Registering your company is the first step in establishing it legally. It implies that you have the authority to conduct business.
It is important to register your firm if you want to maximize its potential. The Corporate Affairs Commission (CAC) in Nigeria is in charge of registering corporate companies. The benefits of registering a business include, among other things, legal protection and ensuring the viability of the enterprise.
Why Business Registration is Important in Nigeria
1. Registering your business helps you reduce your personal liability
You are legally accountable for every aspect of your firm, including debts and losses, as a sole proprietor or partner. Additionally, you will be held personally responsible if you sell a product that is faulty or you make a mistake. This type of business operation might be risky because it puts your personal assets at risk as well.
A company, on the other hand, is a distinct legal entity that makes it simple to shield your personal assets from business decisions. You won’t be personally liable for the company’s debts, allowing you to concentrate on growing your firm.
2. You’ll reduce the amount of taxes you pay
You might pay less tax if your business is structured as a corporation, depending on how much money it makes. The highest tax rate for a person is currently lower than the tax rate for corporations and small businesses.
As a sole proprietor, you are subject to individual taxation, and the profits from your business are included in your personal income.
Additionally, your business will be qualified for a number of tax breaks for marketing, training, and maintenance expenses.
3. Business registration provides owners with legal protection
You are legally shielded from any liabilities your company may face when you register it with the Corporate Affairs Commission. In essence, registering your business makes you a separate legal entity from that of your firm by separating you from it. Your personal property won’t be detained by the bank. For example, if your business (or company) gets a loan from a bank but, due to difficulties, there is a default in the payment, The only assets that your company’s properties can be withheld from the bank from which you acquired the loan are those assets.
4. A business’s registration makes it easier to seek funding
A crucial component of every business is funding. Among other options, getting money for your business may come in the form of grants from the government or loans from banks. Therefore, regardless of how you choose to raise capital for your company, being able to show that it is registered with the Corporate Affairs Commission makes it easier to get bank loans and receive government subsidies.
Investors would also be keener to partner with a registered business than an unregistered one. When looking for essential authorities, your firm becomes legitimate and trustworthy if it is registered with the Corporate Affairs Commission.
5. Trademark Protection
Protecting your company’s name and trademark is a very important function of corporate affairs commission (CAC) business registration. When a company has become well-known among customers, other brand-new companies may start to appear with the intention of exploiting the name and trademark of the popular company to profit from the customer base that has already been built up.
However, this unfair business conduct cannot be carried out if your company is registered with the Corporate Affairs Commission (CAC), as the name and trademark of a registered company are protected.
6. The registration of businesses facilitates international travel
If you wish to travel for business, getting a visa is simple if your company is registered with the Corporate Affairs Commission. Because business excursions have a favorable impact on the economy of the host nation in terms of foreign exchange, embassies issue visas to international investors who want to visit those nations on business. It will be simple to get a business visa for other nations if you are a registered business owner in Nigeria.
7. Business registration increases consumers’ trust in the company
For any firm to grow, credibility and a positive reputation are essential. Customers are convinced that a company is reliable and trustworthy if it is registered with the Corporate Affairs Commission. Because of this, potential clients feel at ease doing business with such a corporation or business entity.
These clients would recommend the business to others if the company’s positive reputation is upheld. And if these prospective clients—who have not yet transacted business with the aforementioned corporation (or business entity)—arrive, they will require confirmation that the enterprise is legitimate and sanctioned by Nigerian law.
Any business in Nigeria is given legitimacy by the Certificate of Incorporation that is given to the proprietor upon successful completion of the business registration process.
8. Credibility and brand recognition
Consider some of the most well-known businesses today, such as Google, Nike, and Facebook. These are all legally recognized businesses. A corporate structure is essential for a business to be as effective and extensive as it can be.
By registering your firm, you improve its perception and reputation. A business is a distinct entity that runs independently of you.
As many corporations will only hire or work with registered companies, becoming a registered company is crucial for any future dealings with third parties. This implies that your company’s name, not your own, will appear on business contracts.
9. You can raise a lot of money from shares
As a corporation, it will be simpler for you to draw in investors and obtain capital for your enterprise. You can borrow money and take on debt when your business is registered, but more crucially, you may sell shares and raise equity capital. Even if the money is staying in the business, you would still have to pay taxes if you had any other type of corporate structure.
Raising capital could be necessary for the growth and development of your company. Investors also prefer investing in registered companies over sole proprietorships and partnerships because they are confident that there is a formal structure in place to receive their money.
10. You can open a business account
As it distinguishes the business owner from his company, having a corporate account for a company is a valuable advantage. However, the Corporate Affairs Commission requires documentation of incorporation as part of the account opening process before you can have a business bank account. Customers are more comfortable making financial transactions into a business account that bears the name of the company than they are to the owner’s personal account. This approach makes it much more professional.
11. To guarantee the business continuity
Every business owner anticipates that his company will continue to operate even if he is not around. If you are a business owner and want to make sure your company stays relevant, you should register your company with the Corporate Affairs Commission.
When registering a business with the Corporate Affairs Commission, the owner must include information on the business’ organizational structure as well as other pertinent facts that will be kept on file with the CAC. When the owner(s) of a firm are not available to run the business, the CAC structure is recognized to ensure its continuity. If a business is properly registered, it may be transferred to another party or sold because every business is regarded as a separate legal entity.
12. The registration of businesses encourages civic responsibility
Tax payment is required in Nigeria for registered commercial entities, and it is also a civic duty for individuals and corporate entities. Tax deductions from your company are used to support public and social services, as well as governance and economic development initiatives. Therefore, business registration gives corporate citizens (business entities) a way to show that they are doing their civic duty by paying taxes.
13. Bidding for government contracts is permitted with business registration
Any business company in Nigeria must be properly registered with the Corporate Affairs Commission before it is permitted to submit a bid for a government contract.
14. Evidence of Legality
Evidence that the business has been registered is provided by the Certificate of Incorporation that is given upon successful completion of business registration with the Corporate Affairs Commission. This increases the legitimacy of the company, particularly for small firms.
15. Supplier Discounts
A registered firm also entitles you to supplier savings that an unregistered organization would not typically be qualified for. Suppliers frequently hold back wholesale prices for proprietors who can provide proper documentation.
Additionally, one of the first prerequisites if you intend to try to secure government contracts for your organization is a business registration.
16. Employing People
If your business is registered, you can hire full-time employees and pay them in compliance with state rules if your business is registered. When you register your business with the government, you will be given a state identification number, which allows you to send employees state taxes on their behalf.
Therefore, it is important to register your business before you even begin the hunt for staff if you intend to add employees to your organization.