Entrepreneurship Notes Prepared by Adnan Gul

Banking products. Banking products are the different services and items that banks offer to help you
manage your money. These include things like:

1 Saving Product (Saving Account). A savings account is a type of bank account where you can keep your
money safe. It helps you save money and usually pays you a small amount of interest over time.

2 Lending Product. A lending product of a bank is a financial product where the bank gives money to a
person or business, which they must pay back over time, usually with interest. Examples include personal
loans, home loans, and credit cards.

3 Current product (account). A current account is a type of bank account where people can deposit and
withdraw money frequently. It's often used for day-to-day transactions like paying bills, shopping etc.

4 Payment product. A payment product of a bank is a financial service that allows customers to make
transactions, such as transferring money, paying bills, or making purchases. Common examples include
debit cards, credit cards, online banking, and mobile payment apps. These products provide a secure and
convenient way to handle financial transactions.

Islamic Mode of Financing. Islamic financing is a system where financial transactions follow Islamic law,
avoiding interest (riba). It focuses on profit-sharing, ethical investments, and asset-backed deals. Some
examples Include.

1. Mudarabah (Profit Sharing)

In this system, one person (the investor) provides the money, and another person (the entrepreneur)
provides the skills and effort to start a business. The profits are shared between them, but if there’s a loss,
only the investor loses money (the entrepreneur doesn't lose money from their own pocket).

Example:

An investor gives money to a business owner to open a store.

2. Musharakah (Joint Venture)

Here, both parties (the investor and the entrepreneur) contribute money to a business. They share both
the profits and the losses in proportion to how much they invested.

Example:

Two people invest their money to open a restaurant.

In this type of agreement, a bank buys something for you and sells it to you at a higher price, but you pay
in installments. The bank tells you the original price and the added profit, so everything is transparent

Example:

You want to buy a car. The bank buys it for you and sells it to you at a higher price, which includes their
profit. You pay in installments, and there is no interest.

4. Ijara (Leasing)

This is a lease agreement where the bank buys an asset (like a car or building) and rents it to you. You pay
rent for using the asset, and at the end of the lease, you might have the option to buy it.

Example:

A bank buys a car and leases it to you.

You pay monthly rent for using the car, and at the end of the lease period, you may buy the car at a pre-
agreed price.

Sources for startup.

1. Personal Savings: The founders use their own money to fund the business.

2. Family and Friends: The founders borrow money from family or friends to help start the business.

3. Angel Investors: Wealthy individuals who invest their own money in early-stage startups in exchange
for ownership or share etc.

4. Crowdfunding: Getting small amounts of money from many people, usually through online platforms,
to fund the business.

5. Bank Loans: Borrowing money from a bank that must be paid back with interest.

Regulatory requirements for enterprise in Pakistan

Following are necessary steps for registering an enterprise in Pakistan.

1. Company Registration

What it is: Any business that wants to operate as a legal entity (like a private limited company, partnership,
or sole proprietorship) must register with the Securities and Exchange Commission of Pakistan (SECP).

Why it matters: It ensures the business is recognized by the government and can legally conduct
transactions and hire employees.

2. Tax Registration
What it is: Businesses must register for taxes with the Federal Board of Revenue (FBR). This includes
getting a National Tax Number (NTN) and registering for Sales Tax if the business meets the threshold.

Why it matters: This allows the government to track the business’s income and ensure they pay the right
amount of taxes.

3. Labor Laws and Employment Regulations

What it is: Businesses must follow laws related to worker rights, including fair wages, working hours, and
safety. This is overseen by The Ministry of Human Rights and Labor Department.

Why it matters: Ensures employees are treated fairly, given proper wages, benefits, and working
conditions.

4. Environmental Regulations

What it is: Companies must follow environmental rules, like controlling pollution and waste disposal. This
is monitored by The Environmental Protection Agency (EPA).

Why it matters: To protect the environment and avoid harming public health and natural resources.

5. Consumer Protection

What it is: Businesses must ensure that their products and services are safe, reliable, and accurately
represented to customers. The Competition Commission of Pakistan (CCP) oversees this.

Why it matters: To protect consumers from unfair practices, such as false advertising or unsafe products.

