access to an array of other content.

    The kids (or their parents) just have to sign up on the website, make the needed payment and that’s it.

    Your expanding your business and having employees now necessitates some changes. You now have to pay employees, make sure they’re paying taxes, pay their SSNIT contributions and also have a name for your business that is more brandable to appeal to a much wider array of students.

    For that to happen, you have to move up from doing business as an individual to doing business as a sole proprietor (or enterprise).

    At this level, you get to register a business name, let’s say, “MaxMath Education Ent.” You get to register a bank account or mobile money wallet in that name so that people making payments to you are more confident in your business.

    You also are able to capture more attention for your business with your branding, logo, website, radio slots, flyers and every other marketing method you can fund.

    MaxMath Education is going places!!

    In the third scenario, you decide it’s time to get help in running and growing this business. Maybe you add some very important people to the company who are willing to invest significant money to help the business grow.

    Or a leading educator wants to help take your business international and so they’ll be getting a share of the company in return.

    Maybe for stability and company succession reasons, you want to grow this business and leave it to your children. You don’t want it to be the type of one-man business that dies the minute the founder also dies.

    At this level, it’s time you level-up again and register the company as a limited liability company, now calling it MaxMath Education Ltd.

    If your business has reached the point that you want to register it as a sole proprietorship or as a limited liability company, you’ll have to swing over to the Registrar Generals Department office or to their website in order to register your business.

    Website of the Registrar Generals Department
    Website of the Registrar Generals Department

    Whilst registering a sole proprietorship does not require much paperwork and is relatively cheap, registering as a limited liability company is much more complex and a bit more expensive.

    For example, if you register as a limited liability company, you also have to register and have a chartered tax auditor audit your accounts every single year.

    You need to submit audited accounts every year to both the GRA (Ghana Revenue Authority) and the RGD (Registrar General’s Department).

    And depending on the amount of business you do and the choice of auditor, they’ll charge you a pretty penny each year. Make sure you get your money’s worth by getting all the advice they can give you to structure your business properly when it comes to finances and taxes.

    How do I register a domain name for my business?

    As an online business, your domain name is one of the most important assets you might purchase.

    A domain name is simply the name via which your website can be found online. We for example have wopedigital.com as our domain name.

    WopeDigital.com is our domain name

    When thinking about a name for your business, you should also be thinking about a domain name for your business. And ideally, you should register the two hand-in-hand if you can.

    The reason for that is because you need to make sure that both are available before you go ahead with your registration.

    If you want to find out whether your domain name is available, you can check that below:

    Find Your Perfect Domain

    And if you want, you can confirm here that the name you want to register with the RGD is available.

    Registrar General's Department Name Search
    Registrar General’s Department Name Search

    There are 2 main reasons why we think it’s useful to purchase your domain name BEFORE you register your business though.

    Firstly, you will notice when filling forms to register your business that the Registrar General asks for your email address and also your website.

    RGD Requests both the email and website address of your business
    RGD Requests both the email and website address of your business

    Whilst you can certainly enter a generic email address at Yahoo or Gmail, these are the official registration documents for your business and bearing your business email account and business domain name or website name can be important.

    You at least won’t have to pay to change or update that information later on in your business’ life.

    Secondly, it can be very disheartening to customers to register a name for their business only to find out that the domain name they desire so deeply has already been bought up and used by someone else.

    In actual fact, there is a whole industry of “squatters” and all they do is to purchase the domain name of other businesses in order to either sell them at a higher price, or to try and inflict some damage on the new business.

    We mentioned this in our article on the 25 Most Common Website Problems and Solutions where Jumia went and bought up 10 domains of Konga, their competitor in various countries in order to block their expansion plans.

    Don’t let that happen to you! Make sure you purchase the domain name for your business as soon as you confirm its availability. Wait too long and someone else might purchase it.

    The cost to purchase a domain name varies a lot though. Whilst you can usually secure a standard .com domain for between GHc60 and GHc200, there are a lot of other factors that can influence the cost.

    If you want more information on that, we’ve covered it in the Domain section of our article on How much does a website cost in Ghana.

    Find Your Perfect Domain

    Once you’ve secured your website’s domain name, another thing you can do is to consider whether you’ll be doing any marketing via social media.

    If you will, securing the usernames on those platforms will also help prevent other businesses or competitors from taking those handles for themselves.

    You can simply sign up on Facebook, Instagram, Twitter, TikTok or the social networks you choose, to claim the usernames for those pages.

