Difference Between Business Name And Company registration
Business registration in Nigeria refers to the process of legally establishing a business entity with the appropriate government agencies. The Corporate Affairs Commission (CAC) is the body responsible for registering and regulating businesses in Nigeria.
Business registration in Nigeria involves the formalizing of a business structure and providing the necessary information to the CAC such as the business name, address, nature of the business, and information about the business owner(s). Once registered, the business owner(s) will obtain a certificate of incorporation which serves as proof that the business is legally recognized and registered with the government.
Starting a business in Nigeria requires careful consideration and planning, and understanding the differences between a business and a company is an important aspect of this process.
In this blog post, we will explore the differences between these two entities, as well as answer common questions such as whether a company can register a business name and what the difference is between business name registration and a limited liability company.
What’s the difference between a business and a company?
A business is a venture carried out by an individual or group of individuals with the aim of making a profit. This can be in the form of a sole proprietorship or partnership, and it can operate in any industry.
A company, on the other hand, is a separate legal entity from its owners or shareholders. It is registered with the Corporate Affairs Commission (CAC) and has a unique name, registration number, and legal status. A company can be public or private, and it can issue shares to raise capital from investors.
Can a company register a business name?
Yes, a company can register a business name with the CAC. This is often done to give the company an additional trading name that can be used in addition to its legal name. The company must follow the same registration process as a sole proprietor or partnership and pay the appropriate fees to the CAC.
What is the difference between business name registration and limited liability company?
Business name registration is the process of registering a unique name for a business with the CAC. This is typically used by sole proprietors or partnerships, and it is relatively easy and less expensive compared to company registration.
Business name registration does not create a separate legal entity, and the business owner(s) are personally liable for the debts and obligations of the business.
Limited liability company registration, on the other hand, is the process of incorporating a company with the CAC. This involves creating a separate legal entity that can enter into contracts, sue or be sued, and own property in its own name.
A limited liability company (LLC) protects the personal assets of the owners or shareholders from the debts and obligations of the business. LLC registration is more complex, time-consuming, and expensive compared to business name registration.
Difference Between Business Name and Limited Liability Company Registration
Below is a more detailed tabular form comparing the difference between business name registration and company registration in Nigeria.
| BUSINESS NAME REGISTRATION | COMPANY REGISTRATION | |
|---|---|---|
| Definition | A unique name registered with the CAC for a business or sole trader. | A separate legal entity registered with the CAC |
| Legal Entity | No separate legal entity | Seperate legal entity |
| Liability | Owner(s) are personally liable | Owners' liability is limited |
| Registration Process | Simple and straightforward | Complex and time-consuming |
| Cost | Inexpensive | More expensive than business name registration |
| Name Reservation | The name must be unique and available for registration | The name must be unique and available for registration |
| Share Capital | Cannot issue shares to raise funds | Can issue shares to raise capital |
| Taxation | Business is taxed as part of owner(s) personal income | Company is taxed as a separate legal entity |
| Ownership Structure | Sole proprietorship or partnership | Private or public company |
| Legal Requirements | None beyond name registration | Complex legal requirements including articles of association, etc. |
| Legal Standing and Protection of Business | No legal standing or protection of business | Legal standing and protection of business assets. |
| Perpetual Succession | Not applicable | Applicable |
| Capacity to Enter into Contracts and Sue | Limited | Full capacity |
It’s important to note that while business name registration is simpler and less expensive, it does not provide the same level of legal protection and benefits as a registered company. Therefore, entrepreneurs should carefully consider their options and consult with a professional before deciding which option is best for their business.
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We hope you found this information helpful. Kindly note that this information is for general informational purposes only and is not intended to take the place of a legal advice. Readers are therefore advised to seek proper legal advice. If you require legal advice, Kindly consult a qualified lawyer.
