The Scope of Business Structures in Nigeria and What to Know

Starting and operating a business in Nigeria could be fun just as it could be anywhere else, but you need to understand the legal requirements for doing business in Nigeria and the peculiarity of the business environment before opening shop in the country.

This piece aims to shed light in several aspects of business life in Nigeria and how you could maximize opportunities to make a name for you as a businessman.

Types of business structures in Nigeria

Types of business structures in Nigeria

  • Sole proprietorship: Sole proprietorship is a one-man business. It is run and managed by its owner alone. He comes up with the business idea and works to raise finance for his business while also taking all the profits to himself. He is a one-man show.
  • Joint partnership: A partnership is a business structure where between two to 20 people come together to start and manage a business. They contribute equally to the business and share profits according to a given formula agreed by them all.
  • Limited company: A limited company can be private or public. It is a private company where it is entered into by two to fifty people with an authorized capital of at least N10,000. There is no membership limit to public company and it has a minimum authorized capital of N500,000.
  • Incorporated company: An incorporated company is a public company that could sell shares to the public in other to raise finance while making parts of the public part of its shareholders.

Business registration in Nigeria

You will have to go to the Corporate Affairs Commission (CAC) in Nigeria to register a new business. You could register a business name for a small business structure and you could register a limited company to go full scale.

The first thing to do before starting to do business in Nigeria is to have your company or business name registered. You obtain a form from CAC and fill in the details of your proposed which should be the proposed name of your business, the scope of your business, your business location, the names of partners in the business and other pertinent information.

The registrar at CAC will check in the agency’s database for the availability of your desired business name. If it is available, you will be issued a business certificate or certificate of incorporation to run your business, but if it is not available or already taken by another then you will be advised to change your proposed business name or modify it for another database search.

What to include in your partnership agreement

If you are putting up a partnership business, your partnership agreement must contain certain articles and information that will be listed hereunder –

  • Personal information about parties to the business agreement and formulation
  • Proposed address of the business location
  • Name and scope and nature of business
  • Date for the business to commence operation
  • How the business will be dissolved in case it comes to this
  • Amount contributed by each partner to the business
  • Amount to be shared in profits by the founding members
  • Assets to be used for the business and equipment to be bought
  • Signatories to the company’s bank accounts should be spelt out
  • Salaries, powers of members, rights, duties and retirement procedures should be detailed out

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