The process of registering a business name in Nigeria is called Business name registration. In Nigeria, there are three company or business structures you can register. The three structures are; a business name, an incorporated company and incorporated trustees. Each of these structures has its own legal implications. While the purpose of this guide is to show you how to register a business name in Nigeria, it will also detail the differences between registering a business name and incorporating a company and the implications of each of them
What’s the difference between registering a company and business name in Nigeria?
So you want to start a business, and you want to do so with as little money as possible. Most business owners like you would just register a business name to get things running. They don’t consider the legal implications of doing so, and you can’t blame them either. Its the convenient and the cheaper option.You on the other hand don’t have to go the same route as them. It is important to understand the risks and the differences associated with registering a business name in Nigeria and Incorporating a company in Nigeria.
When you want to officially set up a business structure in Nigeria, it is important that you choose the business structure that is best for you in the long run as well as the short run. You have to choose the business structure that is more suited to your business.
Here is a list of the major differences between registering a business name and incorporating a company (limited liability company):
- For a business that has only registered business name, you are personally liable for the debts of the business. That is debtors can come for your personal assets or after you. While for a business that has been registered as a company (limited liability company), you or the shareholders of the company are not personally liable for the debts of the business.
- A business with only a business name registration will find it really hard to raise capital for the business. For a Limited liability company(LLC) its way easier to raise capital. Whether from investors through equity investments or via using the shares of the company as collateral for a loan.
- A business name registration has lower costs as you don’t need too much documentation and a lawyer to register it. For an LLC you will require a lawyer or a credited agent, you will also need to submit your company’s constitutional and legal documents. Making an LLC more expensive to set up.
- Because there is no difference between the owner of a business and the business itself in regards to a business name registration, it is near impossible to transfer ownership of the business to another person. For an LLC ownership is easily transferable.
What is the cost of registering a business name in Nigeria?
Here is a break down of the cost of registering a business name or a company in Nigeria:
- The cost of registering a business name in Nigeria is N5000.
- The Registration of a private company with a share capital of N1million or less cost N10000.
- The cost of Registering a private company/Increase in Share Capital above N1million and up to N500million cost N5,000 for every N1million share capital or part thereof.
- The registration of a company not having a share capital cost N20,000.
- The registration of Public Company/increase in share capital above N500million cost N15,000 for every N1million share capital or part thereof.
- The Registration of Public Company/Increase in share capital above N1million and up to N500million cost N10,000 for every N1million share capital or part thereof.
- Registration of Public company/Increase in share capital cost N20,000 for the first N1million share capital or part thereof.
- Registration of private company/Increase in share capital above N500million cost N7,500 for every N1million share capital or part thereof.
What are the requirements for registering a business name in Nigeria?
The list of information or documents needed for for CAC business name registration in Nigeria is:
- 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 Proprietors
How to register a business name in Nigeria online?
The process of registering a business name in Nigeria can be done online as well as in personally visiting a CAC office. A full business name registration in Nigeria can take up to 2 days. Here’s a step by step process on how to register a business name in Nigeria:
- Visit https://services.cac.gov.ng/ and click register on register to create an account.
- The next step is to conduct a public search to check if your business name is available. So you’ll be certain that the business name that you want to register in Nigeria doesn’t exist. This would save you time and money.
- Once you have decided on a business name and made sure that it doesn’t already exist. use the Name reservation feature to submit the business name or names. Complete the forms shown to you. The CAC will reserve the business name for you for a 60-day period. During this period it is expected that you will complete the registration process for your business name.
- After completing the Business Name Registration Forms shown to you. The next thing is to pay the CAC filing fees via the website
- Once your payment has been approved or is successful. You can now submit the forms by clicking “Continue”.
- CAC will review your documentation and if it’s fine it will notify you that your application has been approved, and your Business Name Certificate is ready for collection.