Why you need to register your business and how
Benefits of registering your business and a step-by-step process on how to
Finding a name for your business is very important, and is a very personal process for most entrepreneurs. The next step now becomes, registering the said name with the state before you build your brand. There is a risk with not registering your business’ name on time and building a brand beforehand — someone else could have the legal right to that name and you will not be able to use it. Asides from this, this article details more reasons why it is essential for your business to be registered and how you can do that easily in Nigeria.
Registered businesses enjoy a lot of perks that unregistered businesses don’t. It is far easier and smoother to open a business account as a registered business. And having a business account will help potential customers feel more comfortable patronizing your services or products because they know it will be easier to trace their money if missing. They also regard you as more legitimate, because your business is legally recognized.
Applications for loans and grants can only be done as a registered business. Also, registering your business will help it have more structure, something that investors look out for.
How to register your business:
The first step you need to take after coming up with your new business name and figuring out whether it will be a sole proprietorship, partnership, or Limited Liability Company is to submit two name options to the CAC to check if they are available. If it is, follow the steps to register each type of business.
1. Registering a sole proprietorship
A sole proprietor or trader is a business owner that is not legally separate from the business. Essentially, the profits or losses of the business can be absorbed by its owner. Setting up a sole proprietorship is easy and can be done both online and offline at the Corporate Affairs Commission office. Sole Proprietorships are suitable for micro-small, small businesses, and professional businesses (law, accountancy, photography, etc) owned by one person.
How to register online
- Visit the CAC website and navigate to the online registration portal
- In the portal, search to see if the business name is available
- Register for an account
- Do an availability check and name reservation
- Choose the business name and an alternative one in the event that it is not approved.
- Fill in the rest of the form with the required information: Approved name, General nature of the business, Full address of the principal, place of business, Proposed date of commencement of the business, Passport size photographs of the owners; and Proficiency certificate (If required)
- Click on ‘Submit’
How to register offline
To register for a business name offline, you do not require the services of a lawyer. You simply need to go to the nearest Corporate Affairs Commission, Nigeria (CAC) office, fill in the registration form with other required documentation, and pay a registration fee.
Either way you choose to register, online or offline, you would still need to visit the CAC office to complete the registration and pick up your certificate.
Pay the Applicable Fee
Once you have filled all the requisite forms, you will need to pay the applicable fee for registering a business name in Nigeria. Here is a breakdown of the fees:
- Reservation of Name — N500
- Business Name Registration Form — N250
- Fee for Registration of Business Name — N10,000
2. How to register a Limited Liability company
First, you would need to list all the potential company names you intend to use. They will be checked for availability and your preferred available one can be chosen. Next, find a reputable legal practitioner and chartered accountant that will aid and guide you in filling the forms and getting all the documents required in registering a business.
Finally, complete the registration form either online or offline, pay the filling and stamp duty fees, and prepare the signed copy of the following pre-registration documents to upload
- Government Issued ID
- Statement of Share Capital
- Return of Allotment to each Shareholder
- Details of the first Director
- Details of the Business
- Details of the Company Secretary (not necessary)
- Memorandum and Article of Association
- Evidence of payment to CAC
You would then need to submit the original copies of the uploaded documents to the CAC office to exchange for your certificate and Certified True Copies of all documents.
The CAC is currently offering free business name registrations for MSMEs. You can find more details here