Steps to Register & Incorporate Your Business in Nigeria
Registering a business in Nigeria is quite compulsory if you intend taking your brand or business to the next level. More particularly if you prefer to deal with clients from a more respectable angle rather than as an individual. If at all you are interested in registering your business in Nigeria then this post is for you.
Whether or not you own a business already or you intend upgrading your personal business, it is crucial to register and incorporate your business in Nigeria. To do so, you simply have to follow the steps in this post in order to get the needed authorization to operate in your capacity in the country.
Fortunately enough, the government is steadily making efforts to improve business registration in Nigeria by enacting favourable laws, and creating platforms (like websites) hastening business registration.
To officially register one’s business gives the business prestige and reputation, hence the need to register one’s business. Everyone who wishes to register a business in Nigeria must follow in certain steps in order to achieve this.
Steps to Register and incorporate a business in Nigeria
Step 1: Choose a name for your new business
The name one chooses for his or her business sends a signal to the general public what he/she is into – a good name is an asset to the company. Therefore, time must be taken to reflect on an appropriate name your business will bear.
Remember that one of the advantages of officially registering one’s business is that when one registers his/her business, no other business is allowed to have the same name in the country unless they wish to operate as affiliate or subsidiary of the mother company.
So, a related name to the kind of business one wishes to go into is key, and one has to consider it if he wishes to register a business in Nigeria. Ensure the name you wish to bear has not been taken by someone else.
Step 2: Registering a business name
The Corporate Affairs Commission (CAC) was established by the Companies and Allied Matters Acts of 1990. The functions of CAC include but not limited to incorporation of companies (public, private and limited by guarantee), registration of business name and so many others.
Individuals who wish to register a business in Nigeria have to pass through CAC because they have the sole responsibility of doing that in Nigeria. CAC recognizes four (4) types of companies for business ventures in Nigeria and they are;
- Private Limited Company (Limited)
- Public Limited Company (PLC)
- Companies Limited by guarantee and
- Unlimited Companies.
Pay a visit to a CAC office near you and submit the intended name. Name search normally takes about one week after which you are expected to come back to check the status of the search. Business names are searched to ensure that no one has registered the name before.
If your business name is not available, you have to buy another form and they suggest available names to you. But if it is available then you have to proceed. The business address is registered as well. The next procedure is to collect a form called Registration of Business Form.
Step 3: Incorporating your business
After the business name is approved, the next step to register a business in Nigeria to a full incorporation is to “incorporate the business.” Incorporating procedures are assessed under:
1. Type of company
Private Limited Company (LTD) or Public Limited Company (PLC). The major difference between the two is that PLC companies can quote shares in stock exchange market but LTD companies cannot.
Whereas an LTD company is more interested in making profits, a PLC company is more interested in services and goods for public to have good reputation.
All the legal objects of the company must be contained in Memorandum of Association and Articles of Association (which are constitution and policies of the company that you have prepared).
#2. Objects of the company
Legal objects are the major framework and business dealings which indicate how a company intends to run within the acceptance of the law.
They are set of goods and/or services a company intends to go into dealing or providing in its day to day activities. It must be legal and non-Nigerians are often limited to some sets of objects.
Non-Nigerians are not allowed to participate in production of arms, military hardware, narcotic drugs, etc.
They are traded in Naira which is the local currency of the country.
The subscribers are adults above 18 years who buy into the memorandum and articles of association. These subscribers eventually become directors in LTD companies. It has to be clearly stated with their names, occupations, addresses, etc.
Stamp duty fees, and the mandatory payment of N10,000 for every N1milion base of the company is required. Before this stage, remember that a business owner has to pay for N500 for business name search form.
#3. Tax requirements
Companies are subject to tax rate of 30% per annum. Telecom companies are further taxed 5% of their earnings under the Value Added Tax Act of 1993.
There is also an employee tax (PAYE) backed by Tax Act of 1993 which is charged on salaries of workers of the company.
These taxes are paid to Federal Inland Revenue Service and/or State Board of Internal Revenue. When companies file their returns, they are given Taxpayer Identification Number (TIN).
This helps companies to access government loans, do bank transactions, import and export goods into/out of the country, and do foreign exchange business.
Foreign investors are allowed to fully or partly own their businesses in Nigeria. This is backed by the Nigerian Investment Promotion Act of 1995, Securities Act 1999, and Foreign Exchange Act 1995.
To register a business in Nigeria to a full capacity of incorporation involves some steps that must be followed.
Entrepreneurs are encouraged to register their businesses because of its attendant benefits which include giving the company a separate legal identity, giving it a unique name, real owner’s liability is limited (as it is in PLC), the tax benefits, and general public investing in the company which will broaden its capital base (as it is in PLC).
You have seen new steps to register and incorporate your business in Nigeria. Hope this guide helps, share it if it’s useful to you. Have comments or question? Use the comments section below