In Nigeria, business structures and their registration processes are guided by specific laws. It’s the Companies and Allied Matters Act (CAMA) that oversees establishment procedures as well as the management of various kinds of corporate functions.

Let’s not forget to acknowledge an indispensable regulatory body. The Corporate Affairs Commission (CAC), this organization is charged with a highly significant task of making sure businesses get formally registered across Nigeria.

Types of registered businesses

1. Sole Proprietorship
2. Partnership
3. Limited Liability Company (LLC)
4. Public Limited Company (PLC)
5. Private Limited Company (Ltd)
6. Incorporated Trustees
7. Cooperative Societies

Sole Proprietorship

A sole proprietorship is one of the simplest forms of business structures in Nigeria. It is a business owned and operated by a single individual. In this setup, the owner is personally responsible for all aspects of the business, including its debts and liabilities. While it requires minimal formalities to start, it also lacks some of the advantages, such as limited liability, that other business structures offer.

Partnership

A partnership is a business structure in which two or more individuals (partners) come together to manage and operate a business. Partnerships in Nigeria can be classified into two main types: general partnerships and limited partnerships.

In a general partnership, all partners share equal responsibility for the business’s management and financial obligations. Limited partnerships, on the other hand, involve both general partners who manage the business and limited partners who invest capital but have limited liability.

Limited Liability Company (LLC)

The Limited Liability Company (LLC) is one of the most popular business structures in Nigeria. It provides the owners (known as members) with limited liability protection, meaning their personal assets are generally not at risk in case of business debts or legal issues. To register an LLC in Nigeria, you need to have a minimum of two and a maximum of fifty members. It offers flexibility in terms of management and ownership structure.

Public Limited Company (PLC)

A Public Limited Company (PLC) is a type of business structure that allows for public investment and ownership. It is required to have a minimum of two shareholders and a maximum of any number of shareholders.

PLCs are subject to more stringent regulatory requirements than LLCs, including the need to issue shares to the public, hold annual general meetings, and publish financial statements.

Private Limited Company (Ltd)

A Private Limited Company (Ltd) is similar to an LLC but with restrictions on the number of members it can have, which is limited to fifty. This type of business structure is favored by many entrepreneurs due to its flexibility and limited liability protection. Private limited companies are not allowed to issue shares to the public and often have a more closely held ownership structure.

Incorporated Trustees

Incorporated Trustees are typically used by non-profit organizations and associations, such as religious bodies, charities, and social clubs. This structure allows these entities to have a legal personality separate from their members or founders. Incorporated Trustees must register with the Corporate Affairs Commission (CAC) and meet specific regulatory requirements.

Recommended Read: 5 Benefits of Business Partnerships for Start-Ups: How to Leverage Them for Success

Steps to Register a Business in Nigeria

Regardless of the type of business structure you choose, the process of registering a business in Nigeria typically involves the following steps:

Business Name Registration: You must choose and register a unique business name with the Corporate Affairs Commission (CAC). This step ensures that your chosen business name is not already in use by another registered entity.

Incorporation Documents: Prepare and submit the necessary incorporation documents, including the Memorandum and Articles of Association for companies, or the bylaws for other entities like cooperatives and associations.

Payment of Fees: Pay the required registration fees to the CAC and obtain a certificate of registration upon successful payment.

Tax Registration: Register for tax purposes with the Federal Inland Revenue Service (FIRS) to obtain a Taxpayer Identification Number (TIN).
Open a Business Bank Account: Once your business is registered, open a separate business bank account to manage your finances and transactions.