Types Of Businesses In Nigeria – 5 Types Of Legal Businesses In Nigeria

Types Of Businesses In Nigeria – 5 Types Of Legal Businesses In Nigeria

Have you decided on the type of business you want to start in Nigeria? Are you making plans for your idea and need a deeper understanding of the various types of companies in Nigeria? Whatever reason you want to know the various types of businesses in Nigeria, we’ve got you covered.

Starting a company is a great idea, and making plans requires you to have adequate and necessary knowledge of the different types of businesses that can be registered in Nigeria and how to go about registering them. 

In  Nigeria, the law guides business structures and their registration process. There are several government agencies, like The Corporate Affairs Commission(CAC), that are charged with the sole responsibility of making sure businesses are legally registered with the authorized agency. 

We know you may not be conversant with some of these, so we are here. In this article, we will look into the various types of businesses/companies that can be registered in Nigeria. We know you have many questions you would like to ask. Don’t worry; we will look into some of your possible questions during this article. So join us as we explore these business types. 

Types Of Legal Businesses In Nigeria

We have here a list of the various types of businesses that can be operated in Nigeria. The following includes the approved legal types of companies that can be operated in Nigeria. 

1. Sole Proprietorship
2. Partnership
3. Private Limited Companies (LTD)
4. Public Limited Company (PLC)
5. Limited Liability Company (LLC)

Let’s get started.

1. Sole Proprietorship

A sole proprietorship, the most basic and oldest business form in Nigeria, is also the most popular. It is a one-man business, and although not a distinct legal entity, it has its own unique structure. In this setup, the owner is the business and assumes all liabilities while also reaping all profits. An advantage is that the business can have a corporate account under its name, such as an “enterprise.”Next is Partnership

2. Partnership

A partnership is when two or more individuals (partners) join together to run a business in Nigeria. There are two main types of partnerships: general partnerships, where all partners are responsible for managing the business, and limited partnerships, where there are general partners who manage the business and limited partners who invest money but have limited liability. Next up is Private Limited Companies (LTD),

3. Private Limited Companies (LTD)

In contrast to a sole proprietorship, a private limited company functions as a complete business entity. Legally, it is considered a “juristic person,” enabling it to engage in legal actions under its registered name. In Nigeria, one person over 18 can register a private limited company.

Characteristics include a maximum of fifty members, a minimum share capital of N100,000, and separate ownership from the company. This protects owners from personal liability for company actions, limiting it to their shares.

Additionally, a private limited company operates based on a memorandum of association. However, a drawback is that its shares are not publicly traded. Next up is Public Limited Company (PLC).

4. Public Limited Company (PLC)

The public limited company is an expansion of the private limited company, ideal for large companies. Its shares are traded publicly on the stock market and must annually disclose financial records for transparency.

This type of corporation requires a minimum of two adults to register in Nigeria and operates with a share capital of N2,000,000. Banks are typical examples of such companies. Next, we have Limited Liability Company (LLC).

5. Limited Liability Company (LLC)

The Limited Liability Company LLC is a commonly chosen business structure in Nigeria, offering limited liability protection to its members and flexibility in management and ownership. Members must range from two to fifty to register an LLC in Nigeria.

The above list is the main types of businesses registered in Nigeria. 

Documents Needed To Register A Business In Nigeria

Here is a list of the required documents to register your business. The required documents include the following:

1. Notice of the registered address of the business
2. Memorandum Of Association
3. Article Of Association
4. Particulars, lists, and consent of the directors of your company 
5. The objects and business of the company must be provided
6. Statement of compliance by a legal practitioner

That is all the required documents needed for you to register your business. 

Procedures For Registering Your Business

After gathering the required documents, you can register your business. The following are the steps necessary to take when you want to register your business, and they include the following: 

1. Perform a name reservation by selecting two appropriate company names and verifying their availability through the Corporate Affairs Commission. The fee for a name reservation is #500.
2. Start registering the company using the code the Commission gave upon approval of the reserved name.
3. It is advisable to create the Memorandum of Association and other necessary documents according to the companies’ objectives for registration, with legal advice recommended. (A template is available on the registration portal).
4. Complete the registration form on the Corporate Affairs Commission (CAC) portal along with the necessary documents for submission.
5. Once the registration form is completed and the information is verified, the filing fee and stamp duty fees can be paid online through the Remita platform.

Conclusion

Starting a business in Nigeria is one of the best things that can happen to one, as a company is one of the most lucrative jobs in the country. Although it is very lucrative, you still have to run your business within the confines of the law.

For your business to run smoothly in Nigeria, you must register it with an authorized Government agency. And to do that, you must have in-depth knowledge of the kind of business/company you want to start.

This is where we come in to help you. We bring a list of the legally approved types of businesses that can be operated within the confines of Nigeria. We know that knowing these enables you to decide on which type of business you want. We will also provide you with a detailed account of everything you need to register your business and how to register your company.

So now, you have all the required knowledge on how to go about your own business in Nigeria. Having been through this article, we hope it was helpful and educative. Till Next Time.