    Do I need a website for my online business?

    As mentioned previously, there are many different types of online businesses you can start and whilst a website will enhance every single one of them, some lend themselves to having a website more than others.

    For example, in the not too distant past, it would have been almost unthinkable to be a blogger without having a website (a blog is a type of website that shows the latest posts and articles in reverse-chronological order, or the newest information first.)

    Nowadays though, you can win national blogging awards with only an Instagram account!

    One might say, “But you won’t be able to monetize your content with banner ads if you don’t have a website.”

    Whilst true, there are Instagram influencers who gather an enormous following, dishing out the latest gossip, news and entertainment and by posting sponsored content from brands and businesses, they make tons of money.

    You may want to debate the difference between bloggers and Instagrammers some more, but the world is rapidly changing, making new things possible.

    That being said, there are very, very valid reasons to have a website for your online business. We list 8 of them below:

    • Make your customers happy
    • Free advertising and exposure
    • Business emails
    • Gain International customers
    • Professional branding
    • Automation and systems
    • Effective advertising and analytics
    • Maintain permanent access to your customers

    We expound on each of these in this article: Do I need a website for my business in Ghana?

    Should my business accept payments online?

    So, bit by bit, your online business is moving along nicely. People are interested in what you have to offer.

    When it comes to accepting payment for your product or services, this is likely going to depend on how you make your money or your specific business model.

    If you run a blog or you’re a YouTuber and you make money from Google placing ads on your content, then you’re going to be paid via any of their options that work for you. Be that cheque, Western Union Quick Cash, Wire Transfer, etc.

    Most businesses in Ghana though accept payments via cash (sometimes on delivery), mobile money, bank transfer or cheque.

    Pie chart of the various offline payment methods offered by online shops in Ghana
    Various offline payment methods offered by online shops in Ghana

    These are all manual payment methods, meaning that in most situations, a whole conversation must be had back and forth between the buyer and the seller before the money is transferred or paid.

    Once done also, there’s sometimes another back and forth with regards to the business verifying that the payment has been received and then proceeding to fulfill the order.

    For some online businesses, starting out this way works for them. But for many other businesses, they need to accept payments automatically, with no human intervention.

    The best online businesses in the world need to have the most secure, fastest and widest reaching payment systems possible. That’s why they usually accept payments online.

    If you’ve ever shopped on Amazon or Kikuu, or subscribed to Netflix or run advertising on Facebook or Instagram, you’ll notice that there was absolutely no human intervention in the payment process.

    Automated payment options on the kikuu.com.gh website
    Automated payment options on the kikuu.com.gh website

    You selected what you wanted to pay for, you put in some details, your payment went through and that was it.

    Nobody asked you, "Please, have you paid?" nor did you ask them, "Please, what is your momo number?"

    Depending on the type of online business you have and who your target market is, you might be losing some of your customers to other businesses that provide such seamless and stress-free online payments.

    So why do some businesses choose to accept payments online? Here are a few reasons:

    • No human intervention reduces the risk of errors
    • No possibility of being paid with fake notes or currencies
    • Ability to accept payments from around the world
    • Automatic currency conversions
    • Seamless experience for customers where everything happens online
    • Fastest payment option possible
    • Ability to set up recurring billing options
    • Instant validation of payment
    • Scalability. Enables 100 or even 1,000+ people make payments to the business all at the same time.
    • Multiple payment methods automatically available
    • Can help small businesses look more professional

    Whilst people have different experiences, generally speaking, one issue to look out for with online payments has to do with technical issues. Depending on the payment processor who helps you accept payments, you may run into a few of those.

    At the end of the day, we do recommend that your online business definitely have the option to allow customers and clients pay for your goods and services online.

    If you want more information on this, we’ve got a great article on the Best Gateways to Accept Online Payments in Ghana.  In it, you’ll discover:

    • Who the top 10 best payment gateways in Ghana are
    • The fees they charge
    • Which ones provide for international payments and multiple currencies
    • Their registration requirements
    • How to integrate them into your website

    and a whole lot more. Alternatively, if you're targeting an international audience, then being able to accept payments via PayPal even without a PayPal account might be a priority for you.

    Accounting and record keeping

    And now we’ve reached the most exciting topic of all when it comes to business. 😀 Okay, I guess probably not the most exciting but important nonetheless.

