(Five Minute Read)


Incorporation of business is majorly a question or risk and growth. For businesses which are still very small in terms of revenue, growth, professionalism and risk, the need to incorporate ‘may’ not be important yet.
The larger a business grows, the greater the risk to your personal assets and the more need for protection. The choice is based on your business goals. Before deciding whether or not to incorporate your company you might want to chew on the followings:

a. Do you plan to own this business to yourself or with others

The answer to these question might guide your decision to incorporate or not. Once you incorporate, you alone cannot have control of all the shares, but that does not mean you cannot have the majority share.

b. Can you bear the restrictions and regulations that follows the incorporation of your business in Nigeria?

The government has put in place numerous Laws, which guides certain conducts of your company, the Dos and Don’ts. Company And Allied Matters Act 1990, Taxation Laws e.t.c

c. Tax

Once, you incorporate your company, it is important you pay tax. You must be familiar with all these tax Laws, the tax breaks e.t.c you must learn to pay these taxes on time so as not to contravene the law.

d. Public Disclosure and Scrutiny

Your company, upon incorporation might be subject to public scrutiny. Disclosure is a fundamental rule of incorporate companies, certain information must be disclosed and left in the public domain.

(visit www.legalify.ng to analyse your Contracts)

After chewing on these questions, your decision to incorporate may also be guided by the following importance of incorporating a company?

1. Perpetual Succession

Business, once incorpated do not die. The death of the owner or member does not make the company die or compulsorily wind up and stop operation. So if you want your company to legally have the power of perpetual succession you might want to incorporate it.

2. Transferrable shares

Companies have shareholders. These shareholders can transfer the shares to a third party or even sell it, but there are instances where the consent of the Director is needed to transfer or sell such shares.

3. Ownership and Control

The ownership and Control of a company is between the board of Director and Shareholders. The Board Of Directors are who control the management of the company while the shareholders has power to take strategic decision but it’s the board of directors that has powers of day to day running of the business.

4. Separation of liabilities

Where the business is conducted in the name of the company any resultant liability will be borne by the company, and separate from the affairs of its owners and shareholders. There are instances where shareholders or managers can be liable for negligent or fraudulent Misrepresentation.

All these are vital considerations before deciding to incorporate your business.



Please like our page
Twitter: @legalifyng
Facebook: legalifyng

Very informative post. Thanks

@lofty900 you are welcome. Please feel free to share

what if you register a company but arent making a profit or are not not yet into business (register and keep ) do you still have to pay tax?

@asalimpo from your post, there are two different questions.
1. What if you register a company but not yet making profit would it still be taxed-. Basically what the government tax is your profit, there might however be instances where the Government, believes or have proof that you are understating your profit or hiding profit or not declaring profit at all.

2. What if you register a company, but not yet into business( register to keep)-. Basically, if by that you mean registration of business name, mere registration of business name without even starting the business yet is not taxable.