Choosing the right legal structure is one of the most important early decisions you’ll make as a founder in Ghana. It affects your personal liability, taxes, ability to raise money, compliance workload, and even how customers and investors perceive you. This guide breaks down the main entity types available in Ghana, their pros and cons, and how to choose the best fit for your goals.
The main business structures in Ghana
1) Sole Proprietorship (Business Name)
- Best for: freelancers, one-person side hustles, micro and family businesses testing an idea.
- What it is: A business owned by one person. It is not a separate legal person; the owner is the business.
- Liability: Unlimited — your personal assets can be used to settle business debts.
- Tax: Profits are taxed as the owner’s personal income (PAYE bands up to 35% for residents).
- Registration: Register a Business Name with the Office of the Registrar of Companies (ORC). You must renew annually or the name can lapse/ be struck off.
- Good to know: Cheapest and quickest to start, but offers no liability protection and can limit investor confidence.
2) Incorporated Partnership (Act 152)
Best for: professional practices (e.g., small firms), ventures with two or more active co-owners who want pass-through taxation.
- What it is: Two or more persons carry on business for profit under the Incorporated Private Partnerships Act, 1962 (Act 152).
- Liability: Typically unlimited for partners (unless otherwise structured under specific laws).
- Tax: In practice, partners are taxed on their share of profits (pass-through).
- Registration & filings: Register with the ORC; partnership names also have renewal/filing obligations.
- Note: Ghana does not currently recognise Limited Liability Partnerships (LLPs) in the UK/US sense.
3) Company Limited by Shares (Private or Public)
- Best for: growth-oriented SMEs and startups; businesses seeking investors or limited liability.
- What it is: A separate legal person incorporated under the Companies Act, 2019 (Act 992). Shareholders’ liability is limited to unpaid amounts on their shares. Suffix “Ltd” for private, “PLC” for public.
Ownership & management:
- Private companies can have a single shareholder.
- Must have at least two directors, with at least one resident in Ghana, and a qualified Company Secretary
- Tax: Subject to Corporate Income Tax (CIT) at 25% (different sectoral rates may apply).
- Compliance: Annual returns (with financials) and beneficial ownership disclosures.
- Why choose it: Strong liability protection, credibility with customers/banks/investors, flexible ownership.
4) Company Limited by Guarantee (Non-Profit/NGO/Association)
Best for: clubs, churches, charities, NGOs, professional associations.
- What it is: A company without shares; members guarantee a fixed amount if the company winds up. Suffix “LBG”. Cannot distribute profits to members.
- Tax: Not automatically tax-exempt — you must apply to the Ghana Revenue Authority (GRA) for any exemption status based on your activities
- Extra oversight: Many NGOs also engage with the Non-Profit Organisation Secretariat (NPOS) for regulatory/oversight processes in addition to ORC registration. Check current NPOS requirements if you’ll receive grants or operate as an NGO.
- Compliance: Annual returns and governance standards similar to companies under Act 992.
5) Unlimited Company
- Best for: rare/legacy use cases where owners accept unlimited liability (e.g., certain financial or professional contexts).
- What it is: A company where members have unlimited liability; may be private (PRUC) or public (PUC). Very uncommon for typical SMEs
6) External Company (Branch of a Foreign Company)
- Best for: foreign companies testing the market or operating a branch without creating a Ghana-incorporated subsidiary.
- What it is: A foreign body corporate that establishes a place of business in Ghana and registers with the ORC as an External Company. Not a separate legal entity from the parent.
- Tax: Ghana taxes the permanent establishment (branch) on Ghana-source profits; rates depend on activity.
- Compliance: Must register (and file annual returns) with ORC; often requires appointing a local manager and providing parent financials
7) Co-operative Society
- Best for: farmer groups, producer groups, savings & credit co-ops (SACCOs), and other member-owned ventures.
- What it is: A member-owned enterprise registered not under Act 992 but under the Co-operative Societies Decree, 1968 (NLCD 252), overseen by the Department of Co-operatives. Democratic, community-focused structure.