    If your business is to succeed, you’re going to absolutely have to be on top of your money issues. At all times, you need to know how much money is coming in and how much money is going out.

    We discovered a while back that many profitable businesses collapse and shutdown forever for the simple reason that they were not carefully watching what was happening to their money.

    These businesses experienced a problem with something called cashflow. It means that at a point in time, for whatever reason, the business needed to pay out more money than it currently had.

    And with no way to get access to that money (maybe they’d already maxed out family and friends and business loans), they had to shut down the business. That’s even aside the possibility of people inside the business embezzling money.

    82% of small businesses fail due to cash flow problems.

    score

    Without accounting and keeping great financial records, you won’t even know whether your business is making a profit or a loss.

    For almost every business,

    Profit = Revenue - Expenses

    The fact that your business makes GHc150,000 in revenue in a year might not be as great as it sounds if your expenses are at GHc145,000. That business would have only made a profit of GHc5,000, despite all their hard work.

    It isn’t unheard of for new or young businesses to make a loss before eventually plugging loop holes, building systems and then becoming profitable.

    Either way though, we recommend trying to ensure that your business is profitable from day one. The reason for that is this.

    If your business is making losses and you grow that business, you are likely to grow your losses also.

    However if your business is making a profit and you successfully grow that business, there’s a much higher likeliness that your profits will grow also.

    You don’t need to become a guru in accounting in order to run your business. But there are some very simple and important tips you as a business owner need to follow very carefully in order to save you lots and lots of headache down the road.

    We have a section below on taxes, and the quickest way to get into huge trouble with the government is to either not keep great records of all your income and expenses, or to be poor with your accounting.

    So here are a few tips for you:

    Separate your personal finances from your business finances.

    You've done a great job in creating your online business, but you need to remember that your business is not you and you are not your business.

    You wanting some KFC for yourself doesn't automatically mean that your business also wants KFC.

    KFC chicken and chips
    Your KFC expenditure may not be a business expense

    Many businesses collapse because the founders suck all the money out of the business with personal expenses to feel good or live comfortably, rather than making sure the business has the money it needs to grow.

    You have to make sure you keep your personal spending habits separate and FAR AWAY from your business' pocket book.

    Open an account for your business and use it exclusively

    One simple trick to help keep your business accounting in check is to make sure that you have one main business account and make sure that every single piece of income goes in there, and every single expense comes out of there.

    If you do this, at any time in the year at all, you can just download your bank statement, and it will show you all income and expense items that your business has incurred.

    Have a bank account exclusively for your business
    Have a bank account exclusively for your business

    Do you know what many small businesses rather do? They have some money in their bank account, they spend that on expenses. They have a little money received in their mobile money wallet, they spend that on a different expense. They receive a payment in cash, they pull some of it out of their drawer for another expense. A particular business expense pops up and they pay for it from their personal Visa card.

    This can lead to their accounting becoming a nightmare because there is now no easy way to track all their expenses. And instead of having a single source where all your money comes from and goes to, you now have 3, 4 or 5 different sources that all need to be tracked.

    You should definitely listen to your bookkeeper and accountant when it comes to how to structure your accounting systems and everything, but our recommendation is that whenever you receive a payment from anywhere, be it in cash, mobile money, or any other source, move all that money into your bank account ideally at the end of the day. Never spend money that wasn't withdrawn from your main account.

    Once money is drawn from your main account for certain expenses, there's a clear record of it, and now you can spend that however your business requires, whether through cash or mobile money or any other means.

    Keep all your receipts

    It's quite a sad habit that many businesses in Ghana, both offline and online, do not issue receipts. I believe we've also come to accept this as normal so we as customers don't always ask for receipts.

    But when you run a business, make sure you ask for every single receipt owed you whenever you make a purchase. Learn the habit! It'll save you at tax time when the government wants to see proof of all the various expenses your business incurred.

    On a side note though, asking for and receiving a receipt helps all businesses succeed. It ensures there is a record of your transaction, enables you request a refund (in the case a product you purchased was faulty), and helps SIGNIFICANTLY in reducing fraud and embezzlement by employees ripping off their employers.

    Make time for your accounts

    There are many successful business owners who review their cash positions almost every single day. They're looking at how much money has come in, and how much money they're going to need for the next week, month or quarter.

    For example, if you had a great September and looking at your cash position, you feel like giving bonuses to all your employees, that’s nice. But if you just look into the future a little, you may notice that October is usually a month with high expenditure.

