Step-by-Step Guide to Registering a Business in Nigeria
In Nigeria, the Companies and Allied Matters Act (CAMA) stipulates that businesses should be registered within 28 days of commencing the business and failure to do so results in a default fee of NGN150 for every day in default up until the business is registered. The body in charge of registering a business in Nigeria is the Corporate Affairs Commission (CAC).
Types of Business Registrations in Nigeria
- Business name – This is available to only Nigerians, and it is also known as sole proprietorship, enterprise or venture. Any type of business activity can be registered under this form of registration. However, under some circumstances, the Corporate Affairs Commission (CAC) may recommend that a particular business activity be registered as a private limited company.
- Company limited by shares – Under this form of registration the shareholders are limited by the number of shares they subscribe to in the company. This can either be a private or publicly owned company.
- Company limited by guarantee – members of this company are liable to the extent of their guarantee. This form of registration is mostly suitable for companies focused on promoting their objectives and not for profit. Examples include a university, an institute etc.
- Unlimited company- In this form of registration, the member’s liability is not limited, and it can either be private or publicly owned.
- General partnership- This form of partnership is the same as a business name except that it is a partnership as opposed to a sole proprietorship.
- Limited partnership- In this type of partnership, there is at least one general partner who is responsible for the day-to-day running of the business, and one limited partner who contributes capital to the business, is liable to the extent of the amount contributed. It has the features of a general partnership and a limited liability partnership. Examples include investment companies, real estate businesses etc.
- Limited liability partnership- This type of partnership has the structure of a limited liability company. This form of partnership is mostly used by lawyers, architects, accountants etc.
- Incorporated trustees- non-governmental organisations are registered under this form of registration. Examples of this is churches, mosques, charitable organisations, social clubs, associations etc.
Preparing for Business Registration
Here’s a step-by-step guide on registering a business with CAC:
- Determine the name you want to register for your business.
- Conduct a search to ensure the proposed name is available.
- Reserve the proposed name.
- Carry out a newspaper publication for incorporated trustees.
- Upon approval of the name, upload the required details.
- Make the prescribed payment.
- Submit the application.
- Resolve queries – if any is raised.
- Download the documents upon approval of the registration.
Advantages of Registering a Business in Nigeria / Why should you register your business in Nigeria
Registering a business with the Corporate Affairs Commission (CAC) offers several advantages that ensure legal compliance, protect your business interests, and unlock various growth opportunities. Here are some of the advantages:
- It ensures compliance with the law as business owners are expected to register a business within 28 days of commencing a business.
- It provides legal personality to the business as a separate legal entity except for business name and general partnership.
- It offers protection for your business name and prevents others from using the same name.
- Safeguarding of the personal assets of the shareholders are generally not at risk in case of business debts or obligations except to the extent of their liability.
- It gives businesses the opportunity to benefit from certain opportunities as government tenders, contracts, and other business opportunities require that businesses are registered before they are considered.
- It gives the business perpetual existence, such that the business can continue its operations even if the owners or shareholders change (not applicable to the business name).
- It aids access loans, grants, and other financial assistance programs offered by banks, government institutions, and investors.
- It also facilitates financial reporting, audits, and compliance with tax obligations.
- It enhances the reputation of a business and helps customers, partners, and investors build trust in the business. Investors often prefer to invest in registered entities due to the legal framework, transparency, and limited liability protection provided.
- It helps during account opening with a bank as it is mandatory for a business to be registered before a bank account can be opened.
- It helps to easily obtain a visa and travel to any country for business purposes.
Common Mistakes to Avoid in Business Registration
When registering a business with CAC, it’s important to avoid certain common mistakes that can cause delays, complications, or even legal issues. Some of the mistakes are:
- Using Inaccurate Information – This can lead to complications or wrong details in the registration documents and even prevent approval of a registration, so it is important to double-check all details provided to ensure accuracy.
