n recent times, there has been an increase in the establishment of small businesses all over the country. While formal business registration with the state or local government isn’t necessarily required to complete business transactions, it is important for a new entrepreneur for a variety of reasons. Many owners of small businesses in Nigeria trivialize the need to register their businesses either because of ignorance, or simply to avoid the long process of registering a business or even paying tax.
However, it is important to understand that there are lots of things to benefit from registering your business with the Corporate Affairs Commission (an autonomous body charged with the responsibility of regulating the formation and management of companies in Nigeria) which by far outnumbers the perceived disadvantages. The benefits of registering your business include, but not limited to the following:
Upon registration of a business, the commission issues a certificate of incorporation to the business owner evidencing that such business has been registered. Registering your business gives you the right to operate that business. Also, the certificate of incorporation provides a small business in Nigeria with a good reputation as well as legal recognition.
Furthermore, in the world of competitive marketing, registration of one’s business has become a necessity and of utmost importance for the protection of the business name and trademark. Where your business has grown to a certain level, and the business name has now become recognized by many people, there is a tendency for a newly established business to imitate your business name, thereby taking both your name and your customers. Thus, it is important to register your business with CAC.
When a small business in Nigeria is registered, the business owner has a separate legal identity from the business itself. Thus, the business owner gets separate legal protection. Where liability arises from the business, the owner will not be held personally liable or responsible. If a loan was obtained and there is a default in payment, the bank will not withhold the personal property of the business owner; they will only withhold the property of the company.
Moreover, it is easier to secure loans from banks with a registered business, compared to a personal loan application. Funding is critical in any business; and when it becomes necessary to source it externally, especially from banks, your legal business documents facilitate the process. This is because your company is seen as a legal entity and it can be tracked and accounted for. This gives credibility and trust and ensures confidence.
Also, your investors or lenders will see that they are dealing with a company and will be willing to lend you money if other terms and conditions are met. No investor will take you seriously if you’re asking for investment when your business is not registered. Most government grants to entrepreneurs and small businesses also require that the business is registered.
Credibility is an essential quality a business should have. Most businesses are looking to get into the corporate environment where they are able to trade with corporate organizations and generate revenue. Most customers, especially corporate customers, will do business with you only if your business is registered and your invoices/receipts have your business details. This speaks to compliance and governance. By not registering your business, you may appear as if you are trying to evade tax.
You will need to provide proof that your business is a properly registered business with the state to open a business bank account. A business bank account is an important asset to a small business because you can separate your personal activities from your business activities. It is also more professional to give your clients a business name for payment instead of your own full name.
Furthermore, a registered business can employ full-time employees and pay them salaries and other benefits. You have the opportunity to seek interns especially from the National Youth Service Commission or Sure-p that will not cost you a lot in terms of paying salaries and incentives or even cost you nothing in the case of Sure-p.
Another great benefit of business registration is that you can easily obtain a visa and travel to any country for business purposes. Every country always welcomes foreign investors who are interested in doing business in their country because such good investments will add value to their economy.
A registered business also makes you eligible to receive supplier discounts that you wouldn’t normally receive as an unregistered operation. Suppliers commonly reserve wholesale rates for business owners who can show official paperwork from the state. Also, if you plan to try to get government contracts for your company, a business registration is one of the first requirements.
A business is set up with the intention that the business continues, grows and remains even when the owners are no longer available. Registering a business ensures that the business remains relevant, on the record of the corporate affairs commission. Where a business has a well laid out structure, it further ensures its continuity and registration affords that structure to be recognized. A registered business is an entity in its own right; thus, another can assume ownership or control or your business can be sold. Neither are possible without registration.
A final benefit of business registration is that it gives your potential customers confidence that they are dealing with a reputable business. And when this reputation is maintained, it brings more referrals to the business. Customers and clients, especially people you’ve never worked with before, need assurance that you are a legitimate business.
The importance of business registration cannot be overemphasized; the benefits far outweigh the disadvantages. It gives the business owner an edge over other businesses that have not been registered and makes the business look credible, reputable, and attract financial aid to the business. Register your business today!!!
To register your business, please contact C-Hub @ +234 903 364 6107. Email: firstname.lastname@example.org. Follow us on social media @chubcsaae