    Holding onto your cash just a little longer might help you weather the storm that is October, allowing you to dip into cash reserves if necessary so you can reach the other side and enjoy better months.

    Take out time each week to update and study your accounts, and to ensure that you see trouble ahead before it arrives. You'll also notice patterns and opportunities with your various products, which ones are the most profitable and which ones cost you a lot.

    Use accounting/bookkeeping software

    There are so many apps and services out there that will help you with your record keeping and accounting. We strongly recommend you sign up for one to help keep your records accurate.

    A few of the most well known accounting software out there include:

    • Quickbooks
    • Xero
    • Freshbooks
    • TurboCash
    • Zoho books
    • Myob

    Whilst we have not tried them, we recently came across one online accounting software company in Ghana called Built Accounting and they have a free tier for you to get started on.

    The need for software doesn't automatically rule out needing help from an accountant. If you can't hire one just yet, find a friend who is willing to help you set up your software and keep your records updated.

    It'll make it so much easier at tax time. You won't have all the stress and scrambling around that happens to many businesses.

    Follow up on invoices and accounts receivable

    Just as blood is essential to keeping human beings alive, so is cash for a business. If your business runs out of cash, it dies.

    Business owners discussing financial and cashflow problems in their business
    Business owners discussing financial and cashflow problems in their business

    Just as we mentioned earlier, millions of businesses collapse each year, all because they weren't watching their cash positions carefully. One place they miss it is with money owed to them by clients and customers (accounts receivable).

    Depending on the type of business you run, always make sure you are paid upfront whenever possible. It will save you so much stress and heartache.

    We do understand that this isn't always possible for the product or service you provide. You might be paid only after the product or service is delivered.

    And depending on the terms, a countdown begins for the client to make payment for the goods or services received.

    The sad thing about life is that human behaviour will interrupt even the best laid plans. People are less and less inclined and motivated to pay for items or services they have already received.

    Yet you as a business may have had to already invest or even pre-finance the service meaning you are in a negative cashflow position with regards to this transaction.

    What happens when the client refuses to pay their bill? What happens if 50 clients refuse to pay their bills? Your business is probably going to be in trouble.

    And that's why you have to follow up on all invoices and accounts receivable. Ideally, only provide credit terms to clients you can trust. Building trust with a brand new client by offering credit terms in the hope they will bring you significantly more business is a recipe for getting into financial trouble.

    Set aside money for taxes

    As a business, you're gonna pay taxes!! And the sooner you know which taxes you have to pay and how much, the better.

    If you're a business owner, we recommend you start setting aside money for taxes. This is aside making sure to hand over any tax withheld and VAT payments that you're already supposed to make to the GRA.

    When it comes to your Corporate Income Tax obligations, the government even requires that you estimate how much profit you'll make in the current year and pay that amount in quarterly installments.

    Failing to pay these installments, or ending the year paying far less taxes than you were supposed to will leave you with penalties and interest payments to make on the amount of tax you didn't pay.

    You'll eventually find out that it's better to have overpaid tax to the GRA than to have underpaid.

    We've got more information for you on taxes in our section Does my online business have to pay taxes?

    Success is repeatable. If you adopt the principles of some of the most profitable companies in the world or in your field, you too can become similarly profitable and avoid a lot of financial trouble and heartache.

    How do I get more customers for my online business?

    Getting more customers for your online business comes down to marketing. This is basically the process of getting your products and services out there to let people know you exist and convince them to buy from you.

    Interestingly, successful marketing is also one of the most difficult (and even expensive) parts of business.

    A trait that you’ll find among many businesses that fail is that they either did not know how to market successfully, or they refused to invest a sufficient amount of time and money into their marketing.

    According to Wordstream, if you have a young business, you should be investing up to 20% of your gross revenue in marketing!

    Suggested Markteing Budget for Businesses
    Suggested marketing budget for businesses

    There are certainly many different methods of marketing and you honestly do not have to participate in all of them. You just have to find the ones that work best for your business and start with those.

    You as a business owner have to know who your product is targeting. And you also have to know how you’re going to reach that target audience.

    If you’re selling classy shoes for women in their 40s and above, you have to find out where you’ll find these women and go there in order to market to them.

    Deciding to market anywhere and everywhere will most likely lead to you blowing through significant chunks of money and expending precious energy.

    You may love the idea of marketing your lovely shoes on TikTok, but if your target market of women 40 and over isn’t on TikTok (which they hardly are), that’s going to be money down the drain.

