As an investor or entrepreneur, one of the most important conditions for beginning a business is the registration of a business name. Registering a business name with the Corporate Affairs Commission (CAC) provides numerous benefits to all businesses, from small to medium to large. This article addresses all that needs to be known about how you can register a business name in Nigeria with CAC as well as the numerous benefits that it holds.
An Overview of Business Registration in Nigeria
The Corporate and Affairs Commission (CAC) in Nigeria is in charge of business registration. The Companies and Allied Matters Act of 1990 established this autonomous authority. They are tasked with the regulation and management of businesses in Nigeria.
If you are searching for a reasonably inexpensive approach to legalizing your business, registering a business name in Nigeria with the Corporate Affairs Commission can be a simple way to go. The requirements are simple, the complications are few, and the compliance reporting obligations are light. This structure is suitable for either a sole proprietorship or a partnership. The simple processes outlined below will assist you in registering your business name in Nigeria.
What are the Benefits Of Registering A Business Name in Nigeria with the Corporate Affairs Commission (CAC)?
The Corporate Affairs Commission is referred to as the CAC. It is the Nigerian government agency in charge of regulating and administering businesses in the country. It was created in 1999 with the passage of the Companies and Allied Matters Act. There are numerous advantages to registering a business name with CAC. They are as follows:
#1. Registration Comes With A Certificate Of Incorporation
When you register a business name with CAC, you will receive incorporation after your registration is complete, which can be used for authentication purposes. The CAC also offers e-certificates, which can now be utilized anywhere in the world without the need for physical presence. A business owner or agent is not required to receive the certificate of registration and incorporation in person, which can be cumbersome, time-consuming, and inefficient.
#2. The Business Becomes A Separate Legal Entity
When a business name is registered with CAC, it becomes a separate legal entity. In other words, the business is like a legal person. The law regards the incorporated business as a separate entity that is independent of the members or people who run it. This also means that it can be sued as a separate business and engage in financial transactions and processes.
#3. It Attracts Investors
When a business is registered, its capacity to recruit investors improves and becomes easier. Investors believe that investing in a registered company is safer than investing in an unregistered business with no legal structure. Significant capital can be raised more easily this way.
#4. Improves The Reputation Of a Business With Customers
It can be categorized as a public relations approach. Having a business registered with CAC improves a brand’s image, credibility, and perception. It also increases client trust in a business because they are more confident dealing with a registered entity that can be tracked. They feel more secure and at ease paying for services and products into a business account in the name of the business rather than a personal account.
#5. Provides Business Legal Protection
When a company is formed with the Corporate Affairs Commission, the business name is protected from being used by any other company in Nigeria, reducing the chance of the company’s name being exploited for fraudulent purposes.
#6. Flexibility In Obtaining Loans
A CAC-incorporated business finds it easier to obtain a loan. It increases the trust and credibility of investors and lenders in a business by offering credibility and trust.
#7. Saves Business From Sanctions
In Nigeria, registering a business name is mandatory legislation that shields enterprises from issues such as sanctions and impersonation.
#8. Protects Businesses From Liability
A business registered as a private liability corporation shields business owners from having to pay back loans with personal property because the business is now a separate legal entity. Sole proprietorships, partnerships, public limited liability corporations, and private limited liability companies are all options for registering a business.
How to Register a Business Name in Nigeria
Thankfully, the registration process is no longer entirely manual. It can be done from the comfort of your own home or wherever you want, including on the go. However, it necessitates certain deliberate and meticulous procedures:
Let’s take a look at how to register a business name with the CAC of Nigeria.
#1. Consider a Business Name
A business owner must come up with a name for his or her company. Of course, some elements must be considered, such as the business’s ideals, industry, client attractiveness, and, perhaps most crucially, whether the business name is accessible. On the CAC portal, business owners can look for the names of their companies.
#2. Reserve Your Company Name
You will apply to the Corporate Affairs Commission (CAC) with two alternate names for your business. The CAC will search its database to ensure that the name is not already in use or that a comparable name is not currently in use. If the CAC approves the name, it will hold the name for you for 60 days. It is assumed that you will finish the registration process for your business name during this time. You can do it in person or online by going to the CAC website.
#3. Preparing The Memorandum and Articles of Association
Depending on the form of the organization, business owners will be required to establish a memorandum and articles of association. This is a very legal stage, and you will need the assistance of a lawyer.
The documents are prepared by the lawyer, who must include the names of the first directors or partners, as well as any shareholders. Participants in the agreement or documentation must be at least eight years old. They must also have legal documentation to prove their identification, such as identity cards. All of this will be investigated by the CAC.
