Benefits Of Registering Your Small Business In Nigeria
In recent times, there has been an increase in the establishment of small businesses all over the country. Whether as sole proprietors, entrepreneurs, or SME’s there is a need for these businesses to be registered. Many owners of small business in Nigeria trivialize the need to register their businesses for various reasons which are; ignorance, or simply to avoid the long process of registering a business or even paying tax.
However, it is important to understand that there are lots of things to benefit from registering your business with the Corporate Affairs Commission (an autonomous body charged with the responsibility of regulating the formation and management of companies in Nigeria) which by far outnumbers the perceived disadvantages. The benefits of registering your business include, but not limited to the following:
1. Certificate of incorporation by corporate affairs commission (CAC)
Upon registration of a business, the commission issues a certificate of incorporation to the business owner evidencing that such business has been registered. Registering your business gives you the right to operate that business. Also, the certificate of incorporation provides a small business in Nigeria with a good reputation as well as legal recognition.
2. Protecting your business name and trademark
In the world of competitive marketing, registration of one’s business has become a necessity and of utmost importance for the protection of the business name and trademark. Where your business has grown to a certain level, and the business name has now become recognised by many people, there is a tendency for a newly established business to imitate your business name, thereby taking both your name and your customers. Thus, it is important to register your business with CAC.
3. Protection from personal liability
When a small business in Nigeria is registered, the business owner has a separate legal identity from the business itself. Thus, the business owner gets separate legal protection. Where liability arises from the business, the owner will not be held personally liable or responsible. If a loan was obtained and there is a default in payment, the bank will not withhold the personal property of the business owner; they will only withhold the property of the company.
4. Getting loans from the Bank
It is easier to secure loans from banks with a registered business, compared to a personal loan application. Funding is critical in any business; and when it becomes necessary to source it externally, especially from banks, your legal business documents facilitate the process. This is because your company is seen as a legal entity and it can be tracked and accounted for.
When your company is registered, accessing loan becomes easy compared to the personal loan application. With your documents, you can prove that you’re a business. This gives credibility and trust and ensures confidence. Also, your investors or lenders will see that they are dealing with a company and will be willing to lend you money if other terms and conditions are made.
5. Credibility
Credibility is an essential quality a business should have. Most businesses are looking to get into the corporate environment where they are able to trade with corporate organizations and generate revenue. Most customers, especially corporate customers, will do business with you only if your business is registered as invoices/ receipts with business details. This speaks to compliance and governance. By not registering your business, you may appear as if you are trying to evade tax.
6. Financing for your business
Financing a business, whether small or medium, is the number one top concern of most business owners. To qualify for a business loan, the non-negotiable requirement is that you must have a formalised business registration.
For investors, it’s the same thing, e.g. Dragon’s Den – they are only willing to invest in your business if you give them a share of your business. No investor will take you seriously if you’re asking for investment when your business is not registered. Most government grants to entrepreneurs and small businesses require that the business is registered.
7. Business continuity
Utibe Etim, in his article, stated that a business is set up with the intention that the business continues, grows and remains even when the owners are no longer available. Registering a business ensures that the business remains relevant, on the record of the corporate affairs commission. Where a business has a well laid out structure, it further ensures its continuity and registration affords that structure to be recognised.
8. A good reputation with customers
Registering a business gives your potential customers confidence that they are dealing with a reputable business. And when this reputation is maintained, it brings more referrals to the business. The importance of business registration cannot be overemphasized; the benefits far outweigh the disadvantages.
It gives the business owner an edge over other businesses that have not been registered and makes the business look credible, reputable, and attract financial aid to the business. Register your business today!!! Also, see 10 Apps every business owner needs.
