Are you thinking of owning a business? Or do you already own a Startup or Small Business? Or maybe you are thinking of investing in an SME business, and you want to register such a business. You are in the right spot.
Registering a business is very pertinent. People will recognize you as a legal entity in the country. Also, your business will have a voice both locally and internationally.
But before you register your business, you have to be extremely careful, so that you won’t fall into the hands of crooks and fraudsters. However, this post will guide you on the different steps of registering a business name without stress and mistakes.
The Benefits of Registering a Business Name in Nigeria
When we talk about registering a business name. It is not just giving your business a name. It is a whole lot more than that. There are lots of benefits you tend to get when you register your business. These benefits include:
- Your company automatically becomes a legal entity in the country
- People from different walks of life will recognize your business as a legal entity
- Your business will have a voice both locally and internationally
- Once you are a legal entity, you are allowed to expand to other nations
- Local and International investors can invest in your business
Requirements for Registering a Business Name
To register your business, you must meet up to the under-listed requirements.
- Intended business name
- Indicate the proposed type of business to be registered(Private Limited Company or Private Unlimited Company)
- Names and means of identification of the proprietor of the business
- If more than one person, names and the means of identification of the partners or proprietors of the company.
- Partnership deed where necessary
- The objectives and business of the company
- The address of the company.
- The Memorandum and the Articles of Association of the Company. A Legal Practitioner usually drafts the memorandum. However, the Corporate Affairs Commission(CAC) has provided a generic MEMART, which any new company can adopt.
Steps to Register a Business Name in Nigeria
There is no hard and fast rule in registering a business name in Nigeria. Meanwhile, below are guidelines to avoid mistakes.
- Select a Name – This is the first step you have to take before you can register your business. You must decide and select what name to use to register your business.
- Visit the CAC portal/website – Also, to check the availability of your proposed business name, you have to visit the CAC portal and apply. The CAC will conduct a quick search in its database to determine if the proposed name or a similar one is already taken.
After the name search, if the name is not on their database, then the CAC will approve the name and reserve it for 60 days. During these periods of reservation, the CAC expects you to complete the registration process for your business name.
In this step, you have to:
- Fill in all the necessary registration details in the Statutory Form(FORM BN1). Click to view the Statutory Form
- Pay incorporation filing and stamp duty(Online).
- Upload the required scanned documents (Approval Note, Statutory Form (FORM BN 1, Means of identification, Payment Receipt, and Proficiency certificate(where applicable).
After the registration of the business name, the following documents would be given to the proprietors by the CAC:
- The Original Certificate of registration of the business name
- The CTC of the Application for the Registration of the business name
Besides, the entire registration process should not take more than a week, depending on the workload of the CAC at the moment.
Cost of Registering a Business in Nigeria
The cost of registering a business in Nigeria depends on the type of entity you want to register. There are three main types of business entities in Nigeria: sole proprietorship, limited company, and incorporated trustee. Each of them has different registration fees and requirements.
Here is a summary of the cost estimation for each type:
1. Sole Proprietorship
This is the simplest and cheapest form of business entity. It is also known as a business name. It is suitable for small businesses that are owned and managed by one person. To register a sole proprietorship, you need to pay N500 for name reservation and N10,000 for the registration form. The total cost is about N10,500.
2. Limited company
This is the most common and popular form of business entity. It is also known as a private or public company. It is suitable for medium to large businesses that have shareholders and directors. To register a limited company, you need to pay N500 for a name reservation and N10,000 for a registration form. You also need to pay additional fees based on the share capital of the company. The share capital is the amount of money that the shareholders invest in the company.
The fees are as follows:
- For a private company with a share capital of N1 million or less, the fee is N10,000.
- For a private company with a share capital of more than N1 million and up to N500 million, the fee is N5,000 for every N1 million share capital or part thereof.
- For a private company with a share capital of more than N500 million, the fee is N7,500 for every N1 million share capital or part thereof.
- For a public company with a share capital of N1 million or less, the fee is N20,000.
- For a public company with a share capital of more than N1 million and up to N500 million, the fee is N10,000 for every N1 million share capital or part thereof.
- For a public company with a share capital of more than N500 million, the fee is N15,000 for every N1 million share capital or part thereof.
For example, if you want to register a private company with a share capital of N50 million, you need to pay N500 + N10,000 + (N50 x N5,000) = N260,500.
3. Incorporated trustee
This is a special form of business entity that is used for non-profit organizations such as religious groups, charities, clubs, associations, etc. It is also known as an NGO or CBO. To register an incorporated trustee, you need to pay N500 for name reservation and N30,000 for the registration form. The total cost is about N30,500.
The process might seem like a few hoops to jump through, but it’s a crucial step toward establishing your business. Follow the steps diligently, dot your i’s, cross your t’s, and soon you’ll have your business name officially on the map.