6. Intellectual Property Laws

What it is: Businesses must protect their inventions, trademarks, and patents by registering with the
Intellectual Property Organization of Pakistan (IPO).

Why it matters: Protects the company’s creative works and prevents others from copying or stealing their
ideas.

7. Financial Reporting and Accounting Standards

What it is: Businesses, especially large ones, need to maintain proper accounts and file financial reports
according to International Financial Reporting Standards (IFRS). This is monitored by SECP.

Why it matters: Ensures transparency in the financial health of the business and protects investors.

8. Health and Safety Regulations

What it is: Companies must provide a safe working environment by following health and safety laws.

Why it matters: To prevent workplace accidents and ensure the well-being of employees.

9. Import/Export Regulations

What it is: If a business deals with importing or exporting goods, it must follow regulations set by The
Trade Development Authority of Pakistan (TDAP), Customs Department, and FBR.
Why it matters: Ensures businesses comply with trade laws, pay the necessary duties, and follow
international agreements.

10. Licensing

What it is: Some businesses may require special licenses to operate, especially in industries like
healthcare, food, construction, or banking.

Why it matters: To ensure businesses meet industry-specific safety and quality standards.

11. Anti-Money Laundering (AML) and Anti-Terrorism Financing

What it is: Businesses, especially banks and financial institutions, must follow rules to prevent illegal
activities like money laundering or terrorism financing. This is monitored by the FIA (Federal Investigation
Agency) and SBP (State Bank of Pakistan).

Why it matters: Helps to prevent illegal financial activities and maintain the security of the financial
system.

12. Data Protection and Privacy

What it is: Businesses must protect the personal data of customers and employees, following privacy laws.

Why it matters: To ensure individuals' privacy rights are respected and their data is not misused.

Types of enterprise.

1 sole proprietorship. A sole proprietorship is a type of business owned and run by just one person. The
owner is in complete control, makes all the decisions, and keeps all the profits.

2 partnership. When two or more people come together to run a business. They share the responsibilities,
profits, and losses.

3 private limited company. A private limited company is a type of business that is owned by a small group
of people (called shareholders). The company’s shares are not sold to the public on the stock market.
Instead, the owners usually know each other, and the shares can only be transferred with their agreement.
This kind of company is usually set up to protect the owners from personal responsibility for the
company’s debts, meaning their personal assets are safe if the business fails.

Intellectual rights and property protection in Pakistan. Intellectual rights and property protection in
Pakistan refer to the legal measures that safeguard people's creations, inventions, and ideas. These
protections ensure that creators or inventors can control and benefit from their work, preventing others
from using or copying it without permission.

In simple terms, intellectual property (IP) covers things like:

1. Copyright: Protects original works like books, music, and art.

2. Patents: Protect inventions or new technology.

3. Trademarks: Protect brand names, logos, and symbols that identify products or services.

4. Industrial Designs: Protect the appearance of a product (e.g., its shape or color).
5. Geographical Indications: Protect products unique to a specific place, like Basmati rice or Peshawar
chappals

How to register a company in Pakistan that exports products.

Some Steps.

1. Choose company type (Private Limited, etc.)

2. Register with Security Exchange Commission of Pakistan (company name, incorporation documents)

3. Obtain NTN from FBR (for tax purposes)

4. Register with Export Promotion Bureau (EPB)

5. Get Sales Tax registration (if applicable)

6. Register with Customs Department (export procedures)

7. Obtain necessary licenses (if applicable)

8. Open a business bank account

9. Follow industry-specific regulations

10. Ensure export financing & insurance.

11. Prepare export documentation (invoices, shipping docs)

12. Follow international trade compliance.

Taxation and financial reporting obligations in Pakistan. In Pakistan, taxation and financial obligations
refer to the duties and responsibilities that individuals, businesses, and organizations must follow to
contribute to the government’s revenue and comply with financial laws. Here’s a simple explanation of
the main components:

Taxes: These are payments that individuals and businesses make to the government. Taxes in Pakistan
include:

Income Tax: Paid based on how much money a person or business earns.

Sales Tax: Paid when goods or services are sold.

Customs Duty: Paid on imported goods.

Property Tax: Paid by property owners based on the value of their property.

