Are you planning to launch a venture on the idea you conceived a few days back? That’s a genius idea! For now, you must be full of beans about turning it into reality soon. However, having patience here won’t invite any blunder. You must first equip yourself with the knowledge of procedures of starting a business and load yourself with guts and dedication to make it there.
Is Cyprus on your mind for locating your venture? Well, then you are about to enter a country that offers a conducive business environment to investors and start-uppers worldwide. Being situated in Europe, it would automatically come to your mind that one must have to cut through a terrific bar of red tape and fulfill many requirements. However, that is not the case at all. Instead, opening a company in Cyprus involves far less bureaucratic and fiscal pressure, thereby rendering the process easy-breezy. Furthermore, it is one of the most beautiful and touristic nations in the EU and sees a thriving real estate sector.
You may face some hassles when starting a business anywhere, especially if you jump into it blank and clueless. Here, we have passed through the process of launching a business in Cyprus, and also you will learn the criteria and requirements you will need to fulfill.
To start a business in Cyprus, first of all, you will need to choose a business name and check its availability before finalizing and then getting it registered. Now, prepare your filing documents such as Articles of Association and Memorandum of Association. Now, head to a bank to set up a business bank account and deposit minimum paid-in capital. Appoint the director, company secretary, and other officials of your business. Now is the time to collect all the necessary papers and submit them to Cyprus Companies House to get your business registered. Thereafter, you will need to register the company with tax authorities, social security and pension authorities, and the VAT body. Now, to operate your business legally, you will need to obtain permits and licenses. And there you go!
In the sections that follow, you will understand the process of starting a business in detail.
Process of setting up a business in Cyprus
Cyprus, one of the most crucial commercial centers in Europe, makes a remarkable location to set up a venture, thanks to its strategic location. It offers incredible opportunities to establish and expand businesses in the country as well as provides the perks of its economic stability. Before jumping impatiently into the journey of starting a venture anywhere, one must consider knowing the process, requirements, formalities, costs, qualification criteria, etc. That would facilitate you in easing the process of launching a business. Now, here is a detailed account of the process of starting a business in Cyprus. Read on!
- Craft a solid business plan: Creating a solid business plan is more than important when it comes to starting a venture. It is basically an outline, or say, a detailed roadmap that elaborates what your business is all about, its vision, its mission, its objective, strategies to achieve those goals, and so forth. Furthermore, when drafting a business plan as you will do your market research, scrutinize your competitors, and analyze the demand and supply of the product/ service you want to offer, you will be able to identify the gaps. And thus, it will help you improvise your strategy. Moreover, investors and often banks at the time of opening a bank account may want to have a look at this document of your business.
- Choose a business legal structure: Choosing a legal structure of a business is another critical step where you need to act carefully and wisely. This is because the company legal form you select will determine your tax rates, fundraising abilities, paperwork requirements, liabilities, etc. Your company’s legal structure will also decide how frequently the board of directors of your company needs to file paperwork, or if you even require aboard, for that matter. In Cyprus, the common business structure to choose from is a sole proprietorship, partnership, limited liability company, general partnership, limited partnership, branch offices, etc.
- Get your documents ready: Now, prepare all your business’s filing documents, including the Articles of Association and the Memorandum of the company. These documents are accompanied by a declaration sworn by an attorney and also include information about the company, its directors, shareholders, and the secretary. Once you have collected all the papers, submit them to the Registrar of Companies in Cyprus and wait for the sanction. The act of incorporation may take up to 5 working days.
- Choose a business name: Choose a name that reflects the values and essence of your brand. However, do ensure to check its availability with the company registrar of Cyprus before finalizing it. No two companies in Cyprus can have the same name.
- Fulfill the legal requirements of starting a business: In order to open a company in the country, you must own an official address in Cyprus, where you will receive emails and notices, company register like charges, directors and member details, and other pertinent documents. All businesses in Cyprus need to have two directors except in the case of a private company, where one director is acceptable.
- Open a business bank account: Set up a business bank account with a local bank and deposit your minimum share capital. Cyprus Company Law poses no minimum share capital requirements to start private companies. However, for a public company, the paid-in minimum share capital is set at €25,629.
