When you eventually decide to register a business for that brilliant idea, one of the first questions likely to pop up in your mind is “how do I really get started?” In getting started, you are likely to wonder how to package the venture so that it wins the acceptance of relevant stakeholders. For example, how would you describe the venture? What name is likely to appeal to financiers, customers and just anyone whose support is required to get the ball rolling in the right direction? You probably want think a name that is unique, easily relatable and inspires confidence to the new brand. Take your time in choosing a name, because a name-change mid-stream could have an undesirable impact on the brand-equity if not managed carefully.
After a name, What next?
When you have sorted out your preferred name, the next step would be to register that name as your business identifier. This would be the name of your vehicle.
Why is the choice of a vehicle important?
Then, it is time to choose your vehicle. Let’s put it in perspective. You visit an auto mart and are presented with a vast array of vehicles to choose from, with which to accomplish any given task. My guess is your choice of a vehicle would depend on the task at hand. So, if you were going to be working in a marshy farmland, you probably would opt for a truck with a powerful engine, sturdy build and ruggedness. However, if it was a construction site and you were looking to pull down some heavy concrete boulder, you probably would fancy a bulldozer. But if you were going racing, you’d love a sport car, wouldn’t you? In just the same manner, the vehicle you choose to drive your business matters a great deal. Just as auto-makers design different vehicles for different occasions, commercial law prescribes a variety of vehicles that the entrepreneur may choose from in pursuing her objectives. You want to make the right choice, same way as you don’t want to enter a Formula 1 race with a lorry, or drive your sleek sports car on a desert safari. Simply put, you want to be careful which vehicle carries your dreams. It is very important to understand these rules as, many times, they could mean the difference between a successful business and a sad tale. So how do you know which vehicle is the perfect fit for your idea?
How do I know what vehicle is appropriate for my endeavor?
As we have stated earlier, Nigerian law provides options for the type of vehicle a budding entrepreneur may choose from in pursuing her ideas. The law also recognizes that the idea could either be a not-for-profit, or profit-driven (in fact a good majority of start-ups are set up to with profit as an objective). For not-for-profits, vehicles available include ‘incorporated trustees’, companies limited by guarantee and to some extent, cooperative societies.
For profit-driven businesses, the available vehicles include sole proprietorship, partnership (in Lagos there is a variant called the Limited Partnership), limited liability company and public limited companies and cooperative societies.
Suppose my choice is a Sole Proprietorship?
Many entrepreneurs start up their businesses as sole proprietorships, and so we will commence by examining how to register sole proprietorships.
The mode of registering your business differs from one jurisdiction to another. In Nigeria for example, the Corporate Affairs Commission (CAC) superintends over the registration of most corporate organization structures.
Assuming you are starting the business from scratch, maybe with not so much material resource, you may wish to consider registering a business name (let’s call it “Business Name”), and plying your trade under this business name until you are prepared to incorporate. (This refers to registering a vehicle with separate legal personality from the owners. The most common variant of this class of vehicles have names that end with ‘Limited’ or ‘Ltd’.) The Business Name looks like an obvious choice if you would like to opt for simplicity and a low cost profile. Not only is the Business Name is easier and cheaper to register, you really do not need a lawyer or any other intermediary to register the business name – in fact the CAC encourages promoters to register the business names themselves rather than go through middle men.
A few things to note about the Business Name:
- It would usually end with an indicator of the kind of business eg Bola Blocks, Hopewell Enterprises, Fortune Fleet, etc
- The Business Name does not create a different legal person for the business. To explain this clearly, the Ltd creates a new person recognized by law. While for example, the Ltd can own property, exercise rights, and basically lead a life different from its promoter, the Business Name is more or less the promoter’s trading name and does not enjoy a separate life.
So how do I register a Business Name?
Below are quick steps to registering your business name.
- Identify a suitable Business Name. Select a unique name. It is better to select up to three different names, as this improves the chances that at least one of them would be available.
- Reserve the Business Name. You should run a check with the CAC to confirm that someone else isn’t already making use of your preferred name, or something that sounds like it, or reads like it. This is also called an availability search. For example, the CAC is likely to consider ‘Flashpoint’ and ‘Flashpunt’ as similar, and therefore decline to register the latter if ‘Flashpoint’ is already a registered name. Here is a secret however: even if you had an identical name, the CAC may accept to reserve it, provided there are at least two words differentiating it from a name that has already been registered. So, ‘Flashpoint Integrated Services’ may be registrable even when ‘Flashpunt’ is not.
The CAC has designed a form for it called AVAILABILITY CHECK AND RESERVATION OF NAME form. This form may be purchased at any of the CAC’s offices nationwide at an average cost of N100 or downloaded free from CAC’s website. Better still, the CAC has hosted a new website: new.cac.gov.ng, where you can conduct an availability from the comfort of your device. You will however need to register following the step-by-step procedure provided on the site before accessing the availability search portal.
The CAC charges the sum of N500 for each availability search. If the search result indicates that the name is available for use, the CAC will automatically reserve the name for you, and issue a written communication that the name stands reserved for 60 days. You will need to expedite action to ensure that the registration of the Business Name is completed before the expiration of the 60 days, otherwise, you may need to re-apply for another availability and there are no guarantees that the name would be available on this second trip.
- Obtain and complete the form for the registration of a business name. This is called CAC BN-01 and titled ‘APPLICATION FOR REGISTRATION OF BUSINESS NAME’. The form may be downloaded from the CAC’s website, or purchased for about N250 from any CAC office. The form should be filled and two passport-sized photographs of you affixed to the form. The photograph should be a mug-shot, and preferably printed in colour.
- Obtain the sign-off of the Commission for Oaths: A part of the form requires you to depose to the correctness of the information supplied before a Commissioner for Oaths or a notary public, so you will probably need to visit either the magistrate or high court registries to get this done. If you reside in Lagos, there are high courts at Ikeja and Igbosere areas of Lagos. Many other states have high courts in their capital cities, at the least.
- Pay the registration fee: You can make requisite payments into designated CAC account. The current fee for the registration of business names is 10,000. The account details of the appropriate account can be obtained from the CAC. In some CAC offices, some accredited banks set up small teller centres within the CAC premises to make it easier to make payment.
- Submit the form: Submit the completed form to the CAC offices, taking care to attach the evidence of payment of the requisite fees. Do not forget to make a photocopy of the completed form and the teller, as you will be required to furnish these at when you want to pick up your form.
- Collect your certificate: Upon submission, CAC will process the application and barring any queries, issue you with a Certificate of Registration within three weeks of submission. The certificate will be accompanied with a certified copy of the application you submitted earlier. Usually, the CAC will notify you through an SMS or email that your certificate is ready for pick-up. You need to present a copy of the form submitted to identify you as the rightful person to whom the certificate is to be released.
The receipt of the certificate of registration means that you have successfully registered a Business Name.