Starting a Business Topic Analysis - Doing Business

This topic measured the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-size limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business used a standardized business that is 100% domestically owned, has a start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. The starting a business indicators considered two cases of local limited liability companies that are identical in all aspects, except that one company is owned by five married women and the other by five married men. The overall score for starting a business is the average of the scores obtained for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology and video for more information.

See information about entrepreneurial activity - including firm entry rates and gender-disaggregated statistics - in the Entrepreneurship Database.

What is measured?

Figure 1 - What are the time, cost, paid-in minimum capital and number of procedures to get a local limited liability company up and running?

Source: Doing Business database

Doing Business records all procedures officially required, or commonly done in practice, for an entrepreneur to start up and formally operate an industrial or commercial business, as well as the time and cost to complete these procedures and the paid-in minimum capital requirement (figure 1).

These procedures include the processes entrepreneurs undergo when obtaining all necessary approvals, licenses, permits and completing any required notifications, verifications or inscriptions for the company and employees with relevant authorities. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the indicators' component.

Two types of local limited liability companies are considered under the starting a business methodology. They are identical in all aspects, except that one company is owned by five married women and other by five married men. The score for each indicator is the average of the scores obtained for each of the component indicators for both of these standardized companies.

After a study of laws, regulations and publicly available information on business entry, a detailed list of procedures is developed, along with the time and cost to comply with each procedure under normal circumstances and the paid-in minimum capital requirement. Subsequently, local incorporation lawyers, notaries and government officials review and verify the data.

Information is also collected on the sequence in which procedures are to be completed and whether procedures may be carried out simultaneously. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. If answers by local experts differ, inquiries continue until the data are reconciled.

Read the methodology