When registering your small business in Nigeria, you need to compare the needs of the business with the business entities available under Nigerian law and determine which business structure best satisfies the needs of the business.
As a general rule, small businesses are usually structured under the following entities:
a. Limited Liability Companies :
These are usually registered under Part A of the Companies and Allied Matters Act. This structure may be used in a situation where any of the following conditions are present or may arise in the near future.
- If you have a partner and you want to protect the business and other partners from liabilities.
- If you have employees
- If the company will be signing contracts in its own name
- If the company has assets that it would want to protect from the liabilities of the promoters and investors
- If the company does not have the above, but it is likely that it will have the above, it is best that the limited liability company be registered ahead of time, in order to prevent difficulties arising from legacy issues.
b. Sole Proprietorships and Partnerships:
These may be registered as Business Names under Part B of the Companies and Allied Matters Act. This structure may be adopted where the conditions stipulated above do not currently exist or is not predicted to exist within 3 year from the date of registration of the business.
It should be however noted that the Corporate Affairs Commission permits businesses registered as Business Names to re-register as Limited Liability Companies. All the proprietors need to do is to reserve a limited liability name, draft and file the memorandum and articles of association, and pay the requisite fees.
Milton and Cross provides advisory services to individuals who wish to register or incorporate small businesses. In addition to helping you register your business we also provide support with tax registration and organizational structuring. Contact us on +2348036258312 or +2348188474167