Belize's Small Business Definition: Understanding The Criteria

Belize is a small country in Central America with a population of around 350,000-400,000. It is considered a developing nation with a stable and healthy economy, and the second-highest per capita income in Central America. The country has a very business-friendly environment, with the government providing many incentives to businesses that contribute to the betterment of the economy, such as tax holidays and import/export duty exemptions.

Belize has a complex legal system, and the government and business owners need to be aware of the Belize Constitution, Business Law, and Commercial Code. The country has a two-tiered banking regime with diverse services for various types of depositors and levels of demand. The official currency is the Belize dollar (BZD), which has been pegged to the US dollar since 1978, at a rate of 1 USD = 2 BZD.

Businesses in Belize are typically defined by their economic activity and can range from small service providers to large manufacturing companies. The country offers many opportunities for new industries, with real estate property being relatively inexpensive for rental or purchase. The process of setting up a business in Belize includes choosing a business structure, registering with the government, and obtaining the necessary licenses and registrations.

Belize's small business definition

Belize is a small, sparsely populated country with a stable government and a pro-business atmosphere. It has a strong English-speaking culture and is considered a developing nation. The country offers many incentives to businesses, including tax holidays, no income taxes, no import duties, and easy foreign investment procedures.

The Belize Trade and Investment Development Service (BELTRAIDE) provides support to small businesses planning to invest in Belize. The Small Business Development Centre Belize (SBDC Belize) is a unit of BELTRAIDE that offers free, customised, needs-based services to MSMEs to facilitate their competitiveness and export readiness.

Small and Micro Businesses account for at least 90% of all businesses in Belize. It is not uncommon for these businesses to be owned by one family or two close friends.

The process of setting up a small business in Belize involves the following steps:

• Business Plan: This step involves creating a plan that identifies your competitive advantages, strengths, and weaknesses. It is necessary for obtaining financing from banks, investors, or funding agencies.
• Registration of Business Name: According to the laws of Belize, every firm or individual having a place of business in Belize needs to register the business name with the Belize Companies Registry in the City of Belmopan. The application fee is BZ$25.00 (US$12.50) and the minimum average processing time is 3 hours.
• Incorporation of a Company: An operation must be incorporated in Belize and the Memorandum of Association and Articles of Association must be submitted to the Belize Companies Registry for review. A Certificate of Incorporation will be issued upon completion. The application fee depends on the quantity of share capital.
• Land Acquisition and Development: If you require land for your business, you must submit an application to the Commissioner of Lands, specifying the location and acreage being sought. For applications exceeding 25 acres, a development plan must also be submitted to the Minister of Natural Resources and the Environment.
• Trade License: A trade license must be obtained from the local city or town council before commencing any business operations. The fee for the trade license depends on the annual rental value of the premises.
• Registration for Taxes: All businesses must register for various taxes, including General Sales Tax (GST), Business Tax, and Social Security Tax.

In addition to the above steps, it is important to consult the relevant authorities and seek legal advice when setting up a business in Belize, as there may be additional permits and requirements depending on the nature of your business.

Small business registration

Small businesses account for at least 90% of all businesses in Belize, so it's a great place for small investors to venture into. Here is a detailed guide on how to register a small business in Belize:

Business Plan

A business plan is essential for identifying your competitive advantages, strengths, and weaknesses. It is also necessary for obtaining financing from banks, investors, or funding agencies. It allows you to organize people, resources, and capital efficiently and enables you to foresee problems before they arise.

Registration of Business Name & Incorporation of a Company

According to the Business Names Act, Chapter 247 of the Laws of Belize, every firm or individual with a place of business in Belize must register their business name with the Belize Companies & Corporate Affairs Registry. The registration can be done online, and the minimum average processing time is 3 hours. The application fee is BZ$25.00 (US$12.50).

Incorporation of a Company

To incorporate a company in Belize, you must submit the company's Memorandum of Association and Articles of Association to the Belize Companies Registry for review. After that, a Certificate of Incorporation will be issued. The application fee depends on the quantity of share capital.

