Dear Entrepreneur,
Starting a business requires creativity and determination along with the ability to research and make key decisions. It is very crucial that you position your business to operate legally as this may impact the sustainability of the business. Its therefore important to plan carefully when starting the business in other to avoid overlooking some important legalities that might affect you negatively in due course. It is important to understand the process of starting a new venture as well as the legal requirements involved before you decide to move forward.
Create A Business Plan
In the same way that a builder utilises architectural and structural designs to ensure that a building is built to specification and is structurally solid, the process of developing and producing a business plan will help you establish whether your company will be viable and sustainable. As the saying goes, if you fail to plan, you plan to fail, this is because running a business without a business plan leaves too many things to chance. A business plan contains a description of your business, including details about how it will operate, a section on market research and marketing strategies, an evaluation of your main competitors, and several financial forecasts. If you need to raise funding for your business, it goes without saying that you’ll need to produce a strong business plan since potential lenders or investors will want to learn as much as possible about how your business will work before deciding whether to back it financially.
Register Your Business
Is it advisable to form a Limited Liability Company (LLC) or register a Business Name? Would a Limited Partnership or a Company Limited by Guarantee be appropriate for your needs? These are some critical questions you should ask yourself early on because your choice influences how your Company is taxed, whether you can obtain funding, as well as any personal liabilities you may face.
Business Names are the most common business structure because they’re easiest to form. Benefits include affordability and preferable taxation treatment, but keep in mind that your personal assets are at risk should your business fall into debt or deal with a lawsuit. A Limited Liability partnership is similar to a business Name, but it is owned by two or more people who run it for profit. Limited Partnerships are easy to form with minimal costs associated with getting started, and each person contributes their skills, labor and money in exchange for a stake in the business. There’s also a certain amount of personal liability involved in partnerships, and owners don’t always agree on what’s best for the business, which can lead to legal battles. If a partnership works best for your business, implement a partnership agreement from the beginning to minimize your risks. Limited Liability Company (LLCs) are a business ownership structure that protects shareholders’ personal assets from losses and debts. The distinguishing factor of this structure is that the shareholders (owners) are not financially accountable (limited liability) and the model offers flexibility and practicality which makes it a popular choice for entrepreneurs.
Obtain Relevant Business Licenses.
Depending on your industry, you may also be required to obtain certain permits or licenses which are required if your business involves activities regulated by a federal agency. Examples of regulated business sectors include:
- Food, Cosmetics & Drugs Manufacturing
- Oil & GAS
- Aviation
- Mining and drilling
- Radio and television broadcasting
- Courier Service
These are just some common examples and you may need to carry out research on what is obtainable in your industry .
In addition certain professions require you to obtain a professional or occupational license before you can go into business. Professional licenses allow people to legally practice as doctors, lawyers, accountants, engineers, architects, dentists etc.
Tax Registration
What are my tax requirements now that I’ve registered my company with the Corporate Affairs Commission (CAC)? This is a popular issue for new business owners in Nigeria, and the answer is dependent on a number of criteria such as the sort of entity you register, your sector, and so on. A firm in Nigeria is required to pay taxes to both the Federal Inland Revenue Service (FIRS) and the applicable State Internal Revenue Service (IRS). When you register a business, you must also register with the tax authorities (both FIRS and the relevant State Internal Revenue Service), and this marks the beginning of your commercial relationship with the tax authorities. Failure to register with tax authorities or pay your taxes may result in the closure of your business, as well as tax evasion charges.
Parting Thoughts
There are a lot of bases to cover when starting your own business, so you want to familiarize yourself with the legal requirements involved so you don’t leave yourself open to risks. Kudi Konsult is Nigerias No 1 Platform for all your Business Support Needs. On one platform you can get Business Registration (CAC), Trademark Registration, Business Plan Writing, NAFDAC Registration, DPR Registration, Money Lenders License, Corporate Profile & Logo etc