Business registration, part 2

1. Business statistics and registers Business registration, part 2 Administrative and statistical business registers

2. Enterprises • An institutional unit in its capacity as a producer of goods and services is known as an enterprise • An enterprise is an economic actor with autonomy in respect of financial and investment decision-making, and allocating resources for the production of goods and services • It may be engaged in one or more productive activities • The enterprise is the level of statistical unit at which all information is maintained relating to its transactions, including financial and balance-sheet accounts

3. Establishments • An establishment is defined as an enterprise or part of an enterprise that is situated in a single location and with one single productive activity • The International Standard Classification of All Economic Activities (ISIC) is designed for grouping units with similar activities • Establishments with the same principal activity are industries • Industries may be heterogeneous when enterprises have secondary activities that are different from their principal activities • An establishment may have one or more secondary activities • If a secondary activity is important, the unit involved is a local unit • In the case of most small and medium-sized businesses, the enterprise and the establishment are identical

4. Other statistical units • The concept of the establishment combines activity and location • When precision in activity and location is not required other types of units may be constructed for statistical purposes: • Kind-of-activity units are enterprise or part of enterprises engaged in only one kind of activity, regardless of location • Local units are enterprises or part of enterprises active at or from one location, regardless of kind of activity • Units of homogeneous production are analytical units used for input-output analysis; they perform only a single productive activity, regardless of location • The enterprise group is a statistical unit used in situations where its constituent enterprises cannot provide the required financial information

5. Profiling large and complex entities • In large and complex entities, the units of production are grouped hierarchically • Management of the financial affairs of the business usually occurs at a higher organizational level than management of production • The accounting systems of businesses usually reflect this management structure • Accounts are maintained for the corresponding level of management responsibility

6. Profiling large and complex entities • The legal structure of complex enterprises may not correspond with the management and accounting structure • For defining the ‘statistical structure’ profiling is needed • Profiling leads to the delineation of statistical units that may not coincide with the legal structure

7. Classification of economic activities • Statistical units can be classified in a categorical system of economic activities • The activity classification used is normally the ISIC or a national or regional variant thereof • In the CBR all statistical units used to describe the production process are classified according to activity • If units carry out more than one activity, they are classified according to their main activity

8. Structure of CBR • The statistical units in the CBR get a unique identification code • Relations with parent and sister enterprises should also be stored in the CBR • Information about relationships is normally acquired from the parent company • Ideally all actors in the economy must be registered • The CBR should also store size information as a stratification variable

9. Place of the CBR in the NSO • The CBR provides the sampling frame for sample surveys • It is also the basis for grossing up results to produce population estimates • CBR should be the frame for all enterprise surveys • Stand-alone registers for each individual survey lead to uncoordinated statistics • The CBR should be managed by one single dedicated organizational unit within the NSO

10. Data sources for CBR • It is important to use all available sources of information to establish a comprehensive and up-to-date CBR • In nearly all countries administrative sources exist • Administrative registrations of businesses may not provide sufficient information • Proper statistical units must be formed • Relationships between units must be identified and stored • The transformation of administrative information into statistical units is a stepwise process

11. Administrative data sources • Administrative data sources vary from country to country • Common examples include business registration systems, VAT tax systems, payroll tax systems, unemployment insurance administration systems etc. • Careful review to determine their completeness, suitability and accuracy is needed • The administrative data sources usually provide a list of legal entities • Typically, they do not provide a list of enterprises broken down into establishments classified by activity

12. CBR updating strategy • A set of instruments to update the register must be developed • Optimal procedures depend on how information is received from administrative sources • CBR staff have an important role to play • Supposedly new units must be checked against existing units • Special attention must be paid on update-information that may have a strong impact on statistical outcomes

13. CBR updating strategy • Profiling large units must take place regularly • Feedback information from CBR-based statistical surveys must continuously be used • Economic censuses or partial sector-oriented censuses are recommended • Sample-based GBR-specific surveys should be carried out yearly

14. Economic census • One way of establishing a CBR is by implementing an economic census • Repeated economic censuses can contribute to maintenance of the CBR • An economic census provides the most comprehensive set of small-area data for establishing the frame of the universe of businesses • However, economic censuses are so resource intensive that they can only be organized infrequently • An economic census is not the proper instrument for keeping the CBR up to date

15. Formal and informal sector • In most developing countries only a small number of entities are registered • This can be seen as the ‘formal sector’ • Unregistered entities are the informal sector • This definition makes the informal sector very big • Other criteria to delineate the informal sector may be small size (>5 workers) or having no accounts • Some of these units may be registered or even pay fees to local authorities