    You will have to try different marketing methods, different media, different platforms and so on until you find what works best for you.

    We have a great article here for businesses that want to drive more traffic to their online businesses and websites.

    Whilst it doesn’t cover every single marketing method, you will get a great look into the 5 major sources of online traffic:

    • Direct traffic
    • Social traffic
    • Referral traffic
    • Organic traffic
    • Paid traffic

    Business legal issues - taxes, registration, SSNIT, RGD, GRA and more

    One thing you surely do not want to do with your online business is to participate in any illegalities. There are laws in Ghana and they are to be obeyed in order to have society run smoothly.

    Similarly in running your online business, there are various laws that you have to know and abide by.

    As they say, ignorance of the law is no excuse and so failing to abide by laws you don’t even know about won’t be an argument that’ll stand up in court.

    To avoid paying fines, penalties, interest, being chased by debt collectors, going to court and even the possibility of jail time, make sure you find out as much information as you need regarding the laws that govern your business and your industry.

    Did you know that failing to pay your SSNIT and tax obligations can cause you to incur penalties of up to 3% per month on outstanding payments?

    SSNIT and GRA

    Business Registration and Renewal

    We’ve already mentioned the first legal requirement which is ensuring that your business is registered in Ghana with the RGD.

    No matter whether you’re running your business as a sole proprietorship, partnership, limited liability or other entity, you have to make sure you’ve registered it.

    Once registered, you also have to ensure that you renew your business registration every year. If you’re a limited liability, you also have to file audited annual returns.

    Failing to renew your business registration can lead to you incurring a financial penalty and ultimately to your business being rendered inactive and finally dissolved.

    As at December 2019, a total of 266,795 companies in Ghana, representing 50.91% of all businesses on the current RGD database had not filed their annual returns with the Registrar-General.

    rEGISTRAR gENERAL'S DEPARTMENT

    Does my online business have to pay taxes?

    A lot of people have this notion:

    “My business hasn’t made any money/profit yet so I don’t have to pay taxes or register with the GRA!”

    Sadly, that line is not true and will put you in great danger!!

    A businessman in trouble with the law over taxes
    A businessman in trouble with the law over taxes

    The law requires that every single business in Ghana file an annual tax return stating how much money they made, how much money they spent and what was left over.

    And just to go further, you don’t even have to be a company to be roped in by that law. The law also says that every single individual that received income must file an annual return every year.

    Failing to do so leads to significant fines on 3 levels:

    • GHc500 penalty for not filing
    • GHc10 per day for every day you haven’t filed your return after the deadline (usually the 30th of April each year.)
    • Interest on any outstanding taxes you were to pay at a rate of 125% of the statutory rate, compounded monthly!!

    One thing you should note is that in order to be compliant with the law, you’re going to have to be persistent. You will usually get mixed information from many different sources.

    If you have an accountant, he might say one thing. Your tax auditor might say another. The person at the front desk of the GRA will say yet another thing, whilst your mentor in business might say another. The person who eventually looks at or audits your tax filings will say yet another thing, and that can all be confusing.

    Our advice to you, DO NOT IGNORE YOUR TAXES!!!!

    Are there lots of taxes to consider? Yes

    Do you have to pay them all? For all the ones that apply to you, yes.

    Don’t ignore your tax obligations whilst trying to build your business. It usually ends up with heartbreak.

    Here's a quick overview of some of the taxes you might have to pay:

    Corporate Income Tax (CIT): This is the amount of tax your limited liability company has to pay each year as a percentage of your profit. If you make a profit in any given year, you get to keep 75% whilst the government gets 25% of that.

    If you’re a sole proprietor, this doesn’t apply to you.

    Note: One thing you have to note early is this, you do not pay your corporate income tax at the end of the year when you finally find out whether you made a profit or not.

    Oh no!!

    Corporate Income Tax is paid as follows:

    • You fill a form telling the GRA how much revenue and how much profit you expect your company to make this year. This is called a provisional assessment. (The GRA on the other hand can sometimes make that assessment for you.)
    • Whatever estimated profit is arrived at, the business must now pay that amount in 4 equal installments at the end of each quarter of the year.
    • As the year progresses, if you think you might make more (or less) profit, you can update your provisional assessment and adjust the amounts you are paying accordingly.
    • If at the end of the year, the amount you paid as Corporate Income Tax was less than the actual amount you were supposed to pay by 10% or more, you’re in trouble.

