A few days ago, a client called sounding frustrated.
“Abeg,” he said, “can I just cancel this Limited Liability and register a Business Name instead? I heard this new FIRS tax wahala coming next year will be too much.”
He’s not the only one.
Since talk about the new tax reforms started circulating, we’ve received several calls from business owners asking the same thing. Some are worried about compliance costs, while others are trying to understand what the new rules actually mean.
The truth? The right structure for your business depends on what you want to build — not what others are running away from.
Let’s look at both sides clearly.
Business Name — Simpler, Faster, More Personal
A Business Name is the easiest way to get started. It’s affordable, quick to register, and perfect for small businesses, freelancers, traders, or anyone testing a new idea.
You can open a business bank account, issue receipts, and start trading almost immediately. The accounting is straightforward, and you don’t need an elaborate setup.
However, a Business Name means you and the business are one and the same. That has advantages — more flexibility, less paperwork — but it also carries risk. If the business owes money or faces a dispute, your personal property can be affected.
From a tax point of view, you’ll be assessed under Personal Income Tax (PIT). This works well if your earnings are moderate, but as profits grow, your tax bracket grows too. You also can’t deduct many business expenses, so managing records becomes important.
In short, a Business Name is great if you’re starting small, keeping things lean, or prefer full control without too many legal layers.
Limited Liability Company — Structured, Scalable, More Demanding
A Limited Liability Company (LLC) is a separate legal entity. It can own property, hire staff, sign contracts, and get loans — all in its own name. This protects your personal assets if anything goes wrong.
But that separation comes with extra responsibility. You’ll need to keep proper books, file annual returns, and comply with CAC and FIRS reporting.
In return, you gain structure, credibility, and room to grow. You can bring in partners, investors, or shareholders. You can deduct legitimate business expenses before paying Company Income Tax (CIT).
However, it’s not for everyone. If you’re still experimenting or managing small cash flows, the paperwork might feel like overkill.
The New Tax Reality
With the new tax reforms taking effect soon, both structures will face greater scrutiny.
FIRS is digitising compliance — real-time reporting, VAT tracking, and tighter data systems.
For Business Names, this means less room for mixing personal and business income. For Limited Companies, it means more reporting and documentation.
Neither is “tax-free.” Both require good record-keeping and discipline. The difference lies in how transparent and structured you want your operations to be.
So, before you switch or downgrade out of fear, look at the bigger picture. The tax conversation shouldn’t drive your decision — your vision should.
Choosing What Fits You
If you’re just starting out, a Business Name may be perfect — low cost, simple, and flexible.
If you’re planning to scale, attract investors, or build a brand that lasts beyond you, a Limited Liability structure offers more room to grow.
The key is honesty. What stage is your business in? What level of risk can you handle? What’s your long-term goal?
Final Word
At Kudi Konsult, we believe there’s no one-size-fits-all structure. What matters is alignment — between your business goals, your resources, and your appetite for compliance.
Both Business Names and Limited Companies have their place. One gives you speed; the other gives you structure. One is lighter; the other lasts longer.
Whatever you choose, choose with understanding — and make sure your books, taxes, and systems can stand the coming changes.
Because in this new business era, the best structure isn’t the cheapest or the trendiest.
It’s the one that truly fits where you’re going.