- Get registered with tax authorities: Now is the time to register your company for VAT, pensions, social security, and taxes. You would be allotted a tax number and VAT number after getting registered at these administrative offices. For social security and pension, you need to register your business with Social Insurance Services.
- Procure permits and licenses: To operate a business legally, one has to get permits to construct and establish a business and other permits which depend upon the activity your business will undertake. Once you are done with all these steps, you are ready to initiate the operations of your company and hire employees.
Hiring Employees in Cyprus
After you are done registering your business and making it officially recognized in Cyprus, you then need to consider hiring people to help you operate your company and handle different operations. However, you must know that there are certain rules and regulations that regulate the process of recruiting staff and employees. These obligations, entitlements, and responsibilities are enlisted in the employment and labor act of the country where you are planning to set up your business.
With the help of an experienced HR agency like Zimyo by your side, hiring high-quality personnel in Cyprus would be an effortless process for you. Here is all you need to know about your duties and rights as an employer. Read on!
- Trial Period/Probation Period: The trial period intends to evaluate the employee’s competency, skills, knowledge, health, abilities, and personal characteristics and see how they adapt to the work environment and role assigned to them. The probationary period in Cyprus cannot be shorter than 21 weeks which can be stretched to a period of 2 years. The employer has to mention the trial period in the employment contract upfront to the employee. During this period, an employer, as well as the employer, can terminate the services without giving any notice or stating any ground for termination.
- Leave and Holidays: Employees who have been employed in a company for 48 weeks within a calendar year are entitled to receive an annual leave of at least four weeks. Employees working five days in a week must get 20 days of annual leave on working days, while those who work 6 days in a week must get 24 days of annual leave on working days. In case the employee worked for less than 48 weeks in a year, the employer has the right to reduce the leave correspondingly. There are about 14 public holidays in Cyprus that are paid.
- Maternity Leave: Female employees in Cyprus are entitled to receiving 18 weeks of maternity leave, of which 11 weeks of leave is compulsory. It is allocated two weeks before the anticipated date of childbirth, and the remaining portion of leave is to be used after the childbirth. For employees working in the public sector, the initial 12 weeks of maternity leave are given total compensation, whereas the next six weeks are compensated at the rate of 72 percent of the regular salary of the employee. Maternity leave for employees in Cyprus can be initiated two weeks before the anticipated date of a child delivery or from the week of child delivery itself. All full-time and part0time employees are entitled to get maternity leave.
- Termination of Services: To terminate an employment contract in Cyprus must be preceded by giving prior notice. Dismissal is considered unfair except in the following cases: poor employee performance (due to illness, injury, etc.), force majeure, civil commotion, an act of God, redundancy, end of the fixed-term employment contract, employee reaching retirement age, etc. the employment contract can never be terminated by the employee due to employee joining a safety committee or trade union, their participation proceedings, maternity, pregnancy, nations or social origin, parental leave, color, sex, marital status, religion, political opinion, etc.
- Pension: Social Pension Law of Cyprus intends to pay pensions out of the General Revenue of the Republic to individuals living in Cyprus. That is reimbursed for meeting the living conditions of those who have turned 65 years old and do not possess any right pension or similar reimbursements from any source.
- Work Hour Norms: The standard working week in Cyprus is 40 hours. Typical office hours start from 8: 30 am to 1 pm and then from 2 pm to 5: 30 pm. However, in some offices during the summer months, longer lunch breaks are provided, or employees may have shorter workdays. Government offices start work between 7: 30 am to 8: 30 am and then shut between 2:30 pm to 3: 30 pm. Employees are entitled to 11 hours of continuous rest from work in a day and must also receive a rest day on Sunday. For employees working for six hours at most, employers must provide at least fifteen minutes of break time which should not, however, be provided neither at the start of the working day nor just before ending it.
How easy is it to conduct business in Cyprus?
How easily you can register your business, acquire permits, get an electricity connection for your venture, pay taxes, resolving insolvency, enforce contracts, etc., determines the extent of support a country provides to start-uppers. However, the process of launching a business is hassling to a limit everywhere. However, in some countries, it can be more challenging to transform your business idea into reality. The World studies and collates different factors in a comprehensive Doing Business report to the state how enabling a country is for starting businesses. Here we have covered the major indicators that decide the Ease of Doing business in the economy in the context of Cyprus, which got 54th position among 190 countries and scored 73.4 out of 100, according to the Doing Business report 2020.
