The only body saddled with the responsibility of registration of all types of company by the Federal Government of Nigeria is the Corporate Affairs Commission (CAC) and the law regulating the registration of business is Companies and Allied Matters Act (CAMA) 1990 (CAP C20, LFN 2004)
Some people fail to register their business due to ignorance while some see it as a way to evade tax. However, the benefits of registering your business far outweigh any perceived disadvantage.
What is Business?
According to Black’s Law Dictionary a business is an occupation or commercial activity done to earn money; making money by engaging in commerce. Business can also be defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities.
Different Business Structures Include
- Business registration under Part A include limited by shares, guarantee and unlimited (Section 21 of CAMA)
- Business registration under Part B include Sole Proprietorship and Partnership (Section 573, 574 CAMA)
- Business registration under Part C include Incorporated Trustee. (Section 590 to 597 CAMA). Registration of NGOs, Churches, Ministries, etc
Types of Business Structures in Nigeria
The Sole Proprietorship
This is the simplest business structure – one individual owning and operating the business alone. The owner is solely responsible for the company’s liabilities and this places his assets at risk of seizure to satisfy a debt or legal claim filed against him.
Partnership
Partnership the coming together of two or more individuals to form a company. For many individuals to own and operate a business, consider structuring the business as a partnership; a general or limited partnership. The partners manage the company and assume responsibility for debts and obligations in a general partnership.
Corporations
Corporations are complex and expensive. They are independent legal entities and comply with more regulations and tax.
Incorporated Trustee
The incorporated trustee is an arrangement that religious bodies, associations, organizations, charities and social entrepreneurs can use. An incorporated trustee can be registered by at least 2 trustees and not more than 15 trustees.
How to Register Your Business with CAC
Under the Nigeria enabling laws, you can register your business either as a Business Name or Limited Liability Company. Business name is registered by a sole proprietor and can be registered by either one person or two or more persons. Section 19(3) of CAMA provide for 1 to 20 Partners for Business Name. Once parties are more than 20 and above partnership it has to be registered as a company. Registration as business name confers all the liabilities of the business on the owner(s). An incorporated trustee can be registered by at least 2 trustees and not more than 15 trustees.
For a limited liability company and company limited by guarantee, 2 to 50 members of Board of Directors with a Secretary is required. Companies registered as limited liability companies is a separate legal entity thus has a life of its own different from the directors. All the rights and liabilities are on the company not the directors.
Factors to Consider Before Choosing a Business Structure
Flexibility
Complexity
Liability
Taxes
Control
Steps on Registering Your Business with CAC
• Decide on a name
• Perform a name availability search at the CAC and reserve it
• Complete the CAC documentation (Fill all forms)
• Pay all filing fees
• Submit completed forms to CAC for verification and filing
• Expect the original certificate of incorporation and certified true copies of the paid-for CAC documents in a few weeks
Benefits of Registering Your Business with CAC
1. You can open a corporate account with your registered business certificate.
2. Potential customers feel more comfortable paying into a corporate account because they know their money can be traced.
3. You can apply for bank facilities (loans, mortgages, etc) and grants when your business is registered.
4. Registering your company enhances the reputation and perception of your business to prospective clients and your brand image credibility.
5. Registering your business is the first step to getting your business structured, distinct from hobby.
6. A registered business can get interns from NYSC.
7. Registered business survives owners especially when you have the right structure in place.
8. You have better access to investors.
9. With a registered business, you can easily obtain a visa and travel to any country for business purposes and conferences.
10. Legal Protection. Registered business is protected from passoff or unauthorized use- No one else can use your name in Nigeria.
In all, to get a well-structured and registered business, please contact your attorney for guidance.
Titilope Adeyemi Esq.
For more information contact salvation chambers- office@salvationchambers.com; +234 8034734901