How to choose the right one (decision guide)
Are you testing an idea solo with low risk?
Start as a Sole Proprietor to validate quickly and keep costs low. Switch to Ltd by Shares once you gain traction or take on significant risk/credit.
Are two or more people actively working and sharing profits?
An Incorporated Partnership can work if you’re comfortable with unlimited liability and want pass-through taxation. If you want liability protection and investor appeal, go straight to Ltd by Shares.
Are you building a scalable startup, importing, or seeking investment/loans?
Choose a Company Limited by Shares (Private). It offers limited liability, flexible shareholding (including a single shareholder), and is what banks and investors expect. Ensure you meet director/secretary rules.
Is your mission charitable or member-benefit rather than profit?
Register a Company Limited by Guarantee (LBG) and pursue applicable tax exemption with GRA; or consider a Co-operative if it’s member-owned and community-driven.
Ghana Revenue Authority
Are you a foreign company testing Ghana without a local subsidiary?
Register an External Company (branch). If you want local equity participation, ESOPs, or clearer investor optics, form a Ghana Ltd by Shares subsidiary instead.
Important Ghana-specific rules to keep in mind
- Directors & Secretary (Ltd by Shares/Guarantee): Minimum two directors (one must be resident in Ghana) and a qualified Company Secretary.
- Annual Returns & Beneficial Ownership: Companies must file annual returns (with financials) and keep/report beneficial owner information to the ORC. Business Names (sole proprietors) must renew annually. Missing deadlines attracts penalties or strike-off.
Taxes: General CIT is 25%; individuals (including sole proprietors and partners) are taxed on graduated bands up to 35% for residents. Sector-specific rates/exemptions can apply. Always check current GRA guidance.
Foreign participation: Ghana’s investment regime (GIPC) sets reserved activities (e.g., petty trading, salons, taxi services under 25 vehicles) for Ghanaians only, and imposes minimum foreign capital where foreigners may participate (historic thresholds: US$200k for joint ventures, US$500k wholly foreign-owned, and US$1m + 20 Ghanaian employees for trading). Policy is being updated in 2025 — verify current thresholds with GIPC/trade.gov before you invest
Real-world scenarios
Solo creative/consultant: Start as Sole Proprietor for speed; convert to Ltd by Shares when you sign bigger contracts or bring in a co-founder. (Conversion is possible but involves fresh incorporation and filings.)
Food processing SME: Go Ltd by Shares for liability and bankability; you can issue shares to early employees/investors.
Charity/faith-based group: Choose LBG and manage governance carefully; apply to GRA for exemptions as eligible.
Foreign brand testing Ghana: Register an External Company to start; convert to a Ghana subsidiary (Ltd) if you plan long-term operations or fundraising locally.
Frequently asked questions
Can a private company have a single owner?
Yes. Single-member private companies are permitted under Act 992 (still need two directors and a qualified secretary).
Do sole proprietors file annual returns?
They do annual renewals of the Business Name with the ORC (different from companies’ annual returns with financial statements).
Is there a fixed minimum stated capital for Ghanaian-owned private companies?
Act 992 doesn’t set a universal minimum stated capital for all private companies (sectoral rules can apply). Stamp duty is paid on whatever stated capital you choose.
Can foreigners own 100% of a Ghanaian company?
Yes, in many sectors, subject to GIPC rules (reserved activities and minimum foreign capital where applicable). Confirm the latest thresholds before registering.
Step-by-step next actions
- Map your risk & funding: If you’ll borrow, import, or hire staff, bias toward Ltd by Shares.
- Check sector rules: Banking, mining, health, education, and foreign-owned trading have extra licences/capital rules. Verify GIPC & sector regulators early.
- Choose a compliant name & suffix: LTD / PLC / LBG / PRUC / PUC as applicable.
- Assemble officers: 2 directors (≥1 resident) + qualified secretary for companies.
- Register with ORC, obtain TIN/Tax ID, then register for taxes with GRA. File returns/renewals on time.
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