-----There is no shortage to remarkable ideas, what's missing is the will to execute them------
SETH GODIN
Hi, you must be an entrepreneur who has a business idea to make money
and who wants to give that idea a legal flavour otherwise you won't be reading this. Dear friends, the truth is as remarkable as this idea is if you don't execute it, it remains an idea and will never translate into money.
and who wants to give that idea a legal flavour otherwise you won't be reading this. Dear friends, the truth is as remarkable as this idea is if you don't execute it, it remains an idea and will never translate into money.
In this post, we will look at probably one of the most important ways to execute that your business idea. This one way of executing your remarkable business idea is REGISTRATION. But before we proceed lets look briefly at the law and body involved in the process of Registration.
The Law, Corporate Affairs Commission (CAC) and the Procedures for Registration
In Nigeria, the Company and Allied Matters Act, (CAMA) amongst other relevant laws regulates the legal framework for doing business in Nigeria particularly with formation (registration) of business.
The Corporate Affairs Commission (CAC) amongst other regulatory bodies is saddled with control of corporate business activities in Nigeria. The CAC is established by CAMA, it administers CAMA and oversees the formation, management and winding up of companies in Nigeria. CAC has it headquarters in Abuja and branches in all 36 State Capital of the Federation.
REGISTRATION
All things being equal, as hinted above registration is one of the ways of executing your remarkable business idea to translate into money. This registration may among other things be borne out f the necessity to give your idea a legal backing, a life to the idea and structures upon which the idea can stand and thrive.
Generally, it is not compulsory to register your business in Nigeria,
however, there are some enterprises or businesses that cannot be done
unless they are incorporated (registered). Thus, an entrepreneur if you want to do such
business you must register that business (to be discussed later). The
implication of this is that you may not register your
business depending on what kind of business you choose to do.
Apart from the above reason, hereunder are other reasons why you should register your business:
1. Easy access to loan with your certificate of incorporation or registration. A bank after consideration would be much more willing to grant loan facility to a registered business than unregistered one.
2. Contract: This is similar to the above, people feel more comfortable entering into contract with a registered business or company than an individual whose business is not registered.
3. Confidence: This is linked to the preceding point. A person would more confident dealing with a registered company or business especially in terms of payment. Ordinarily, a person quivers and not so comfortable when you as an entrepreneur gives your personal account and not your corporate account number.
4. Cheaper and easy to register (this is only applicable to business name as registration of companies and Incorporated Trustees are so easy and cheap).
As stated above, it is generally not mandatory to register your business in Nigeria, however where you want to carry out your business in a name different from your name or surname or initials, that name that is different from your name, surname is registrable and as such MUST be registered, failure to do so is an offense. For example, Oche Eze Kunle wants to do a poultry farm, if he decides to use Oche Eze Kunle, or Oche or Eze or Kunle or O.E.K, he does not need to register the name as the name is not registrable but if he desires to use O.E.K Poultry Farms or Oche Poultry Farms, this name becomes registrable and he MUST register it, this last name becomes a BUSINESS NAME. It is the registration of this name that is called a BUSINESS NAME. A business name is a name used by an investor to distinguish his business from another. It could be Sole Proprietorship, Partnership or even a Company.
EXAMPLE OF A NAME THAT MUST BE REGISTERED AS A BUSINESS NAME.
An investor's full name or surname or initials with any addition to either the full name, surname or initials like the 2nd example above.
EXAMPLE OF A NAME THAT NEED NOT BE REGISTERED AS A BUSINESS NAME.
AS A BUSINESS NAME.
An investor's full name or surname or initials only without any addition to
either the full name, surname or initials like the 1st example above.
CATEGORIES OF BUSINESS ORGANISATIONS THAT CAN BE REGISTERED AS A BUSINESS NAME, FEATURES AND SUITABILITY OF THE BUSINESS.
1. Sole proprietorship.
2. Partnership.
1. SOLE PROPRIETORSHIP
This is a popularly know as one - man business. It is a business organization in which an individual engages in commercial activities with a view to making profits. Here an individual alone takes all the profits and bears all the risk. Consequently, if he or she is ill or dies, that ends the business.
. Here an individual alone takes all the profits and bears all the risk. Consequently, if he or she is ill or dies, that ends the business.
A Sole Proprietor may engage in any legal business of his choice but if it involves a business like legal practice, medical practice (hospital/clinic ), accountancy, surveying, etc., he or she must be legally qualified.
FEATURES: It is cheap and easy to set up.
SUITABILITY:
1. This kind of business is suitable for a sole trader where a person wants to do business alone.
2. It is suitable for quick decision making.
So, if you want to take all the profits alone and bear the risk and be able to take quick decision without waiting or consulting any one. Essentially, in reality most investors in Nigeria are sole proprietors who hide under the veil of incorporation i.e Company because most incorporated companies (private companies) are registered with a man, his wife and his infant children as members of the company and essentially, in this case he takes all the decision himself or decisions are taken quickly without any hindrance. The importance of the difference why investors prefer to register a company than register a business name would discussed shortly.
a company than register a business name would discussed shortly.
REGISTRATION: A sole proprietor, as stated above need not
register his business if he carries on business in his full name,
surname or initials BUT must register is there is any addition to the
full name, surname or initials. Registration of the name is under
BUSINESS NAME. see examples above.
2. PARTNERSHIP
As the name implies, this is a business organization that involves the coming together of two or more persons to carry on business in common with the aim of making profit. A Partnership cannot be less than two (2) and MUST not be more than twenty (20) persons. For the purpose of evidence, the formation and terms of the Partnership should be reduced into writing by a Partnership articles under seal, or by a mere agreement. A partnership can be formed orally but wisdom demands its put into writing and the terms expressly stated out to avoid retraction or denial.
Every member is equal except otherwise expressly stated.
FEATURES.
1. Minimum of 2 persons, maximum of 20 people.
2. Members are jointly and severally liable for the liability of the Partnership because there is no separate legal personality like a Company. HOWEVER, it is important to note that a Partnership may also achieve limited liability for some of its members if there is an agreement to the effect and if such ingenious drafting of the agreement ensures continuity of business.
3. Every member has a right to participate in the management of the Partnership except a sleeping partner. (i.e one who is not active int the management of the Partnership.
4. There is no limit to the kind of legitimate business a Partnership can undertake, this means that Partners can do any legitimate business of their choice without any restriction or limitation as the kind of legitimate business it can do. This is by far the MOST important feature of Partnership and what makes it more enticing to adopt to do business and distinguishes it from a Company (a company can only do the business listed on its objects and nothing more).
SUITABILITY.
1.It is suitable where people want to do business that will engage in different and unrelated legitimate businesses.
2. For simplicity of formation, flexibility, and confidentiality.
REGISTRATION: A Partnership, as stated above need not
register the Partners carries on business in their full names,
surnames or initials BUT must register is there is any addition to the
full names, surnames or initials. Registration of the name is under
BUSINESS NAME. see examples above.
ADVANTAGES OF REGISTERING A BUSINESS NAME.
