Before starting any business or company in Nigeria, it is mandatory to register it with the Corporate Affairs Commission (CAC), the government body responsible for business registration and regulation. The structures available to register in Nigeria include Business Name, Limited Liability Company, Partnership, and Incorporated Trustees for NGOs, churches, and associations.
However, the structure you choose largely depends on several factors. These include the ownership structure (whether it is a one-man business or jointly owned), tax implications, level of personal risk or liability, and the overall business purpose and vision.
Among all business structures, Business Name and Company registration are the most popular options for entrepreneurs in Nigeria. If you are planning to register a business and are unsure which structure best suits your goals, this article explains the key differences, benefits, and factors to help you make an informed decision.
But first, let’s take an overview of both structures.
Overview of Business Name
A Business Name registration is the simplest and most affordable form of business structure in Nigeria. It is commonly used by small-scale entrepreneurs, start-ups, traders, and freelancers who want to operate under a recognized business identity without the complication of incorporating a company.
When you register a business name, you and the business are legally considered the same entity. This means you personally own the business, control all its profits, and bear all its liabilities. Unfortunately, one major limitation is that the owner bears unlimited liability, which means personal assets can be used to settle business debts or legal obligations.
A business name cannot issue shares or attract investors as shareholders, and it has limited growth potential compared to a registered company. Despite these limitations, it remains an excellent and affordable option for business owners to operate legally while building brand recognition.
Registering a Business Name with CAC
To register a business name with the Corporate Affairs Commission, you will need to provide the following information:
- Your preferred and distinct business name. Note that a business name must include a qualifier, either “Ventures” or ‘Enterprise”
- The business address
- The nature of your business
- A valid means of identification, e.g, National Identity Card (NIN), voter’s card, or driver’s license
- A recent passport photograph, your phone number, a valid email address and your signature.
Overview of Incorporated Company
An Incorporated Company is a more formal and structured business entity recognized as a separate legal person distinct from its owners, who are known as shareholders. This structure is ideal for entrepreneurs who aim to build a scalable business, attract foreign investors, build credibility with banks, clients, and government institutions, or gain access to loans and credit facilities.
Unlike a business name, an incorporated company continues to exist even if the owners or directors change or die. It can be registered as either a Private Limited Company (Ltd) or a Public Limited Company (PLC). Incorporated companies can also raise capital by issuing shares to investors, giving them the flexibility to expand and attract funding.
However, they are subject to stricter compliance and reporting obligations, such as filing annual returns, maintaining proper records, and paying corporate taxes. To operate, a company must have at least one director and one shareholder, which can be the same person in a small private company.
The requirements for incorporating a Company with CAC include the following:
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- The Proposed company name
- Nature of business (objectives of the company)
- Registered office address
- Minimum share capital of ₦100,000 for a private company and ₦2,000,000 for a public company
- Shareholding structure (how shares are divided among owners)
- Details of directors, including name, address, nationality, passport photograph, and means of identification (at least one for private, two for public)
- Details of shareholders (can be same as directors)
- Company secretary (optional for small companies)
- Memorandum and Articles of Association (MEMART)
- Payment of filing and stamp duty fees
Tax Identification Number (TIN) application (post-incorporation)
Which Business Structure is Right for You in Nigeria?
Choosing between a Business Name and an Incorporated Company depends on your business goals, scale, and long-term vision. If you are starting small, running a sole proprietorship, or testing a business idea with limited funds, then registering a Business Name is the simpler and more affordable option. It also offers full control for the business owner and minimal compliance requirements.
However, if you plan to grow your business, attract investors, secure funding, or build a brand that can operate on a larger scale, then an Incorporated Company is the better choice. It offers limited liability protection, higher credibility, and better access to loans and partnerships. However, it comes with more formal requirements and regulatory obligations. Ultimately, your choice should align with your business goals, risk tolerance, and vision for the future.
In conclusion, regardless of the option you choose, it is important to engage an accredited lawyer or CAC agent to handle the registration process on your behalf. This ensures accuracy, compliance, and a seamless registration experience with the Corporate Affairs Commission (CAC).
