It is not surprising that prospective business owners are not familiar with the formalities of deciding what type of business to register . Majority of business owners just want to register a business and get it running without regard to the difference between business name and company registration.
They do not consider the legal implications of each structure. It is therefore imperative that we discuss the differences between these two structures. Registering a business with the Corporate Affairs Commission goes beyond choosing the cheaper and more convenient option, but choosing what is best for you in the long and short run. This articles explains the difference between business name and company registration in Nigeria.
A business name also known as a trading name. It is the name which a Business trades under for commercial purposes, it can be registered or not. It can remain unregistered if the owner(s) use their first name(s), surname(s) and the initials of first name(s) or under full name(s).
A business name is suitable for small business ventures, businesses that are not already looking forward to raising capital through the issuance of shares or go large scale. It can be used to form a sole proprietorship or a partnership
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A company is an association of persons who have come together for a common purpose which usually is to do business and make a profit. Upon registration, it becomes a corporate structure with separate personality status.
A company can either be a private or public company. These two types of companies can further be divided into limited by shares, limited by guarantee or unlimited depending on the structure of the company.
Entrepreneurs or business owners who register as a Business Name would usually want to do a conversion when the business starts growing. Mostly when they would like to raise funds, take loans, acquire assets or do business with multinationals.
This can be a lengthy process as the consent of the Registrar General, Corporate Affairs Commission has to be sought. Also queries can be issued which will further lengthen the time frame. Most entrepreneurs miss out on bid opportunities because the conversion process takes time.
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Also, upon approval, a fresh company would have to registered with the previous name. This would require payment of additional funds. Thus, it is advisable that Entrepreneurs register a Company from the very beginning.
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In our experience, most small business owners would usually want to register a business name instead of a company. The predominant reason being that it is cost effective to register a business name as opposed to a company.
At Sidebrief, we understand these intricacies. We are committed to making it easier, faster and more affordable to do business in Nigeria. With our competitive prices, cost will not be a determining factor in deciding what legal structure to use when starting but rather the most appropriate structure will be.
You can reach us via - Email: email@example.com or Phone: 09018081296
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