Nigeria, a developing country in West Africa has a population of more than 200 million. The Nigerian economy is one of the biggest in Africa and ranks 24th in the globe. Thus, Nigerians have a chance to start up thriving businesses that would enable them a good income. Although there is great potential for businesses to be started and grown, you cannot reap the full benefits of having one in Nigeria until it is registered. In this article, we would be showing you a step-by-step guide on how to register a business in Nigeria among other relevant information.
Setting up a Business in Nigeria
If you are tired of working under someone or just being idle, then starting a business is a great option for you to earn a considerable income. Although it may be quite challenging to set up a thriving business in the country due to one issue or the other, Nigeria offers a wide range of business opportunities for investors, whether local or foreign. Also, setting up a business in Nigeria is relativelyaffordable compared to other countries like the US, UK etc. This isbecause the Nigerian government has implemented several measuresto reduce the costs of registering your business. In addition, the country has several sources of funding available for small businesses, such as banks, and government grants among others. This makes it easier for some entrepreneurs to get the capital they need to start and grow their businesses anywhere in the country.
Why Register your Business?
1. Security of Assets
Your incorporated business is regarded by law as a completely separate legal entity, and by extension, you cannot be held liable for the debts owed by your business unless you personally guaranteed the debt or loan. Registering your business name protects you from losing your personal assets. In other words, your personal assets cannot be taken in order to pay off the debt of your business.
2. Availability of Resources
Your business’s ability to expand quickly depends on the means you have at your disposal. When your business name is registered, you can easily attract investors or collect money for your business from the government. The fact that no one will invest in an unregistered enterprise indicates to potential investors that you already have a formal structure in place.
3. Respect and Recognition
Your company gains respect and recognition by becoming incorporated. Additionally, this could imply that your company has attained a certain degree of notoriety and prominence. Additionally, it presents your business as having responsible, effective, and efficient management, which instantly inspires confidence or trust in your clients or customers.
Your business can live as long as you want by incorporating; this means that even the death of the owner or a change in ownership won’t stop it from operating. The only situation in which a company’s existence may be affected is if it is officially shut down by a court order. This claim indicates that a company is an entire legal entity. In a nutshell, incorporation gives a company the ability to outlive you and numerous generations.
5. Business Name Retention
It is the duty of the CAC to ensure that your business name is protected and cannot be used by any organization or company across the nation, so once you register your business with the CAC, you are free from having any problems in the future regarding your business name. To put it another way, incorporating your company will set it apart from other businesses in Nigeria.
It is however advisable to get a good lawyer so your business can enjoy legal protection once it is registered. This protection allows you to operate your business without fear of being sued or having problems with the authorities. Additionally, registering a business also helps to promote economic growth and stability, as it encourages more people to invest in the country. Finally, it can open doors to new opportunities for the business, both domestically and internationally.
How to Register a Business in Nigeria
Before we dive in, it is expedient to note that the institution responsible for business registration in Nigeria is the Corporate and Affairs Commission (CAC). Established in 1990 under the Companies and Allied Matters Act, this body is charged with the responsibility of regulation and management of companies in Nigeria. To register your business in Nigeria, follow these steps:
1. Research Your Business Idea
Before you start the business registration process, it is important to do some research to choose the appropriate type of business andensure that your business idea is viable. While brainstorming and limiting down a few business ideas, consider the type of business you plan to open and research the industry, the market, competitors, and your potential customers. It would also do you a lot of benefitsif you understand the business environment in Nigeria, includingregulations and restrictions. You must also ensure that your business idea is one which you are passionate about and is compatible with your hobbies, and personal objectives, among others. This would keep you motivated all through the coming highs and lows and increase your chances of success.
2. Create an Account with the CAC
Once you have searched for a business idea, you need to create an account with the CAC. Visit the CAC portal to register and create an account. Fill in the required information and input your name as it is on your government-issued ID card. Afterwards, a verification link would be sent to the mail you provided and you would need to confirm and then log in.
3. Choose a Business Name
Once you have researched your business idea and determined that it is viable and created an account, you will need to choose a business name. You need to conduct a search on the internet and have options. These names should not be picked at random as they must represent your brand. You then need to search again at CAC‘sregistration portal to ensure that your options are still available. It is important that the name should be unique and it must not be similar to the name of an existing business. Additionally, it can not include offensive words. Also, the search on the portal may be conducted by an accredited agent who is hired to handle the registration. You are to provide two names which would be used for the search. Noteworthy, the search may take one to two days to be completed. The CAC will then issue an Approval Note indicating the name has been reserved for registration for the applicant once the search has been completed and the name is available.