Land Acquisition and Development

If you need to acquire land for your business, you must submit an application to the Commissioner of Lands, specifying the location and acreage being sought. For applications exceeding 25 acres, a development plan must also be submitted to the Minister of Natural Resources and the Environment. An Environmental Impact Assessment (EIA) is required for ventures over 500 acres.

Trade License

Obtaining a trade license is necessary before commencing any type of business operations in Belize. The license must be obtained from the local city or town council and is valid for one year. The cost of a trade license is BZD 125 (around USD 63).

Registration for Taxes

All businesses in Belize must register for taxes. This includes registering for General Sales Tax (GST) with the Department of GST if your annual turnover exceeds BZ $75,000 (US$37,500). You must also register for Business Tax to obtain a Tax Identification Number (TIN) and a Certificate of Registration, which must be displayed prominently at your place of business. Additionally, businesses earning over BZ$ 75,000 annually must file monthly business tax returns, and self-employed persons earning BZ$ 20,000 or more annually must also file business tax returns.

Social Security Registration

All businesses that employ one or more persons must register with the Belize Social Security Board within seven days of employing an employee. Social Security covers the health benefits of employed persons in cases of sickness, maternity, or injury.

Local Bank Account Establishment

Explore the requirements for opening a local bank account in Belize. As a non-national, you may need to reside in the country for at least six months to a year or obtain permission from the Central Bank of Belize to open an account at a local bank. International banks are a good alternative, as they allow you to maintain your account in US dollars.

Business Location Selection

Beltraide provides suggestions and tips for businessmen to find the perfect spot for their companies.

Immigration and Employment Compliance

Learn about the different visas and work permits available from the Belizean government. Anyone wishing to generate income in Belize must receive some type of work permit, and the costs can vary, so it is recommended to consult with a local lawyer.

Small business support

The Belize Trade and Investment Development Service (BELTRAIDE) is a government body that provides support for small businesses in the country. BELTRAIDE's Small Business Development Centre (SBDCBelize) offers one-on-one confidential and needs-based business advising, as well as training in proven management fundamentals to help micro, small, and medium-sized businesses succeed. SBDCBelize also provides free advisory services, including business plan development, loan application assistance, and guidance on exports.

In addition to BELTRAIDE, there are other sources of support for small businesses in Belize, including:

• The Micro, Small and Medium Enterprise (MSME) Support Program: This government initiative provides financial relief to small businesses to help with employee retention and transition during economic challenges, such as the COVID-19 pandemic. The program offers grants, wage subsidies, and soft loans to eligible businesses.
• DFC Small Business Loans: DFC offers loans ranging from $5,000 to $40,000 to improve or expand small businesses. The interest rate is as low as 7%, and the loan term can be up to 5 years. DFC also provides free business project assessments and assistance with loan requirements.
• Belize Chamber of Commerce: The chamber of commerce can provide resources and support for businesses looking to operate in Belize.
• International Banks: Belize has several international banks that offer various credit facilities, such as loans, lines of credit, and credit cards, which can help finance and operate a small business.

When starting or operating a small business in Belize, it is recommended to consult with local lawyers and accountants to navigate the legal and financial requirements. Additionally, there may be opportunities for partnerships or collaborations with other businesses, as it is common for family or close friends to own businesses together in Belize.

Small business taxes

Belize is considered a tax haven, allowing individuals and corporations to legally reduce their tax liabilities. The country has a stable and healthy economy, with the second-highest per capita income in Central America.

Understanding the Tax Structure

Belize has a flat tax rate of 25% for individuals earning more than $26,000 per year. Those earning less than this amount annually are exempt from income tax. The tax policy includes intermediary reliefs for those earning between $26,001 and $29,000. Additionally, there is a standard tax deduction, and various reliefs, such as for charity and education.

Registration and Compliance

Small businesses in Belize must register for Income Tax and General Sales Tax (GST) with the relevant departments. They must also register with the Belize Social Security Board if they employ one or more persons.

