Before registering your business with the Corporate Affairs Commission (CAC) in Nigeria, there are several important things you need to know. Here’s a general overview to help you get started
1. Brand Name
Choose a unique name for your brand that complies with CAC’s guidelines because there are names CAC would NEVER approve. Also conduct a name reservation to be sure your chosen brand name is truly available with the CAC hasn’t been registered by another entity. Get started here
2. Business Structure
Determine the type of business structure you want to register. There are various options, including sole proprietorship, partnership, limited liability company (LLC), and public limited company (PLC). Each structure has different requirements and implications for ownership, liability, and taxation.
Hence, it is important to carry out your findings and choose the one that best suits your needs.
3. Business Activities
Clearly define the primary activities or business objectives of your brand. This information helps categorise your business under the appropriate industry or sector during the registration process.
You should as well know that some activities/nature of business such as education, skill, finance, etc; won’t be accepted under business name registration. They are best registered under a limited liability company.
4. Compliance Obligation
Understand your obligations as a registered business in Nigeria. This includes adhering to corporate governance practices, filing annual returns to the CAC, maintaining proper accounting records, and conducting regular audits, payment of tax, among other requirements.
Stay informed about these obligations to avoid penalties or legal issues.
5. Intellectual Property Protection
If your business involves intellectual property (e.g., a product, unique name, etc), it’s essential that you consider protecting your intellectual property rights in Nigeria.
The Nigerian Copyright Commission and the Trademarks, Patents, and Designs Registry are the agencies responsible for handling intellectual property matters.
6. Business Environment
Familiarize yourself with and understand the overall business environment in Nigeria, including economic trends, market conditions, and relevant business laws/policies. Stay updated on government policies, incentives, and initiatives that may impact your business.
7. Share Capital & Shareholder
If you plan to register a company limited by shares, determine the amount of share capital and the number of shares to be issued. The minimum authorised share capital requirements differ based on the type of company.
Identify the directors and shareholders of your company. For private companies, a minimum of one director is required. At least one director must be a Nigerian resident. Public companies have additional requirements.
You’ll need to specify the authorized share capital of the company. This represents the maximum value of shares that the company can issue to shareholders.
8. Tax Obligation
Familiarize yourself with the tax obligations for your business. Register for tax with the Federal Inland Revenue Service (FIRS) and comply with tax laws and regulations.
Stay updated on changes in tax policies and filing deadlines. Filing of Tax or VAT is now 14th of every month as against the stipulated 21st.
We understand that there are many misconceptions as regarding payment of tax in Nigeria you can reach out to us to clarify this misconceptions
9. Documentation
Prepare the necessary documents for registration. These typically include:
a. Business Name: You’ll need to provide a completed registration form, a valid means of identification for the proprietor, passport-size photograph, E-signature.
b. Limited Liability Company (LLC): Prepare a completed registration form, the Memorandum and Articles of Association, a valid means of identification for each director/shareholder, E-signature.
10. Fees and Charges
You need to be aware of the registration fees and charges associated with the CAC process. The fees vary depending on the type of business structure, authorised share capital (for LLCs), and other factors. Ensure you have the necessary funds to cover these costs.
Here are some general considerations:
Business Name Registration: The fees for registering a business name with the CAC typically range from ₦25,000 upward (Nigerian Naira).
Limited Liability Company (LLC) Registration: The fees for registering an LLC depend on the authorized share capital of the company. Here is a general breakdown:
a. For authorised share capital of up to ₦1 million: The registration fee ranges from ₦55,000 upward, depending on the number of shares issued.
b. For authorised share capital above ₦1 million: The registration fee increases as the share capital increases. It can range from ₦10,000 per ₦1 million of share capital.
These fees can vary and should be accounted for in your budget. Talk to a consultant
11. Business Permits and Licenses
Depending on the nature of your business activities, you may require additional permits or licenses from relevant government agencies or regulatory bodies. For instance if you are considering ggoing into real estate, construction, oil and gas, consulting, etc DPR certificate is required for Oil and Gas, Special Control Unit Against Money Laundering certificate (SCUML) is a compulsory registration to be done for your brand.
You can as well carry out your research for the specific requirements for your industry and comply with any necessary permits to operate legally. Talk to a consultant
12. Annual Returns Filing
This right here is perhaps the most confusing obligations many business owners or startup founders don’t understand. Annual returns isn’t the same thing with TAX. Instead it is the fee you pay at the end of every business year to CAC.
You are required to file annual returns with the CAC on or before June 30th of every year this is in other to maintain an active status on their website.
Refusal to do this will lead to your brand becoming Inactive on The Corporate Affairs Commission Website and an Inactive status has accounted for wide range of visa application, grants, loans denials. Talk to a consultant
Conclusively, we know you got value for your time. Just in case you’re still considering how to go about your cac registration, annual returns filing, compliance, scuml registration, etc, little worries we’re here for you why not TALK TO US RIGHT AWAY?
Share your thoughts what other things do you think people need to know before registering their business in Nigeria?