- Failure to conduct a name search – This can result in a name conflict. It is advisable to conduct a comprehensive business name search to ensure your desired business name is available and not already registered by another entity or person.
- Incomplete Documentation – In situations where incomplete or missing documents are not uploaded, it can lead to delays and queries in the registration process. Always review the registration requirements and ensure that the necessary documents are uploaded.
- Incomplete Payment – Most times, during company registration most people fail to pay for stamp duty after paying the filing fees because the page does not automatically open. Ensure you make the correct payment.
- Failure to Comply with Statutory Requirements for minimum share capital – Neglecting to comply with the minimum share capital for certain business types can result in registration issues.
- Failure to submit the registration after making payment – It is important to submit the registration for consideration after making payment to ensure the registration is reviewed by CAC.
- Failure to register the business after the stipulated time – All businesses are required to be registered 28 days after commencement of business otherwise a default fee of NGN150 daily would accrue. Otherwise, the commencement date of the business would have to be from when it is registered.
- Neglecting Tax Registration – Failure to obtain a tax identification number from the Federal Inland Revenue Service (FIRS) and registration with FIRS upon registration of a business can result in penalties and legal consequences.
- Failure to seek professional advice – Registering a business without seeking professional advice or guidance can lead to errors and oversights. It is important to consult CAC accredited agents when registering a business to ensure compliance and avoid mistakes.
Requirements for Business Registrations in Nigeria
The following are required for the registration of a business in Nigeria:
Requirements for registration of Business Name and General Partnership
- Two alternative business names
- Nature of the business activity
- NIN, state, city, street, street number, signature, passport, phone number, local government area, date of birth and email address of the proprietor.
- Email, phone number, state, city, street, street number, local government area of the business.
Requirements for registration of Company Limited by shares, Limited Partnership, Limited Liability Partnership
- Two alternative business names
- Nature of business and objectives
- NIN slip, signature, passport, phone number, date of birth, email address, state, city, street, local government area and street number of director, secretary, witness, shareholders/ partners.
- Share spilt among shareholders/ partners (note that people with 5% shares and above will be made persons of significant control in the company).
- Email, phone number, state, city, street, street number, local government area of business.
Requirements for registration of NGO
- Four alternative business names
- Nature of NGO
- Aims and objectives
- Minutes of meeting appointing trustees
- Email, phone number, state, city, street, street number of NGO
- NIN slip, signature, passport photograph, statutory declaration, date of birth, phone number, email address, state, city, street name and street number of trustees (minimum of 2 trustees)
- Source of funds
- Statutory declaratory form by the trustees (will be provided by us and signed by the trustees)
Post Registration Requirements
After registering a business, there are certain things that are required of the business, and they are:
- Obtaining a tax identification number (TIN) and registering with the Federal Inland Revenue Service (FIRS)
- Opening of a bank account
- Obtaining the necessary permits
- Paying and filling of taxes and CAC annual return
Frequently Asked Questions on Business Registration
- How long does the business registration process take?
Typically it takes 3 to 10 working days to register a business name or company limited by shares. It however takes longer to register a company limited by guarantee and an incorporated trustee. Also, note that the timeline can be elongated by government policies or issues that might arise on the CAC portal.
- Can a foreigner register a business in Nigeria?
Yes, a foreigner can register a business in Nigeria but it must be registered as a private company limited by shares with a minimum share capital of NGN100 million.
3. Can I change a business name after registration?
Yes, upon payment of the prescribed fees
4. What is the ongoing compliance after registration?
Filing of annual returns with CAC and complying with industry requirements
- Can I register a business online?
Yes, businesses are registered online.
6. Do registered businesses pay taxes in Nigeria?
Yes, registered businesses in Nigeria pay taxes.
The importance of registering a business cannot be overemphasized and some of them have been captured above. As much as it is necessary to know the steps involved in registering a business as previously explained, it is advisable to seek the help of a professional to ensure the business is properly registered. Focus on your business whilst we manage your compliance and business registration Contact us here today