28 Feb What you need to know before you register your Business Name
A Business Name is one of the business structures you can use to run a business. It is commonly known as a ‘sole proprietorship’.
Also, registering a Business Name is the first step to setting up a partnership (limited or unlimited) in Nigeria but you will need to have some documents in place to govern your partnership.
Registering a Business Name is a low-risk form of business, with minimal compliance obligations so it is great for test-driving business ideas and concepts or launching your small business.
Registering a Business Name can create an identity for your business, help you differentiate yourself from your competitors, and can be the starting point to creating your brand.
To save you the hassle of fretting over the where, how, and when (with costly errors) of registering and owning your Business Name, here are some points you need to consider as you start this journey:
- Prepare for the Registration Process: The Corporate Affairs Commission has made it accessible to reserve and register your Business Name with their online portal, but this does not reduce the level of attention you need to pay to specific aspects of your intended Business Name. If your intended business has some technical elements to it, you may be required to submit proof of your technical ability to undertake the business you intend. This is where we can help, to ease the burden of figuring out the jargon for the registration process.
- Order your Business Stamp: Even though a Business Name is not a corporate entity, it still has the advantage of giving your business a separate identity from you, the owner. So, you will be required to execute formal documents, as your Business Name during its existence, and this requires the use of a Business Stamp. If you are looking to own a Business Name, you will need to get a Business Stamp. This is a simple pre-filled ink stamp or a rubber stamp with an ink pad, carrying an image of the name of the business. You can order your business stamp here.
- Apply for the TIN/VAT certificate: There is often the misconception that a Business Name does not have any tax obligations, and this is not the case. Business owners are required to charge VAT on their services and products to customers and remit the VAT on the goods and services sold, to the Federal Government. This requires a Tax Identification & VAT Number. There are some other tax obligations for a Business Name, but these would depend on a range of factors. A TIN/VAT certificate for a Business Name is as important as its Registration Certificate.
- Set up a Business Bank Account: A common malpractice by the owners of Business Names is the lack of separation between the owner’s purse and the business’ funds. This is the single, most significant factor for the lack of accessibility to investors’ and funders for this form of business. You should set up a business bank account (often referred to as a corporate bank account, by banks) to help you manage your business and remove any possibility of misspending in your business.
- Maintain financial records and receipts: Keeping detailed financial records and receipts is very important for your business. Apart from the obvious benefits of being able to manage your business’ budget, it will help you prepare for and be able to maintain your tax obligations without delay or default.
- File your Annual Return within the deadline: You may be reading this and be surprised to learn that Business Names are required to file a Return to the Corporate Affairs Commission (CAC) every year. We are glad you now know this. Failing to comply with this filing requirement has led to business paying penalty fines or losing their Business Names because they were struck off the CAC Business Names Register.
- Notify CAC of any change in the details of the Business Name: Change is a constant factor, in any business. Any change in the key aspects of your business including changes in ownership, changes in business address, changes in the objects of the business, or cessation of the business (when the business ceases to continue) should be communicated to the CAC as soon as possible after the change. This will prevent any obstacles when the time comes to scale your business to the next level.
Now that you know what it takes to own a Business Name, let us get you started with your very own Business Name. Go ahead and register your Business Name.
We take away the distractions and help you focus on your core task of running your business. Find out more on how we can support your organisation by visiting our website, subscribing to our posts or contacting us.