When individuals engage in any form of activity with the hope of getting a return for a given level of risk, that activity can be considered a business. Businesses exist in different forms, ranging from a sole proprietorship, partnership, and companies ( limited, unlimited, and guarantee). One of the distinctive features between these three forms of business is the existence of the principal-agent problem in companies. The existence of this problem is a function of the fact that companies are legal bodies, as they are different from their owners. Companies in whatever form they exist have the right to sue and be sued. The principal-agent problem occurs because of the conflicting interest between the owners of the business (shareholders), and the board of directors.
All businesses exist in these three forms (a sole proprietorship, partnership, and companies), whether it is into the rendering of services (Service Business), buying and then reselling (Merchandising Business), and lastly the transformation of raw materials into finished goods (Manufacturing Business).
Establishing a business has many formalities, ranging from the registration of the business, the source of capital for the business and also, sourcing for the right people to man the job. In the context of the Nigerian economy, establishing a business is one herculean task, given the nature of the Nigerian economy, as well as the ease of doing business in the Nigerian economy. According to the World Bank’s Doing Business Report, Nigeria has currently ranked the 145th country in terms of the ease of doing business, moving up by 24 points from the 169th position on the 2017 ranking and 170th position on the 2016 ranking. This indicates that there is a progress in Nigeria, in terms of the ease of doing business, given the federal government’s projection of being among the top 100 in the World Bank’s Doing Business index by 2020. This projection can be found in the Economic Recovery and Growth Plan.
In this piece, I will walk you through on how to overcome one of the bureaucratic and legal obstacles in a business: THE REGISTRATION OF A BUSINESS IN NIGERIA. Different countries have their own agencies when it comes to the registration of a business. Within the context of the Nigerian economic environment, the organization that takes charge of this responsibility is the corporate affairs commission (CAC). Before I walk you down this road on business registration, what is the importance of you registering your business?
The importance of you registering your business shows professionalism. This is on the basis of when you are dealing with a client and partners. It is an indicator of the fact that the business is here for the long term and not for the short term. Building on the first reason, another importance of you registering your business is the issue of capital sourcing. When your business is registered, it makes it easier for the business to get loans, and also to attract foreign investors. Another reason, why registering your business is very important is because of the fact that the business name cannot be used by any other business.
Recall I made mention of the fact that a business exists in different forms, this will have an effect on the registration process of your business. If you are registering a sole proprietorship business, you do not necessarily require the service of an agent, to help you with this as the business is not a legal entity by definition. In registering such a business, you must decide whether you are doing the entire process by yourself, or you are hiring the service of an accredited agent to help you with your business registration. If you are considering the latter, you can go online and search for accredited agents, or log into the CAC website www.cac.gov.ng for more information on this. If you are considering registering the business by yourself, the following procedures will be of help:
Steps In Registering a Business Name In Nigeria
- Create an account: Creating an account is very easy. This can be done by following this few procedures.
- Access the portal via the Corporate affairs Commissions website cac.gov.ng
- Click on “CREATE ACCOUNT”
- Provide your details
- Click on “SUBMIT”. The system will display the USERNAME and PASSWORD.
- Submit a request for name reservation.
- Log in to the portal using your login detail from step one.
- Select “REGISTRATION”.
- Select “BUSINESS NAME”.
- Enter the availability serial number, and then click on “start”.
- The system will display forms, complete the forms and each time you complete the forms set click on “PROCEED” until you get to payment point.
- Make payment.
- Download the forms.
In registering a company, the process will be different from that of a sole proprietorship business; this is on the basis of the fact that the business is a legal entity. It is important to note that in registering a company, the assistance of a certified agency is inevitable. In the registration of a company, the following procedure should be followed:
Steps In Registering Your Company In Nigeria
- Create an account by accessing the CAC website http://services.cac.gov.ng.
- Check for the availability of proposed company name
- Download and complete pre-registration form
- Form CAC1.1
- Memorandum and Article of Association
- Recognized form of identification for director(s)/Subscriber(s) and secretary
- Pay filling and stamp duty fees.n
- After filling the above forms in step three, you scan the signed copies of each document in step three including the Evidence of payment to CAC and upload the scanned copy for processing.
- Submit the original copies of the documents uploaded in step five to the CAC office you had selected in exchange for your certificate and the certified True copies of the documents.
There has been an improvement in the cycle time for processing new applications for registration. The Corporate Affairs Commission (CAC) concludes a new application for registration within 24 hours. However, there is an exception to this, this is on the basis of the non-compliance with the above guidelines. It is important to note that the cost of business name registration is N 10,500.