By Benita Ayo
With the current economic situation of the country and the inability of the government of the day to provide suitable jobs for its young and capable citizens, many have taken to creating and managing their own businesses which are birthed from ideas.
It is true that ideas are the spirit of enterprise as they give birth to huge businesses provided they are nurtured properly. However, it is not enough to create, own and establish a business. It is more advisable to proceed further and register the business for better opportunities.
There are so many reasons why a business should be registered some of which include;
Retaining credibility for the business: No one wants to give room to suspicion as to the nature of business carried on hence the need to ensure that there is no shadow of doubt trailing such enterprise. One of the criteria for obtaining business loan or being eligible for government or private sector loans is evidence of business registration.
To enjoy legal coverage: Depending on the kind of business registered (i.e. whether business name, company, etc), there is a certain legal protection enjoyed by a registered business. For instance, a registered business name can sue and be sued through its proprietor, a company can sue and be sued by its incorporated name simply because it enjoys a distinct legal personality from its subscribers, an incorporated trustee can sue and be sued through its trustees etc).
Thus, before taking any step to register your business, you must ascertain the type of business to be registered and this is where majority of pre-incorporation questions by clients do come from. During legal consultancy sessions, I am often queried by clients on the differences between a business name and a company. The differences are briefly explained hereunder;
Differences Between a Business Name and a Company
The differences between a business name and a company are as follows;
Business Name
It is mostly owned, operated/managed by a sole proprietor
It cannot sue or be sued by its registered name but through its proprietor
The profit and loss is borne and enjoyed by the sole proprietor
A business account can only be opened with a business registration certificate
Company
This business is owned by more than one person called subscribers/shareholders
A minor cannot subscribe to a company
The company upon incorporation enjoys a distinct personality different from its subscribers/shareholders thus it can sue and be sued under its registered name.
The list is endless and this is why it is advisable to consult with a legal practitioner in order to get a clearer and better understanding.
Registering a business in Nigerian today is seamless as this is now done on the Corporate Affairs Commission’s online portal. A business may now be registered within days as against what pertains in previous years.
Benita Ayo is an Associate/property consultant with Ayodele, Olugbenga & Co., 57, UBA HOUSE, 9th floor, Marina, Lagos. She may be contacted on: WhatsApp: 08063775768 and email: [email protected]
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