    There’ll be a penalty to pay alongside the difference.

    Alternatively, if you paid more than necessary, you will be granted a tax credit or refund, but only if the GRA looks through your books and is satisfied that you’ve complied with everything else.

    Pay As You Earn (PAYE): This is the amount of tax you pay (usually monthly) on behalf of all employees in your company.

    If you are a sole proprietor and you have 3 employees on payroll, you are required by law to withhold a certain amount of their salary (usually falling somewhere between 5% and 30%) each month and remit it to the government.

    Year 2021Chargeable
    Income (GHc)
    Rate %Tax Payable
    (GHc)
    Cumulative
    Income (GHc)
    Cumulative
    Tax (GHc)
    First319003190
    Next100554195
    Next120101253917
    Next300017.55253,539542
    Next16,461254,115.2520,0004,657.25
    Exceeding20,00030
    The current Personal Income Tax rates in Ghana

    If you run a limited liability company and you’re an employee of the company as well, you’ll have to pay PAYE on your own salary also.

    Withholding Tax (WHT): This is a slightly convoluted one but can get you into trouble if audited by the GRA.

    Whenever you make a payment to a business in excess of GHc2,000 in a given year, the government of Ghana requires that you withhold a percentage of that amount (from 3% to 20%) and pay it as a provisional tax on behalf of the business you withheld the money from.

    The government does this as a way to get their hands on some taxes even if the business evades taxes later. At least they got something.

    Interestingly, withholding tax can end up just costing you a lot more money. You find a service provider, the fee is GHc4,000. You’re to withhold some amount and pay him only GHc3,654 and pay the rest to the government.

    Many businesses, because they do not know nor obey the law, are going to be a bit livid and rather refuse to do business with you if you want to withhold a portion of their payment. But if you refuse to make that deduction, the GRA will penalize you by making you pay that deduction yourself.

    Note: If you’re a shareholder of your company and your company rewards each shareholder with some dividends, those dividends are subject to a withholding tax of 8%.

    (This gives rise to the concept of double taxation though so you should certainly consult your tax consultant to help you when structuring you business, pay structure, etc.)

    There are other scenarios under which you might have to withhold tax and the rate may vary. You can find more information here on Withholding Taxes on the GRA website.

    Value Added Tax (VAT): VAT is another tax that you might have to pay to the GRA depending on the type of business you run (retailers especially with a flat rate) or the volume of your gross revenue each year.

    Businesses that exceed GHc200,000 a year in revenue (or are likely to) must charge an extra 19.25% (up from 18.125% due to new levies added) on their products and services and pay that amount to the government.

    Some of that amount may be recovered if you the business also paid a VAT component on some of your raw materials though.

    Personal Income Tax (PIT): If you run a sole proprietorship, you have to declare all profit the business made as your personal income and pay tax on that.

    You also have to pay tax on any other income that you made in the year, whether that’s from some investments you have (treasury bills, shares, cryptocurrency, etc) or dividends as a shareholder of another company, or from royalties, etc.

    Anywhere you made money from, you’re going to have to account for that and pay personal tax on it.

    Do note that all individuals are supposed to file their personal tax returns each year and pay the appropriate taxes that apply. The good news though is that you can now pay your taxes online to the GRA via the Ghana.GOV portal.

    I guess that was a lot of tax information, right? Whilst we’ve written everything above only to educate you, we strongly recommend listening to and taking the advice of your accountants, tax consultants and lawyers to make sure you’re in compliance with the various laws on the books.

    As an online business, do I have to pay SSNIT?

    If you start a company or business in Ghana that has even a single employee, whether online or offline, you are bound by law to pay social security contributions on behalf of that employee.

    Here is a little overview for you. SSNIT is the abbreviation for Social Security and National Insurance Trust. They were set up way back in 1972 to help provide a pension in retirement for Ghanaian workers.

    Sadly, man does not live forever, nor does man work forever. It reaches a point that you usually stop working, whether due to health reasons, old age, choice or even requirements of the law (Ghana has a compulsory retirement age of 60).

    When that happens, if your main source of income was your salary (or even your business), it can lead to a very significant drop in your income. And that’s where a pension comes into play.

    A pension works when a collection of people all make a small contribution regularly over the course of their lifetime so that when they retire, they can receive an ongoing income to continue living a comfortable life.

