Confused between registering a business name and incorporating a company in Nigeria? Learn the legal and tax differences, advantages, and which is best for you.
Business Name or Company Registration: Which One Should You Choose?
Many Nigerian entrepreneurs face a dilemma when starting out: should you register a business name or incorporate a company? The two options differ significantly in legal structure, liability, tax, and compliance.
Let’s break it down so you can make an informed decision.
What Is a Business Name in Nigeria?
A business name is the registration of a sole proprietorship or partnership. It is not a separate legal entity from its owner.
- Simple structure
- Low cost
- Owner is personally liable for debts
Suitable for freelancers, small-scale traders, and sole entrepreneurs.
What Is an Incorporated Company?
An incorporated company, usually a Limited Liability Company (Ltd), is a separate legal entity. It can sue and be sued, own property, and exist independent of its owners.
- Limited liability protection
- More professional image
- Higher compliance requirements
Best for startups, SMEs, and businesses seeking investment or scaling operations.
Key Legal Differences
| Criteria | Business Name | Incorporated Company |
|---|---|---|
| Legal Status | Not separate from owner | Separate legal entity |
| Liability | Unlimited (personal risk) | Limited to share capital |
| Taxation | Personal income tax | Corporate tax |
| Compliance | Simple | Requires annual returns, secretary, etc. |
| Funding | Limited options | Easier to attract investors |
What’s Better for You?
- Choose Business Name if you’re a solo entrepreneur testing a market.
- Choose Incorporated Company if you need to protect your personal assets or seek funding.
Final Tip
Always consult a corporate lawyer in Nigeria before choosing your structure. What looks simple today could complicate things tomorrow.