4. Complete the Required Forms
You need to complete the required pre-registration form after you have reserved a name for your business on the portal. This pre-registration form (CAC-BNo1) must be filled out with accurate information as any mistakes may cost you in the long run. You are to provide the general nature of your business, approved name, address of the business, name, address, occupation and other details of the proprietors and signature of the proprietors.
5. Pay For a Filing Fee
A receipt for your payment will be given to you once the filing costhas been paid. Be aware that you can pay either immediately through the website portal or at the bank. The price to register a business name varies depending on the kind of business you want to register.
6. Prepare Your Documents For Upload
You will need to provide a signed copy of the pre-registration formsand upload a scanned copy to the website for processing. Thedocuments required for registering a business would be highlighted further in this article.
7. Provide the Original Copies of Your Documents
Apart from submitting online, you will have to submit the original signed copies of the documents uploaded above to the CAC office. You will need to submit them in exchange for your certificate and the Certified True Copies of the documents.
Documents Required for Registering a Business/ Company
• CAC Registration Form
• Evidence of the registered address of your business
• Receipt of stamp duty payment
• Consent and particulars of the first directors of your company.
• Approval note of your business name or availability printout
• Memorandum of Association and Article of Association
• Directors and shareholders identification letter
• Statement of compliance by a legal personnel
• Certificate of incorporation of company secretary
Note that all the above documents must be uploaded in PDF format.
Validity Period for Business Name Reservation and Processing Time
A CAC name reservation has a 60-day valid term. When the government approves the name, the organizers must submit the incorporation form right away. In some circumstances, the name may be retained for six months. The application requires two to three working days, but it may take longer when there is excesswork. These times may also rely on the individual’s state. It takes 48 hours to make availability available if the individual wishes to reserve it while he organizes his affairs, 24 hours to correct availability, and five working days to process consent for restricted names.
What is the Cost of Starting a Business in Nigeria ?
The price of starting a business in Nigeria is dependent on a number of factors, including the nature of the business, its size, its location, and the licenses and permits needed. In general, the price of starting a successful business can vary. You should speak with business advisors in Nigeria about your business plan and your budget to get an estimate of the cost from them. To register a company, however, typically costs between NGN 10,000 and NGN 45,000 in Lagos State, for example. The registration fee, stamp duty, and other related expenses are included here.
Is There any Risk in Starting or Registering a Business in Nigeria?
Registering a business in Nigeria can be a stressful and risky process. This is because of the following reasons:
1. The Complexity of the Nigerian LegalSystem.
The rules and regulations governing companies and businesses, in general, are complicated and not always clear-cut. Additionally, it can be challenging to locate trustworthy legal practitioners due to the fact that state laws frequently differ among other reasons. Before registering a business in Nigeria, it is crucial to do extensive research and consult with a lawyer to make sure the business complies with all legal requirements.
2. The Potential for Financial Losses.
Nigeria is renowned for having high levels of fraud and corruption, and people doing business here may suffer financial losses as a result of stealing and embezzlement. Before engaging in any business deal, it is crucial to carefully investigate any potential financial partners and to be aware of the local laws and ordinances that control commercial activity in Nigeria.
3. The Potential for Instability.
Political unrest is common in Nigeria, so it’s expedient to be mindful of the dangers and disruptions that could result from such unrest. The Nigerian economy also depends largely on oil and gas, making it vulnerable to changes in the world markets.
Other things to Note:
Raising funds for your business is one of the most crucial steps after registering it, and you can do this by looking into grants, venture capital, and investors. Governments at the local, state, and federal levels as well as private organizations and bodies may offer grants. Investors can be discovered through networking or a business’s own contacts, whereas venture capital can be obtained from venture capital firms and angel investors.
In addition to these options, you should also be able to evaluate the financial options available to you, such as traditional bank loans.
A lot goes into starting a business in Nigeria. From raising funds toregistering your business to getting customers, it can all be a challenging journey. Registering your business is a way to secure your business and protect its longevity. If you have been looking for information on how to go about your business registration, then we hope this article has been of help to you.