#4. Filling out The Incorporation Form
Obtaining and filling out the incorporation form is another step in registering a business name with the CAC. This follows the completion and processing of the memorandum and articles of association. The form is to be provided alongside additional documents. This may necessitate the services of a lawyer or a secretary. The following forms will be completed:
- CAC Form 7: This is to be filled out by the directors, and it must include all of their information.
- CAC Form 2: This is completed by a director and includes the share capital as well as the return of allotment form.
- CAC Form 3: The notice of circumstance or change of address form will be filled out by a director and secretary of the firm.
- CAC Form 4: This is completed by another individual or company accredited by CAC; it is the statement of conformity in addition to the CAMA form criteria.
Two directors will sign a paper naming a secretary for the company.
#5. Submission Of The Forms
Once the above-mentioned forms have been completed online or in person, together with payment for these forms, the next step is to submit the forms once the payments have been approved. The documents will next be scrutinized by the CAC before the entrepreneur is notified of its approval. The complete procedure usually takes one week.
The business name is then ready for collection. However, the length could also be affected by trailing variables such as bureaucracy, workload, a small number of employees, geographical location or distance, or the entrepreneur’s inability to find qualified individuals. The entire procedure should take around a week, depending on the CAC’s workload at the time.
List Of Documents Needed to Complete the CAC Registration Process
The following is the documentation you must supply throughout the CAC registration process:
- The proposed name of the business.
- The proposed objective of the business
- The business memorandum and articles of association
- Statement of the authorized share capital
- Form CACC 1, reservation, and availability of names
- Names and addresses of the parties incorporating the company
- Two recent passport photographs of every director and an authentic means of identification
- Statutory declaration of compliance by a legal practitioner.
- Name and address of the company secretary
- Address of the principal business office
- Filing with the Federal Inland Revenue Service for the purpose of tax.
All other documents or fees that may be needed by the commission to satisfy any law or condition
How Much Does It Cost to Register a Business Name in Nigeria?
- The cost of registering a private business with an authorized share capital of N1 million or less is N10,000.
- Registration of a private company with a share capital of more than N1 million and up to N500 million costs N5,000 for every 1 million shares of the company.
- Private company registration above N500 million in authorized share capital costs N7,500 for every 1 million shares of the company.
- Public company registration for the first 1 million shares or fewer costs N20,000
- Registration of a company without share capital costs N20,000
What are the Requirements for the Registration of a Business Name?
The initial requirement for registering your business is a government-issued identification card. The National ID Number Slip (NIN) is the sole form of identification allowed by the Corporate Affairs Commission.
What is the Difference Between a Business Name and a Business Registration?
A business name is the registration of a trade name for commercial purposes, as opposed to a company, which is the formation of a separate legal entity for the purpose of conducting business.
How Long Does it Take for a Business Name to be Approved?
According to the Corporate Affairs Commission (CAC), processes such as name reservations and new business registration would now require 48 hours. In a notice issued on Tuesday, the commission outlined the new schedule for document processing. This is in contrast to the one to two weeks required for business registration.
Can I Register my Business Name Online in Nigeria?
Previously, you would have had to go via a lawyer or an accountant to Register your Business Online in Nigeria, which could take a very long time. However, you can now register your business online from the comfort of your own home, using your laptop and an internet connection.
Does Business Name Pay Tax in Nigeria?
In Nigeria, a Business Name owner must pay tax on the total amount earned from all sources of revenue for the year.
How Many Days Does it Take to Register a Business in Nigeria?
When there are no unexpected delays or constraints, company registration can be completed in two to seven working days. The size or share capital of a company is determined by the sort of business to be conducted and whether or not a foreigner is involved in the company.
Can Two People Register a Business Name in Nigeria?
You can register your business as a single practitioner or as a partnership with another person. You must fill out the appropriate form and attach two passport-sized photographs of each applicant (if you are beginning a business as a partnership).
Can I Start a Business without Registering it in Nigeria?
Companies or business names in Nigeria must be registered with the Corporate Affairs Commission (CAC). To gain access to the Nigerian market, international investors may wish to establish a new Nigerian business or a new Nigerian subsidiary that operates as a different legal entity from the offshore parent company.
Conclusion
Hopefully, by this time, you have a thorough understanding of how to register a business name in Nigeria. Please keep in mind that you do not require the assistance of a lawyer, chartered secretaries, or any other third party to register your business name.
To encourage involvement from prospective investors and entrepreneurs, the Corporate Affairs Commission (CAC) has streamlined the business name registration process. When you register your business name, you become eligible for financial support from the Bank of Industry.
Along with obtaining a business name, make an effort to obtain your unique tax identification number (TIN), as every business in Nigeria is required to pay tax. This will save you time and effort while trying to raise cash for your business.
Now that you have your business name registration, you will need business insurance to assist keep your business afloat even in difficult circumstances.
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