Oh, you intend beginning officially that new Business for Profit making! Then, this is for you.
It’s a must requirement to understand the difference between the different categories of registrations basically carried out by the Corporate Affairs Commission for new or existing start-ups, So sit tight and relax while I take you on the journey to kick-start that fantastic organization and business of yours.
Our 2 focus for today shall be on Business Name vs. Company Registration.
Please understand, when registering and deciding from the above 2 types which to Register, It’s always beyond choosing the cheaper and more convenient option, but choosing what’s best for your kind of Brand in both the long and short time as the name you officially registered will determined and go a very long way to contribute to the development and profitability of your Brand.
First, what’s the meaning of a Business Name and a Company?
Business Name Registration – Basically, a business name could simply mean a name which a business trades under for profit purposes and categorically registrations, the business name is the category where sole proprietorship and basic partnerships fall into. Yes, it is suitable for not just single-owner businesses and partnerships, but also for businesses that are not going to raise capital through the issuance of shares in the future.
What’s the Cost to register? A business name is simpler and easier to set up, unlike a company registration.
Company Name Registration – A company can be defined as a legal entity made up of two or more people for the purpose of carrying on a business service(s).
Understand the services are highlighted with ‘s., this means ‘multiple’ under same name umbrella. One peculiar feature of a company is that it enjoys a separate legal existence from its owners. This means that it has the power to own assets in its name borrow and lend money, enter into contracts, and can also sue and be sued in its own name rather than the name of the major director.
Points to also consider are if you want Your Business to Have a Separate Legal Personality from You?
As it’s earlier stated above, a company enjoys a separate legal personality from the founders, unlike a business name. In quote from a writer “this can be likened to the birth of a new born baby. When a baby is born, it is separated from its mother and becomes a unique being. The same applies to a company. Once it is formed, it enjoys a separate distinct personality from its founders. But this is not so in a business name. A business name doesn’t confer a separate legal entity to the business. Its life is tied to the owner/owners of the business. It cannot sue or be sued in its name.”
For a more understanding of this principle, let’s take an example, for instance, Mr. Jimoh Adebo is a computer dealer who decides to trade in the name and style of “J.A. Enterprise”, which is a business name. If Mr. Jimoh Adebo J.A. Enterprise incurs debts, his creditors will come for him, his business, and his personal assets eg. cars, and more to recover their money. But if he registered it as “J.A. Limited”—which is a company limited by shares and for one reason or the order tomorrow his business runs into financial difficulties, its creditors cannot come for Mr. Jimoh Adebo properties, because Mr. Jimoh Adebo is a different entity from his company.
But how do you then make the right choice? Let’s take a look at some factors based on legality:
- A business name doesn’t required a share capital hence, you wont be able to raise capital to a large extent But with a Registered shared company limited by shares, you can as its used as a Collateral.
- The certificate for a Business name is Basically a simple document containing the name of the owner and very few services that can be rendered stated on the certificate presented with an affix BN., But a Company has it as RC and contains Names of Shareholders i.e. people that forms the company which can be anyone including family members, children etc provided the Share capital is split as well a document to list all the Services that been carried out under its umbrella.
- As a Business name, the owner is liable for any form of debts whereas a company debt is limited to its shareholders.
- As a Business name, if the owner passes on., The business automatically died but reverse is the case as a Company limited by shares can continue very easily to operate even when a shareholder passes on.
- To a very large extend, doing and transacting a business deals with a Company is more advanced than just a Business entity. Large organizations like government, NGO and the like of them, requires a Company more than a Business name to transact a great deals.
Summarily, it’s very important to consider these points when thinking of the best option.
Requirements to Register a Business Name (BN):
- Preferred name of Business
- Bio-data of owner including mobile number
- Proposed business address
- Means of identification e.g. Voters card
- Nature of Business and what to be rendered.
Requirements to Register a Company (RC):
- Preferred name of Company
- Minimum of two directors and one secretary.
- Proposed company address
- Means of identification for all directors and secretary
- Bio-data of all directors including phone number, house address, 2 passport photograph, etc.
- Share allotment of the share holders
- Nature of Services to be rendered.
Please note, anybody can be used as a director/shareholder provided he or she is 18years and above including your children.
Now, we as an ICT company and business development consultant, you can reach us for us to accurately decide best for you and get your business/company registered as soon as possible as registering officially will give you a great benefit of the following:
- Employ more hands to carry out your services and create an enabling environment as a director to that name.
- Give you a great cover-up to that name as nobody else can ever make use of your registered name.
- Open and operate a corporate and business account.
- Have shareholders and directors as in the case of Company limited by shares.
- Bid for government and private large contracts.
- Be a stakeholder in the Nigeria economy etc.