- Starting a Business: The process of starting a business entails various costs, procedures, formalities, and investment of your time to get the paperwork done. The Doing Business measures these factors to determine the rank of an economy in this sub-index. Cyprus was given 50th position among 190 countries and scored 92 out of 100. In 2017, the country merged the procedures of VAT and tax registration while making reservations and name searches faster, thereby streamlining the process.
- Managing Permits: Businesses require foundation licenses and permits and additional permits to carry out the activity which they wish to undertake legally. For instance, if you are starting a tourism company, you will need a different authorized license. The type of permit you need depends on the business and its operations. The Doing Business evaluates the cost, formalities, and time the process of managing and acquiring permits involves. Cyprus got 125th position and scored 64.2 out of 100 among 190 economies.
- Getting Electricity: Electricity is an indispensable requirement for establishing and operating a business. So, you will definitely have to run from one administrative office to another in order to procure a connection to the electricity grid for your business. And that can render the process of starting a business bothersome or easy, depending upon the time, cost, and formalities one has to satisfy. Cyprus got 75th rank and scored 78.4 out of 100 among 190 economies which the Doing Business compares. In 2016, the country reduced the time it earlier used to take to obtain electricity connection, thereby rendering the process easier.
- Getting Credit: Credit in businesses is sought to enhance their growth, expand it, meet the overheads and expenses, recruit employees and additional needed staff members, etc. There are certain formalities and procedures one has to go through to get credit. Thus, the Doing Business measures this factor as well to gauge the overall EODB rank of an economy. According to the Doing Business report 2020, Cyprus got the 80th position and scored 60 out of 100 among 190 countries in this sub-index. In 2011, the country established its first private credit bureau, thereby improving access to credit information.
- Managing Payroll: It is indeed fortunate and pleasing to see your hard work paying off in your business’s growth. At this point, every business owner has to regard the decision of hiring new employees to expand the entity, and thus, consequently, you will need to manage a bigger payroll and abide by the tax laws of the country. Therefore, it is pragmatic to hire an efficient and competent payroll management expert like Zimyo to help you adhere to taxation obligations as well as pay your staff and employees on time.
- Paying Taxes: As the business becomes eligible to pay taxes, the business owners need to abide by different laws and regulations and endure the formalities of filing and paying taxes. How easily one can accomplish the process determines the rank of an economy in the sub-index of Paying Taxes. According to the Doing Business report 2020, Cyprus got 29th rank and scored 85.5 out of 100 among 190 economies that were compared. In 2015, the country reduced the count of provisional tax installments for paying corporate income tax, thereby rendering the process easier.
- Enforcing Contracts: This is another indicator considered by the Doing Business, where it assesses the outcome, time, formalities, requirements, etc., involved in the process of enforcing contracts. Cyprus got 142nd rank in this sub-index and scored 48.6 out of 100 among 190 economies. The country introduced a simplified and quick procedure for claims that are worth lower than €3,000 in 2016.
- Resolving Insolvency: Resolving insolvency is another necessary indicator that determines the EODB rank of an economy. The Doing Business probes into the time, outcome, procedure, formalities, etc., involved in resolving commercial insolvency. Furthermore, it also measures the efficiency and strength of judiciary and legal regulations of countries that are related to the context. Cyprus got 31st rank among 190 countries and 72.5 out of 100. In 2016, the country adopted a reorganization procedure and provisions to support the continuation of the business of the debtor through the proceedings, thereby rendering the insolvency procedure easier.
Cyprus features immense power, reliability, and reputation in Europe when it comes to starting a business here. The country furnishes investors and new businesses with many tax deductions and other perks that render the location enticing for establishing a venture. Furthermore, it is known to respond well to the demands of both international as well as domestic enterprises. All in all, Cyprus renders itself a country of remarkable opportunities. You won’t regret it!
Zimyo is a leading HR and Payroll management services provider in Cyprus with multiple years of experience. The company helps businesses hire the best talent and takes care of the financial requirements of employees, such as advances or credit for a hassle-free work experience.