Not many SME owners know about the local laws regarding business in their region. Starting a business is undoubtedly exciting. However, the numerous processes involved in getting your business up and running can prove to be challenging- from creating a business name, business plan, understanding the market, amongst other things.

One important aspect that SMEs in Africa must consider is the legal rules and regulations involved in starting their business.

Local laws are laws within a city, town, village or local government. Understanding the local laws within your state will help you create your own rules and regulations within your organisation and help you run your business much more efficiently. It also gives you the privilege to partake of benefits within that locality.

Most importantly, it will help you avoid costly mistakes that can negatively affect your business plans.

Some SMEs in Africa jump into starting up their business without considering local laws and regulations. This has led to cases from paying fines to more adverse cases like a total shutdown of such businesses. Understanding your local laws will allow you to run your business legitimately within that locality.

Areas where local laws are important to SMEs
Business Structure
One of the major things to consider before starting your business is your business legal structure. This will affect how you run your business. Common business structures include sole proprietorship, partnership, public limited liability company and private limited liability company.

Understanding your local laws will help you check for business filings that apply to your business structure within your locality. It will also help you update necessary documents and become law compliant.

Taxation
Paying taxes is important for every business owner. Understanding your local laws and regulations will help you know what types of taxes your business qualifies for.

In Nigeria, every business must register as a taxpayer and obtain a tax identification number. Business names are required to pay personal income tax, while corporate organisations pay companies income tax and withholding tax.

Business Location
It is important to understand your local laws and regulations within your location. For example, in Nigeria, businesses are required to pay a business premises registration levy in the first year of doing business and even a renewal every other year. The rate of fees might vary depending on the location. Your business might also need a permit for other environmental laws like water quality and treatment.

Business license
Understanding your local laws will educate you on which licenses you will need to get for your business. It is important to carry out research to know which licenses apply in your industry. For example, if you plan to open up a restaurant, you might have to register with the local governing body for food standards.

There are institutions and bodies within your state that are saddled with the responsibility of enforcing these laws.

In Nigeria, the government set up a few institutions to monitor and ensure compliance with the requirements of laws and regulations concerning businesses.

These institutions include the Corporate Affairs Commission, the Federal Inland Revenue Service, the Inland Revenue Service, the National Agency for Food and Drug Administration and Control, the National Information Technology Development Agency and the Standards Organization of Nigeria and many others. There are also regulations monitored and enforced by local governments.

Continue reading here... https://www.sme360.ng/2021/04/07/why-it-is-important-to-take-your-local-laws-seriously-before-starting-your-business/