Federal and Provincial Taxes: Different levels of government (federal and provincial) may collect their own
taxes, like taxes on services or income.
Entrepreneurship Notes Prepared by Adnan Gul
Income: Income is the money you earn from working, investments, or other sources. It can come from a
job, business, or things like rental properties, savings, or investments. Essentially, income is the money
you receive regularly to cover your expenses and save.

Types of Income.

1. Earned Income: This is the money you earn from working, either by being employed (salary or wages)
or by working as a freelancer or business owner (profits).

2. Investment Income: Money you earn from investments like stocks, bonds, or real estate. This includes
interest, dividends, or capital gains (profit from selling investments at a higher price).

3. Passive Income: Money you earn without active effort, often from investments or businesses that don't
require much daily work. Examples include rental income or royalties from books or music.

Saving: Saving is the act of setting aside a portion of your money instead of spending it

Benefits of Saving.

1. Emergency Fund: Helps you handle unexpected expenses.

2. Financial Security: Gives you peace of mind about your future.

3. Achieve Goals: Helps you save for things like buying a house or going on vacation.

4. Avoid Debt: Reduces the need to borrow money.

Investment: Investment is the act of using money to buy something with the hope that it will grow in
value over time. The goal is to earn a profit in the future.

Types of Investment.

Private investment: Private investment is money put into businesses or projects for the purposes of
generating profit.

Public Investment: Money is invested by the government for the betterment of the people. Education,
health etc. are the examples of public investment.

Induced investment: Induced investment is the investment that happens as a result of increased demand
in the economy, leading businesses to expand and invest more.

Asset: An asset is something valuable that you own, like money, property, or investments.

Types of asset:

Tangible asset: An asset that can be touched and seen. Machinery, Money and land are examples of
tangible asset
In tangible Asset: An asset that cannot be seen and touched. Competency reputation and good will are
examples intangible asset.

Liability: Liability is the legal responsibility for something, especially for paying debts or compensating for
harm or loss.

Equity: Equity is the value of ownership in something, like a company or property, after subtracting any
debts or liabilities.

Example: You buy a bike for 50,000 rupees and take a loan of 30,000 rupees. After paying 10,000 rupees
of the loan, your equity is 30,000 rupees (50,000 - 20,000 loan left)

Revenue: Revenue is the total amount of money a business earns from selling goods or services before
any expenses are deducted.

Types of Revenue.

1. Sales Revenue: Money earned from selling goods or services.

2. Service Revenue: Income from providing services, like consulting or repairs.

3 Rental Revenue: Income from renting out property or equipment.

4 Interest Revenue: Earnings from investments or lending money.

Expense: An expense is the money spent on things needed to run a business or personal life, like buying
supplies, paying bills, or salaries. It’s the cost of doing business or living.

Types of expense.

1. Fixed Expenses: Regular, consistent costs (e.g., rent, insurance).

2. Variable Expenses: Costs that change each month (e.g., utilities, groceries).

3. One-time Expenses: Unexpected or rare costs (e.g., new appliances, repairs).

4. Operational Expenses: Daily business costs (e.g., salaries, supplies).

5. Capital Expenses: Long-term investments (e.g., equipment, property).

6. Personal Expenses: Costs related to individual living (e.g., entertainment, dining).

7. Debt Expenses: Payments on loans or credit (e.g., credit card bills, loan installments). Here is a simple
example of revenue and expenses.

Revenue: Sales of products: 50,000

Expenses:
Rent: 10,000

Salaries: 15,000

Utilities (electricity, water, etc.): 5,000

Total Expenses: 30,000

Net Profit:

Revenue - Expenses = 50,000 - 30,000 = 20,000

So, the business has a net profit of 20,000.

Cash flow:

Cash flow refers to the movement of money in and out of a business. There are three main types:

1. Operating Cash Flow: This is the money a business earns from its main activities, like selling products or
services. It's the cash generated from day-to-day operations.

2. Investing Cash Flow: This refers to money spent or received from buying or selling assets, such as
equipment, property, or investments.

3. Financing Cash Flow: This is the cash that comes from borrowing money, repaying loans, or getting
money from investors (like issuing stocks). It also includes paying dividends to shareholders.

These three types together show how cash moves within a business.