Written by Bubacari Marega

11 Jul. 2022

6 Mins read

Contents

1. What is a limited company?

2. Operating as a limited company

3. Incorporating a limited company

4. Completing your bookkeeping

5. Claiming your business expenses

6. Corporate tax

7. Completing your accounts

8. Taking money from your company

What is a limited company?

A limited company is a type of business where the owner’s liability is limited to the amount they have invested in the shares or guaranteed to the company.

Meaning, the owners of limited company are not personally liable for the debts of the company.

Operating as a limited company

Small businesses generally choose to trade through a limited company as they can be much more tax efficient compared to trading as a sole trader or partnership.

It does, however, need to be structured in the right way to take advantage of the savings available. Luckily, we are here to help you with this!

A limited company is completely separate entity from its owners.

Everything from the company bank accounts, to ownership of the assets and any involvement in tenders or contracts is purely company business and separate from the interests of the company’s owners or shareholders.

In comparison, a sole trader and their business are treated as a single entity for tax purposes.

Incorporating a limited company in the Gambia

Incorporating (forming) your limited company is relatively straight forward, especially after the introduction of the Single Window Business Registration Act, 2013.

There are just three simple steps:

1. Decide who the director(s) is going to be.

The director is the person who will be responsible for running the company, along with the shareholders. The nationality of the directors may have foreign workers levies if they are not Gambians or ECOWAS nationals.

2. Decide who the shareholder(s) is going to be

The shareholder(s) will be the person(s) who will own the company. The directors and shareholders are often the same people in small, limited companies and can be just one person. If the ultimate owner of the company is not a Gambia national, the company might need to be registered as a foreign company rather than a private company under the Companies Act 2013 for the registration of Private companies in the Gambia.

3. Register your company with the Registrar of companies

a. Fill the application for with name of the business and directors along with the business location and date of commencement of activity.

b. Submit a memorandum and articles of association to the registrar

c. Obtain a Business TIN number

d. The registrar General will then issue a Certificate of Registration and publish a notice in the Gazette.

Costs of registration of your limited company in the Gambia

1. Business Registration Form (Free)

2. Reservation of a Unique Company name (D500)

3. Tax Identification Number (D50)

Completing your bookkeeping

Bookkeeping is the recording of your day-to-day transactions on some kind of system, such as a spreadsheet or accounting software.

These transactions are then used as a basis for completing your accounts and tax returns.

No matter how big or small your business is you will need to ensure that you keep accurate bookkeeping records, to manage your overall finances and get a view of everyday expenses.

BMA Bookkeeping

We recommend using our very own bookkeeping services. Simple and easy to use, we offer our virtual services to cater specially for small businesses in The Gambia just like yours.

We can automate aspects of your bookkeeping through bank feeds, recurring transactions, and automated payment reminders. This not only reduces the potential for errors but also allows you to spend more time focusing on your business.

How often should I complete my bookkeeping?

We recommend completing your bookkeeping as often as possible, on a weekly basis or monthly basis.

Doing your bookkeeping regularly reduces the chance of errors and allows you to clearly understand how your business is performing.

Claiming your business expenses

Different types of business will have different types of expenditure. But as a general rule the vast majority of business expenditure is allowable, even expenses you have incurred personally for business purposes.

The most common business expenses are:

• Company vehicle expenses
• Staff costs and wages
• Use of home as an office
• Materials or good you sell
• Admin costs (telephone and internet)
• Advertising and marketing costs
• Business insurances
• Repairs and renewals
• Work clothing
• Staff training
• Professional fees (accountants, lawyers, etc)
• Travel and subsistence
• Bank charges and interest
• Capital expenditure (equipment or furniture etc)
• Entertaining costs
• Membership and subscription fees.

We recommend opening a company bank account to keep your business and personal transactions separate.

What is a dividend?

A dividend is a payment from the company’s profits (after tax) to its shareholder(s).

To declare a dividend, a dividend voucher and minutes must be produced.

Once the paperwork is in place, the money can be transferred from the company bank account to the personal bank account of the shareholders.

What is the financial year?

The financial year is a period of time for which a company will prepare its accounts and tax returns. The tax payable will be based on the amount of profit a company makes during its financial year. A limited company’s financial year will usually run to the end of the same month of formation a year later, although this date can be changed.

The Gambian Corporation tax

Corporation tax for limited companies in the Gambia is set at 27% for 2022. This means any profits made during your financial year will be taxed at 27%.

Paying your tax bill

The corporation tax is paid quarterly during the year and your final tax is payable no later than three months after the end of the tax year.

You can pay your corporation tax using the following departments of Gambia Revenue Authority:

- The large Taxpayer unit: a dedicated office for taxpayers with high turnover for them to fulfil their tax obligations located at Kanifing Revenue Office.

- The Tax Office operation unit: a dedicated office for small and medium taxpayers with offices in Banjul, Kanifing, and branch offices around the country.

Completing your accounts

If we are completing your accounts and accompanying tax returns, we follow this simple three process:

1. We send you a reminder to remind you of when your accounts are due and ask for your bookkeeping records.

2. We compile your accounts and complete your accounts. Then they will be double checked by a Senior Accountant.

3. We submit your accounts after we receive your approval to the GRA.

Taking money from your limited company

If the company is an owner operated limited company, then it is normally more tax efficient for the director(s) to take a small salary up to the PAYE threshold and remainder of the withdrawals as dividends.

By structuring the withdrawals in this way, the company directors do not pay income tax. The only tax payable is corporation tax on the profits of the company.

If the company directors and shareholders are not the same people or the shareholders are unequal then wages should be paid as per the hours worked in the company, so that the distribution of funds is fair.

If you would like some more information on this, then please get in touch for a free consultation and we will email you our salary and dividend guide.