*Photo supplied
*Photo supplied

Potential and existing business owners attended Bermuda Economic Development Corporation’s breakfast seminar on June 19th 2014 focused on helping new start-up businesses understand the cost of doing business in Bermuda.

Jamillah Lodge, BEDC Business Development Officer, welcomed attendees by reminding them of the importance of including all costs when planning to start a business. Mrs. Lodge suggested that before starting a business that burgeoning entrepreneurs should conduct a feasibility analysis by doing 4 things: getting personal, considering capacity, researching the market, and crunching the numbers. The latter was the primary topic of the morning. Mrs. Lodge further explained that many start-ups do not factor in some of the compulsory costs associated with starting a business in Bermuda like: business formation costs, payroll taxes, social insurance, health insurance and private pension. The seminar included an overview of each of these areas to assist attendees in starting their business planning process right.

The first presenter, Mrs. Keiva Maronie-Durham, Director and Attorney at Amicus Law Chambers, explained the differences between a sole proprietorship, partnership and Limited Liability Company, reviewing the pros and cons of each. She noted that while a Limited Liability Company has higher start up and annual costs it is a more secure structure and protects your personal assets against liability. In the Question and Answer session, Mrs. Maronie-Durham also confirmed that it was not necessary to register as a Limited Liability Company in order to operate in Bermuda, noting that if individuals chose to operate as a sole proprietor they would need to register with Government bodies, like the Office of the Tax Commissioner.

Joelene Lindsay, Senior Tax Auditor from the Office of the Tax Commissioner confirmed that all employees or self-employed persons have to pay payroll tax unless their payroll is less than $650 in any tax period. This presentation was filled with lively discussion as attendees asked questions to see if there was any circumstance where payroll tax would not be payable. Mrs. Lindsay stood firm stating “all persons providing services on the island are subject to payroll tax.” She helped attendees understand though, that taxes were payable only on the salary of the employee or self-employed person and not on total income earned and that the tax rate is adjustable based on annual remuneration with most small businesses falling into the 7.25% tax rate (annual remuneration of $250,000 or less).

Following the first set of presentations, attendees participated in a 10 minute Networking Event that allowed them to mingle with each other and the presenters. During the second half of the seminar, participants heard from Tonya Hatherley, Compliance Inspector from the Department of Social Insurance (DOSI). Ms. Hatherley advised that The Contributory Pensions Act 1970 & Regulations requires every person over the age of 18 (or school leaving age) who is gainfully employed for more than 4 hours per week to pay Social Insurance contributions. She indicated that although contributions into Social Insurance are compulsory, they are to ensure that every resident, once they reach a pensionable age, are able to become financially sustainable at retirement.

Ian Cameron, Compliance Officer at the Bermuda Health Council discussed the requirement for all employers to maintain an active health policy with the minimum requirement of the Standard Hospital Benefit (SHB). He advised that it is the employer’s responsibility to ensure that employees have health insurance and the employer could be held liable if the employee is found not to have coverage.

The last presenter of the day was Alan Lugo, Pension Officer with The Pension Commission. He advised that every employer must establish and maintain a pension plan for eligible employees (Bermudian, or spouse of Bermudian, 23 or older, completed 720 or more hours of work in a calendar year). Mr. Lugo also explained that a self-employed person must apply for a pension plan if between the ages of 23 and 65 and have earnings exceeding $20,000 in a calendar year.

Closing the seminar, Acting Executive Director, Erica Smith reassured the attendees that it was not the intent to scare them away from entrepreneurship by identifying the cost to start up a business but instead to better prepare them to plan to start their start-ups right by taking into consideration all the costs. The majority of the attendees surveyed agreed that the seminar was very informative, with one participant remarking that they really benefited from “understanding the pros and cons of doing business before any undertaking [purchasing] product and services.” Another attendee remarked that the clarity of data was very well imparted”.

For more information on this seminar and our upcoming seminars, please contact BEDC at info@bedc.bm or visit the BEDC website at www.bedc.bm.