Legal Requirements to Start a Company in Nigeria

Starting a company in Nigeria goes beyond choosing a name and opening an office. There are legal steps every entrepreneur must follow to avoid government penalties, account freezing, license issues, or business closure. Many small and medium businesses skip the proper setup because they assume it’s only for big brands. Later, problems arise when they try to open corporate bank accounts, access loans, register with regulators, apply for grants, or pitch to investors.

Types of Company Registration

Before starting, decide on the legal structure that fits your plans. In Nigeria, the Corporate Affairs Commission (CAC) allows different company categories.

Common types include:

• Business Name (for SMEs, freelancers, small brands)
• Limited Liability Company (LLC or LTD)
• Public Limited Company (PLC)
• Incorporated Trustees (for NGOs, churches, associations)
• Unlimited Company
• Company Limited by Guarantee

Your choice affects taxation, ownership, liability, and compliance requirements.

Step 1: Choose and Reserve a Business Name

Start with two name options in case the first one is taken. A name search is done through the CAC online portal. Avoid names similar to existing companies to prevent rejection. Once approved, the name is reserved temporarily to allow documentation and registration.

Step 2: Prepare Required Information

Company registration requires clear details. You will need:

• Full names of owners or directors
• Email addresses and phone numbers
• Residential addresses
•  Passport photographs
• Valid ID (NIN Slip, International Passport, Driver’s License, or Voter’s Card)
• Nature of business
• Shareholding structure (for limited companies)
• Company secretary details (for certain company types)

Information errors can lead to delays during approval.

Step 3: Register with the Corporate Affairs Commission (CAC)

CAC registration can be done online or through an accredited agent. For a Limited Liability Company, at least one director is allowed. The process involves submission of forms, IDs, object clauses, and payment of registration fees. Once approved, you receive a Certificate of Incorporation and a CAC Form containing director/shareholder details.

Step 4: Obtain a Tax Identification Number (TIN)

TIN is needed for banking, contracts, and compliance. Some CAC registrations now come with an automatic TIN, while others require separate application at the Federal Inland Revenue Service (FIRS). Without TIN, you cannot open a proper corporate account or file annual taxes.

Step 5: Register for VAT (If Applicable)

If your company sells products or services, you may need to register for Value Added Tax. Businesses earning above the threshold are expected to collect and remit VAT monthly. VAT registration is handled by FIRS and helps avoid tax-related sanctions.

Step 6: Open a Corporate Bank Account

A company account increases credibility and makes transactions traceable. Most banks will request:

• CAC Certificate
• Form CAC 1.1 or Status Repor
• Tax Identification Number
• Valid ID of directors
• Passport photos
• Utility bill
• Board resolution (for some company types)

Some banks also run compliance checks before account activation.

Step 7: Obtain Industry Licenses and Permits

Depending on your sector, you may need regulatory approvals. Some examples:

• NAFDAC – for food, cosmetics, drugs, bottled water
• NCC – for telecom service
• CBN – for fintech or financial institutions
• SON – for products and manufacturing
• COREN – for engineering companies
• LASAA – for advertising in Lagos
• DPR – for oil and gas services
• NUJ Registration – for media platforms

Skipping industry permits can lead to fines or shutdowns.

Step 8: Register Business Premises if Required

Some states and local governments require Business Premises Registration for physical offices. A certificate is issued after inspection or documentation. Industries like manufacturing, trading, hospitality, and transportation may also require local council approvals.

Step 9: Comply with Tax and Regulatory Filings

Once the company is active, regular filing is required to stay compliant. Obligations include:

• Annual CAC returns
• VAT remittance
• Company income tax
• PAYE for employees
• Pension registration (if applicable)
• NSITF registration

Non-compliance attracts penalties and blacklisting.

Step 10: Prepare Legal Documents and Policies

Some documents strengthen business credibility and prevent disputes. These may include:

• Partnership agreement
• Shareholder agreement
• Employment contracts
• Service agreements
• Terms and conditions
• Privacy policy (for digital platforms)

These can be customized or drafted by a legal expert.

Post-Registration Tips for New Companies

After meeting legal requirements, the next steps help position the company for branding and growth. Important actions include:

• Create a professional website
• Open social media business pages
• AclSecure a trademark for the business name
• Open a corporate account with online banking
• Set up accounting and bookkeeping
• Register for pension and health schemes if you employ staff

Common Mistakes Nigerians Make When Starting a Company

• Registering a business without TIN
• Using personal accounts for corporate transactions
• Ignoring VAT and tax obligations
• Operating without industry licenses
• Mixing personal funds with company money
• Choosing the wrong business structure
• Skipping annual CAC returns

Avoiding these issues protects your company from future restrictions.

Cost of Starting a Company Legally

The total cost depends on the company structure and regulatory permits. Expenses may include:

• Name reservation
• Registration fee
• Stamp duty
• TIN processing
• Licensing feesLegal documentation
• Agent charges (if used)

A small business name costs less than a Limited Liability Company, while companies that require government licensing spend more.

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