When starting a business, a lot of entrepreneurs are usually confused as to whether to register their business with the Corporate Affairs Commission as a Business Name or a Company. This article focuses on registration of Business Name in Nigeria. What you need to know and how to go about this.
A Business Name is the name and style with which you trade. The owners of the business are responsible for the acts and liabilities of the business. However, when a business is registered as a company, the company and the owners have different legal rights and responsibilities.
Benefits of registering a business name in Nigeria
Below are some of the reasons for a registration of Business Name:
- Protection of your name from being plagiarized (copied) or used by another.
- A registered business is more desirable to customers as it is recognized by law
- Maintaining business account and ease of accessing loans from financial institutions.
Form of business name enterprise
A Registered business name be used to carry on business in the form of a Sole Proprietorship or Partnership. Let’s take a look at the different forms;
It is the most common form of business in Nigeria. It simply means a one-man business organization. It is a ME, MYSELF and I model. It is the type of entity that is fully owned and managed by one natural person known as the sole proprietor.
Advantages of Sole proprietorship
- A sole trader need not register his business if he carries on the business under his first name, his surname and the initials of his first name or under his full name.
- A proprietor has complete control of his business hence facilitating prompt decisions.
- Sole proprietorship is easy to establish as it requires less formal processes.
- The sole proprietor gets all the profit.
Disadvantages of Sole Proprietorship
- The death or bankruptcy of the owner means the end of the business.
- The sole proprietor is personally liable for the debts and actions.
- The sole proprietor raises capital solely.
Partnership Business in Nigeria
This is a type of business organization in which two or more individual’s pool money, skills, and other resources, and share profit and loss in accordance with the terms of the partnership agreement. In absence of such agreement, the partners share profit and risks equally. This model can be be carried out through registration of Business Name.
Advantages of Partnership
- Registration process is less formal.
- Contribution of capital is shared among the partners.
- The partnership form of organization enjoys the benefit of the ability, experience, and talents of the partners.
- Any loss sustained by the firm will be borne by all the partners equally as opposed to a sole proprietor.
- The partners of partnership firms exercise joint responsibility and meet frequently. This enables them to take decisions promptly, which is conducive to taking advantage of sudden opportunities.
Disadvantages of Partnership
- Membership is limited to 2-20 except for law and accountancy firms and cooperative society registered by law.
- Difference of opinion very often results in disharmony and lack of management
- A partnership may come to an abrupt end on the death, lunacy, insolvency or resignation of a partner.
- Partners have unlimited liability.
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