This research deals with the problems still constraining the private sector in Egypt such as complicated and costly rules and entry regulations. The research concentrates on legal requirements that need to be met before a business can officially start the operation, the official cost of meeting these requirements, and the minimum time it takes to meet them if the authorities do not delay the process. One of the major problems that face SME’s is that they take a very long time and pay high fees to get registered and start the business “legally”. A recent study published by the World Bank based on few indicators measuring the smoothness of starting a business in 155 countries, placed Egypt in the rank 115. Normal procedures such as registering the company, issuing licenses, paying taxes and even closing the business take, in other parts of the world, much less than what they take in Egypt. All these regulatory “barriers” - so called procedures - allow the creation of “unofficial economy” or the “informal economy”. The informal economy has very negative impacts on Egyptian economy. In other words, the Egyptian government loses a substantial share of its income due to this informal sector.