You know how when you need to buy a phone but you are not sure what features the various phones have. What you are sure about is the money in your pocket and what you want to use the phone for. This is why the first question you ask is ” What is the difference between Iphone X and Tecno Camon X. Trust them Igbo traders to go on and on explaining how the two phones differ but are equally good phones.
This is quite similar to what happens when someone contacts us to register their business with Corporate Affairs Commission (CAC) in Nigeria. The constant conversation is “what is the difference between Business Name and Limited Liability Company”?
Therefore, in this post we will be explaining in simple terms the differences between registering a Business Name and a Limited Liability Company.
First of all, what is Business Name registration? As the name implies, it is to register the name you want your business to be called. It is the style you want your brand to be called. So a baker wants her bakery to be called “Chopsbox Bakery”, that is basically the name she wants to be called. so business name registration is simply naming your business. Registration of Limited Liability Company on the other hand can be likened to the birthing of a new individual, Independent of you.
After establishing this basic foundation, here are 3 major differences between Business Name and Limited Liability Company registration with CAC in Nigeria;
1. The business name and its owner are not separable.You are the business and the business is you. If the business enters gbese (debt) you can be arrested, if you die the business dies, the business name cannot sue that customer that has refused to pay you after collecting human hair worth 500k. While the Limited Liability Company is different from the owners. If the company owes gbese the owners cannot be arrested. If the owners die the business does not die. You can be broke while your company is rich and balling.
Remember that the Limited Liability company registration is like the birthing of a new baby.
2. Business Name Registration is a simple and less formal way of doing business in Nigeria. Cost of registration is cheaper than Limited Liability Company.
3. Business Name also called enterprise or Ventures pay less taxes than Limited Liability Company.
So, it is up to you to decide what you really need as a business owner.
Just in case, you will like to know what TAXES your business is required to pay, click this link.
We would love to hear from you, have you registered your business? If you have, what business structure did you choose, business name or Limited Liability Company and why? Tell us about it in the comments below.
Finance Clinic Team
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