Starting a business is one aspect, but getting your business legalized and approved is essential. Whether you’re a current business owner or are still deciding whether to take the bold step and start a company, it’s important to step back and make sure you take all the proper legal steps to ensure your dream is realized with the protection of a legal business entity.
There is a range of legal requirements for new businesses and startups, including financial regulations, tax obligations and employment laws. Make sure your new company complies with all its legal responsibilities so you can get back to focusing on growing your business.
How to Legalize Your Business.
Step 1- Register Your Business.
The first thing to do when starting a business is to put a structure to it. In Nigeria, you would have to register your business with the corporate affairs commission to get a valid certification to operate as a business. Registering your company boost the trust of your customer in your company and increase the credibility of your profile. It provides legal backing for your business and gives you access to other business openings. To register you can visit the CAC website new.csc.gov.ng.
Determine What Business Structure You Want
If establishing a new business you need to know there are a variety of business structures available, therefore, you need to decide on the company structure that will best suit your business needs. The four main types are sole proprietorship; partnerships; incorporated trustees; and companies. The business structure will determine the cost, tax, legal, regulatory and financial risk implications.
The law that deals with the regulation of companies in Nigeria is the Company and Allied Matters Act (CAMA). It deals with the various types of company structures, eligibility, process for registration/incorporation, and rules for operation. The regulatory body that is in charge of implementing the provisions of the CAMA is the Corporate Affairs Commission (CAC).
Register Your Company Name
The first step to register a company in Nigeria is to register your business name, however, before you do that you need to do a name availability search. At this stage, you need to make sure your choosing name is available and not already in use. You can make this search on the CAC online portal. You will apply to the Corporate Affairs Commission (CAC) and suggest two alternate names for your business. The CAC will conduct a search in its database to ensure that the name is not already in use or there is no similar name already in use. If the CAC approves the name, then it will reserve the name for you for a 60-day period. During this period it is expected that you will complete the registration process for your business name.
After, the name confirmation, you need to complete your Business Name Registration Forms by providing details like the approved business name, nature of the business, your business address, Name, Address, Occupation, signature, and other details of the Proprietors of the Business. Next, you make payment for the CAC Filing Fees, then submit.
Prepare and File the Necessary Documents
There are some necessary documents required for the registration of a company. You need to prepare a Memorandum of Association (MOA) and all the related documents based on the objectives of the company you wish to register. This aspect is best handled by a lawyer whose experience and qualification is best to utilize. When submitting your documents to the CAC, at least one director of the company must include a copy of a certificate of qualification or evidence of proficiency. In addition, a company must have at least 2 directors (non-employee shareholders). However, private companies must not have more than 50 non-employee shareholders.
You will also need the receipt of payment of your stamp duties, they are submitted to the FIRS for assessment and stamping. Stamp duties are assessed on the share capital of the company. Once you make the relevant payments online (the amount depends on the share capital of your company), you can upload all the documents and your submission is finalised. After submission, the CAC will contact you if there are any queries. If there are no queries, the CAC will inform you once the registration is complete, and then you can go to their office to pick up your certificate of incorporation.
Step 2 – Apply For A Federal Tax ID Number
To obtain the Tax Identification Number (TIN) for your registered business is now easy, If you are yet to obtain TIN, the application can now be made online and the process is free. Tax Identification Number (TIN) is prepared by the tax office FIRS in conjunction with the Joint Tax Board (JTB). It is issued to individuals or registered business / incorporated companies for proper identification and verification.
Registration with FIRS will not relinquish an organization from the tax obligations with the State IRS. A taxable person, therefore, needs to register separately with both bodies. It also means that Business AYX will register for tax with FIRS and the State tax authority.
How to register for tax with FIRS
Steps for registering as a new taxpayer with the FIRS
- Check the status of taxpayer identification number (TIN): CAC usually issues TIN to all registered companies, enterprises, and not-for-profit organizations. The TIN is also displayed on incorporation documents.
- Registered businesses can check or verify their TIN via http://apps.firs.gov.ng/tinverification. Visit the address and type in the RC Number / BN Number.
- The search result will show the corresponding business name, TIN, and Tax office.
- The Tax office displayed on the portal will be the relevant tax office where the business will register for taxes payable to FIRS, such as corporate tax, tertiary education tax, value added tax, and withholding tax. To learn more about how FIRS assigns tax office, check filing of returns based on segment.
Documents required To Register Your Company For TIN in Nigeria
- A copy of the following;
– Memorandum and Articles of Association
– Certificate of Incorporation
– CAC 7 containing the particulars of the Company’s Directors
– CAC 2 detailing the Company’s statement of share capital and return of allotment of shares. (Note that FIRS will have a look at the original copy).
- Duly completed and officially stamped VAT registration form 001 – Copy of the VAT Form 001 is available at FIRS office
- Other forms that may be completed at FIRS office are the application for e-filing, e-TP access and new taxpayer registration.
- Application letter on the company letter headed paper
Step 3 – Obtain Business Permits and Licenses.
Every business sector has certain special licenses, registrations, and permits which could attract penalty when not acquired or be termed to be operating illegally. Different businesses with different licence so you need to get the right one for your business. For example Signage/Advertising, NAFDAC, and more.
Step 4 – Insure Your Business
Business insurance can protect you in cases where the personal liability protection offered by your specific business structure aren’t enough. Business insurance can protect not just your personal assets, but your business assets as well. Some types of insurance are required by law, such as unemployment and disability insurance. It’s also a good idea to purchase business insurance to protect your startup from other potential risks. Some common business insurance options include:
- General liability insurance: Protects your business from various forms of financial loss, including property damage, injury, medical issues, lawsuit settlements or judgments
- Product liability insurance: If your business sells products, this insurance protects you in the case that one of your products is defective and injures a customer
- Commercial property insurance: Protects your business from loss or damage to company property, as a result of natural disaster, accidents or vandalism