    In 2008, the current pension act came into force that provides for a 3-tier pension system. Tiers 1 and 2 are compulsory whilst tier 3 is voluntary. You can find a great summary of how SSNIT’s pension works on their website.

    If you’re a sole proprietor whose business does not have any employees, contributing to SSNIT would be a purely optional action on your part although they encourage that you do so in order to also have a pension when you reach the retirement age.

    As always, something that is backed by law means that you can get into very significant trouble if you don’t take it seriously.

    You’ll regularly come across stories in the news of companies and directors being arrested, fined and even imprisoned for failing to make certain SSNIT contributions for their workers. Don’t let that be you.

    So here’s a very, very quick overview of what you have to do regarding SSNIT when you start or grow your online business in Ghana, that’s if you have employees.

    • You first have to register your company with SSNIT. This must be done as soon as possible after registering your company. You can do so by going to any of their offices or branches around the country. You can check here for their map.

    The details you’ll need are covered below:

    • Certificate of Incorporation/Commence Business
    • Place of business and postal address
    • Company TIN number
    • List of employees and their social security numbers, basic salaries and contributions
    • Social Security Number of directors
    • Valid ID for directors.
    • TIN (Tax Identification Number) directors
    • Email address and residential address of each director.

    Once you’re successfully registered with SSNIT, you’ll be issued an Employer Registration Number (ERN).

    • The premises from where you run your business will be visited before you are registered with SSNIT, not to mention you will have bi-annual visits to ensure you are complying with your SSNIT obligations.

    • You’ll have to make sure that all employees of your company go through the needed biometric registration with SSNIT and have their social security numbers, you too if you’re an employee of your company.

    • Since we’re talking about online business in Ghana, we’d recommend that you also let them sign you up with their online portal. Or you can sign up for that here: SSNIT Online Portal

    Employer Enrolment Initiation
    SSNIT online portal for Employer Enrolment

    That’ll give you the ability to update your SSNIT records and generate the needed payment records that are to go along with your monthly payments.

    These payments can then be made through any of their partner banks, rather than having to go to their offices each time.

    This covers the registration requirements for paying the tier 1 part of the pension.

    • You next have to go through the same process to register both your companies and your employees with a tier 2 trustee licenced and approved by the National Pensions Regulatory Authority (NPRA).

    There are currently 37 trustees in good standing that you can consider registering with to manage your tier 2 contributions. We recommend you do the needed research in order to select the one you think will be most competent in handling your pension portfolio.

    • Once your company and your employees are all registered with SSNIT and a tier 2 trustee, you now have to start doing a little bit of mathematics and salary structuring (or re-structuring).

    Pension contributions are made on an employee’s base pay or basic salary. So if an employee receives a base salary but also extras like bonuses and allowances, etc, pension contributions will only be assessed on the base salary.

    The employee is to contribute 5.5% of their base pay.

    The employer (you) contributes an extra 13% of the employee’s base pay bringing the total to 18.5%.

    These are the compulsory contributions. If you the employer or the employee has signed up for any other pension schemes or a tier 3 pension, you may make more deductions and/or contributions but these are voluntary.

    (Note that all tier 1, 2 and 3 contributions are tax exempt as long as they do not exceed 35% of the employee’s basic salary. Any contributions above that would be taxed first.)

    • The employer (you) MUST submit a contribution report by or before the last working day of that month. (If you signed up with the SSNIT online portal as I mentioned earlier, you’ll be able to generate the contribution report online with ease.)

    • Out of the money deducted and contributed, 13.5% MUST be paid to SSNIT by the 14th of the next month to ensure that you do not incur any penalties. Remember, this is all backed by law (if you have employees) and the law has teeth to bite you with when you least expect it.

    • The remaining 5% must be paid to the tier 2 trustee that you signed your company up with.

    If you do everything mentioned above, you should be in compliance with the law when it comes to your pension obligations.

    Other legal requirements

    There are some businesses where you have much more to be concerned about than just your business registration, taxes and SSNIT contributions.

    Some industries require that you have a professional licence as an individual or as a business before you can operate (pharmacies, laboratories, architectural firms, etc).

    In other industries, you need to take your legal protections to another level by filing trademarks, patents and copyrights to protect your creations or intellectual property (music, movies, literary works, books, art, etc).

    Before you commence operations for your business, do make sure you have all the necessary legal documents to ensure you stay on the right side of the law.

    Making your online business an asset

    One of the ultimate goals of every online business is to grow big and strong. The current richest man in the world, Jeff Bezos owns Amazon.com.