General Sales Tax (GST)

GST is a consumer tax applied at a rate of 12.5% on goods and services in Belize. Businesses with sales or gross revenues of $75,000 or more per annum must register for GST. This tax is charged on most goods and services within the country, except for exempt or zero-rated supplies. Exempt supplies include financial services and some medical supplies, while zero-rated supplies include certain food items like rice, flour, and fresh fruits and vegetables.

Business Tax

Businesses, companies, and self-employed persons in Belize are liable to pay business tax, with rates varying according to business classification. These taxes are due on the 15th day of each month, covering the previous month's receipts. Late filing and payment may result in penalties and interest charges.

Other Taxes and Considerations

In addition to income tax, GST, and business tax, there are other taxes that small businesses in Belize may need to consider, such as property tax, which is levied by the respective city councils in each district. Additionally, there is a Municipal Garbage Disposal Rate, which varies depending on the location and the amount of garbage generated.

Tax Incentives and Support

The Belize government provides various incentives to businesses, including tax holidays and import/export duty exemptions, especially for those contributing to the economy and providing jobs to locals. Additionally, government trade promotion groups like BELTRAIDE offer support and information to new investors, helping to streamline the startup process.

Navigating the tax landscape in Belize can be complex, and it is always recommended to consult with a competent accountant or attorney to ensure compliance and optimize your tax structure.

Small business banking

Belize is a great place to start a small business, with many incentives provided by the government for businesses that contribute to the economy and create jobs for Belizeans. The country has a small population of around 350,000-400,000, but its major industries, tourism and agriculture, attract many foreign businesses.

The banking system in Belize is well-regulated and closely modelled after the British and American banking systems. All banks are owned by or affiliated with banks in Europe and North America and are required to maintain 24% liquidity at all times. There are four commercial banks regulated by the Central Bank of Belize, which exercises tight oversight over the industry.

Choose a Bank

You can choose from the four commercial banks regulated by the Central Bank of Belize:

• Atlantic Bank Limited
• The Belize Bank Limited
• Heritage Bank of Belize
• National Bank of Belize

Alternatively, you can opt for a credit union. The Holy Redeemer Credit Union is the largest in the country, with 60,000 members and 650 million dollars in assets. Credit unions are a popular alternative to commercial banks as they charge simple interest.

Understand the Requirements

To open a small business account, you will need the following documents:

• Certificate of Registration
• Extract of the business name
• Letter addressed to the bank requesting the opening of the account, stating the purpose, signatories, and signing conditions
• Valid social security card or passport for all individuals on the account, along with a recent utility bill
• Address verification for the business (utility bill or lease agreement)

Be Aware of the Benefits

Having a small business account in Belize offers several advantages, including:

• Proper record-keeping of deposits, withdrawals, and payments
• Electronic account statements for easy balancing
• Immediate notifications of transactions
• Free online banking, E-Kyash, and merchant services
• Access to financing based on your account records

Understand the Fees and Requirements:

A monthly fee of $7.50 is charged for business or personal chequing accounts. Other fees include:

• Cash deposit fee: $1.50
• Cheque processing fee: $2.25 for cheques processed by BBL, $3.50 for other banks
• Initial deposit: BZ$200, which is recommended to be maintained to avoid overdraft fees

Explore Additional Services

Belize banks offer a range of services that can benefit small businesses, including:

• Unsecured loans up to 4 years
• Secured loans up to 10 years
• Competitive interest rates
• Overdraft protection
• Credit and debit card acceptance
• Online and mobile banking
• ATM network across the country

Be Mindful of the Challenges

While Belize offers many opportunities for small businesses, there are some challenges to be aware of. The country has high telephone and internet access fees, an erratic electricity supply, and a tedious process for acquiring land. Additionally, there is no insurance on deposits, and foreign exchange transactions have daily changing currency exchange rates.

In conclusion, small business banking in Belize offers a range of benefits and services that can support the growth of your enterprise. By understanding the requirements, fees, and challenges, you can make informed decisions about your financial needs and navigate the banking system effectively.

Frequently asked questions