Business registration in Nigeria is what so many people take so common. Meanwhile, a business that has no name is a business with no face. The reasons why some business are not registered is not because of lack of fund, but some lack the proper orientation on why they should register their business.
In addition, there is brief survey i did in Anambra state, Nigeria. I asked 150 Nigerians in different niches of business different questions on their knowledge about business registration. The choice of my respondents was random.
Notwithstanding, I interviewed 80 different traders from different business lines and different commodities in Onitsha Main market. Some of these lines are; Lagos line that deals on clothes, Emeka offor line that deals on gadgets and Iweka road that deals on electronics. Contrary, another class of the respondents are 16 producers like paint and groundnut oil producers. 33 other group were people with skills such as Hairstylists, Automobile mechanics and Carpenters. The remaining 21 people were into farming such as Fish farming, Poultry and and crop production.
The questions i asked each of them was as follows;
- Do you have a business name?
- Have you registered your business?
- Is it important to register a business name?
- Do you know how to register your business name?
The result is as follows;
- 26 out of the 80 traders have a registered business (32.5%).
- All the 16 producers have a registered business ( i.e 100%).
- 2 out of 33 of those with ‘Handwork”(skills) have a registered business (6.1%).
- Finally, None of the farmers have a registered business (0%).
In conclusion, most of the businesses that were registered are Big businesses especially exportation and importation business. However, most of the people that failed to register their business did it out of ignorance while some, especially those with small businesses thinks its not necessary since they can still do their business even without registration.
Why it is important to register your business.
Despite the fact that having an unregistered business will not stop you from doing your normal business. But, there are some added advantages that you may need to know about. This post will teach you why registering your business can help you grow your business.
Business registration gives your business an Identity
“Identity precedes every birth”. Just as a new born baby requires child naming ceremony, so does your new business. Similarly, a business that does not have a name is faceless legally. Most people mistake naming a business and having a business with name. In this case, the former is just telling people you have a business while the later means the proper authorities knowing that your business exists.
Above all, no two business can be registered with same name in a country. So then, business registration gives your business a unique identity.
Furthermore, the danger of not registering your business name is this; if you have a booming unregistered business and you have built your customers around the business. If eventually you later decided to register the business name and it is has been taken by another business. You will have no legal right to use that your business name again. Imagine the embarrassment and the loss it will impose on your business.
Legal protection to your assets
It is important to know what is “Limited Liability”- We don’t pray for your business not succeed but if eventually your business crumbled and is in debt. A registered Limited Liability business will only loose the assets the business have and it ends there. However, if a business is not registered or is not a limited liability company, the owner of the business will loose the business assets and as well the personal properties of the business owner such as cars and houses.
Read “What Forms of business organization is right for you” to understand what Limited liability means and the type of business that offers it.
In summary, Registration of your business can save you your personal property if your business goes into debt.
Note; this is not for sole proprietorship type of business. So then, they can register their business as “Do business as” (DBA).
It builds your business reputation
People tend to be confident and secure when they are dealing with a business than an individual. Usually, a business with a name is seen as an authentic one by customers.
Thus, a company gains more respect from the general public when it is incorporated. Everybody wants to associate himself with a name like this; “Paul and Peter LTD” or “Uchegbu and sons LTD”. Consequently, customers when they hear such name subconsciously feels they are at the right place and not scammers or fraudsters.
It strengthens the bond between the business and its customers and also, open room for new customers to come in. Because, every customer wants business that is legit.
Business continuity and succession
Its so unfortunate that most small business owners don’t think of continuity. Usually, they see the business in the present and do not visualize and anticipate expansion.
Basically, if you must think growth for your small business, think of registering it. Also,Think of continuity. Some names like “Dangote group of company LTD” or “Innoson and sons LTD” will continue to ring bells in the ear even after this generation.
The reason is because you are visualizing a company that exists as an entity of its own. Also, the company is totally different from its owner and can be easily move from one owner to another without defaming the face of the company to the public.
Opening of business account
Have you ever received a payment from a business and it writes something like this, “Olajide LTD”? or you want to buy a product from such business and a corporate account is given to you instead of personal account? – It really feels more like a business and not a child’s play.
However, You can not get that kind of business account without a business registration. In addition, business account also separate your personal activities from the business activities.
Getting Loans from the bank or Investors
Getting a business loan is totally different from a personal loan. Nevertheless, one of the prerequisites of getting a business loan is to provide evidence of business registration. In other words, no bank can give you money for business if you cannot separate your business from your personal life.
Similarly, when investors wants to invest in your business, they will want to see how organized your business is so that you can be able to pay back. So then, one of these ways of showing commitment is to present a business with name.
Registered businesses can only pay taxes as a C corporation or S corporation. It simply means that their tax is based on how much the business makes. While, unregistered business owners pay tax as an individual and not as a business.
Steps for Business Registration in Nigeria
The body responsible for business registration in Nigeria is the Corporate Affairs Commision (CAC). Registration of a business name by CAC is very simple and is available online.
First step: Search for availability of name
The first step in business name registration is the name availability search; I always encourage that you should first do the free search on the Free CAC public name search before proceeding to the official search.
However, If the name of your choice have been used before. It will bring out the RC number, Address and date of registration of the business that took the name. Otherwise, if not taken, the site will tell you that it is available.
Consequently, You can proceed to do the official search with the CAC portal. You are required to submit two names of your choice that you may want to use with a fee of #500. An available name can be reserved for as long as 60 days for you to get ready for registration.
Second step: Submission of statutory forms
In this step, the applicant is to submit forms containing information about the business such as;
- Approved Name of the Business
- General Nature of the Business
- Address of the Business
- Name, Address, Occupation and other details of the Proprietors of the Business
- Signature of the Proprietor
The requirement is to submit the documents with two passport photographs of each applicant.
Third step: Payment of filling fees
Once the pre-registration processes is over, You can go ahead and pay the filling fee at the bank or Online. In addition, you are required to pay a stamp duty to the Federal Inland Revenue Services ( FIRS).
Last step: Submission of the documents
After payment of fees, you can proceed to upload the copies of your documents. The documents to provide includes;
- Evidence of payment to CAC
- Memorandum of article of association
- Stamp duty certificate
- Form CAC1.1
- Other forms if applicable
Finally, You will receive your Certificate of incorporation after making the necessary payments and submission of forms if nothing is wrong with the forms. However, the will contact you if there is need for that.
However, if you need an additional help on how to register your business in Nigeria, You can click on the official website now for the complete guide.