    It’s an online business that has grown big and strong and the beautiful thing about it for the owner is that whether he goes to work or not, whether he’s awake or asleep, whether he’s happy or sad, whether he’s alive or passes on, his online business continues to make billions and billions of dollars a year.

    The dream to have your online business working with you only needing to put in minimal effort is a dream many entrepreneurs and business owners have.

    But how do you make this a reality? By having systems!

    For your business to grow bigger, stronger, faster and more independent of you, you need systems. A system is basically a documented way of doing things that has been simplified as much as possible so that other people can do it instead of you having to do it yourself.

    The more systems you have in your business, and the more these systems work well and efficiently, the faster your business will grow.

    In our article on 9 ways to increase online sales through your website, we listed some of the advantages of the systems your website can provide for you.

    For example:

    Customer Data

    • Do you have all your customer data in one place?
    • Can you search your list of customers by name? By phone number? By when they ordered?
    • Can you access your customer data from anywhere in the world?
    • Can you delegate access to any other people in your business to access your customer information?
    • Do you have backups of all your customer data?

    Receipts and Invoices

    • Do you automatically generate receipts for customers who purchase from your business?
    • Do you have a copy of every receipt issued?
    • Are all your receipts in digital format? Or only in physical format?
    • Can you search through all your receipts and invoices instantly?
    • Are you able to reissue a receipt if a customer has lost their copy?
    • If the GRA asks for all your sales receipts, are you able to provide these?

    Payments

    • Is your business able to sell to multiple people at the same time? To 10? To 100? To 1,000?
    • Are all payments to your business automatically lodged in your bank account?
    • Do your payment systems have automatic ways of detecting and weeding out fraudsters?
    • Are you able to automatically issue a refund to a customer who requests one?
    • Are you able to accept payments from potential clients in other countries around the world?
    • Do you have any data and analytics on your clients to enable you better target your audience?

    For the best online businesses in the world, the answers to all those questions almost always ends with a yes.

    So even as you work hard on starting and growing your online business, keep working on making things easier for both you and your customers with various systems.

    You’d be able to look into systems for payments, systems for fulfillment, systems for managing your finances, systems for client data and so much more.

    A note on fraud and scammers

    One of the things you have to remember is that wherever there are opportunities, there will also be criminals wanting to take advantage of those opportunities.

    Sometimes due to a lack of systems and structures in Ghana, it is relatively easy to participate in fraud and online scams and walk away scot-free.

    Because of that, there’s a significant number of people who are totally against patronizing any online business in Ghana. They’ve probably been defrauded in the past and never want to experience that again.

    It’s your job therefore to ensure that your online business looks the most credible it possibly can. Don’t give a potential customer any reason to imagine that you’re not a genuine business.

    Can you convince everyone to do business with you? Nope! Can you convince people who are on the fence? Yes you can!

    • Ensure your existing customers are able to leave reviews for you online.
    • Make sure your business is registered and you’re paying all necessary taxes.
    • Make sure all payment accounts (mobile money wallets, bank accounts, etc) are in your business’ official name
    • Invest in a professional website that provides all the information about your business and services that any potential client might want
    • Don’t send business emails from Gmail and Yahoo. Go professional with business emails.
    • Invest in Search Engine Optimization. The more people see your business popping up in Google Search, the more your credibility increases.
    • Always keep your promises!!! If you say you’ll deliver the product by 6pm, make sure you deliver the product by 6pm. Nobody wants to hear excuses.
    • Issue your clients with receipts whenever they buy from you or pay for your services. It’s a really small thing but it’s surprising how many people ignore this. Receipts are important for a reason.
    • Invest in a lovely logo (doesn’t have to be expensive) and keep your branding consistent everywhere.
    • Keep improving your business by using systems and automation. When everything in your business has to pass through someone, it opens the door for errors and wildly varying experiences.
    • Do not engage in high-pressure sales techniques. These are sometimes the behaviours engaged in by scammers and fraudsters that put off regular customers.
    • The customer isn’t always right. Don’t be bullied and defrauded by customers either. There are scammers among them too.

    Conclusion

    If you’ve made it through this guide to the very end, congratulations.

    Whilst we hope to have answered some of the questions you have in mind in starting an online business in Ghana, there are probably other questions which you might have in mind.

    Feel free to contact us or leave a comment below and we’d be happy to address that as best we can.

    Wishing you the best with your online business.

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