Are you a business owner looking forward to registering your brand soon with the CAC?, before carrying out CAC registration, it is very paramount to understand the differences between business name and company. In this guide, you will discover the major advantages of a company over a business name certificate.
In a recent article, we could understand that; one of the major functions of the Corporate Affairs Commision is to legalize and certify businesses in Nigeria. As a business owner, you may wish to choose among the categories of registration (business name or company).
It becomes very vital to understand the benefits of CAC and why you must register your brand to enjoy the smooth running of your business.
All registered business owners stand a chance to enjoy certain benefits but there are major benefits and advantages of having a company name registration certificate over a business name certificate.
Before we proceed into the advantages of a company over a business name certificate, let’s quickly understand the following abbreviations that separate companies and business names;
BN = Business Number
RC = Registered Company Number
Both RC and BN appear on the certificate on completion of the registration. e.g BN: 221555 or RC:245566
Before looking at the advantages, let’s quickly highlight the benefits of both
- Both Certificates can be used to open a corporate bank account
- They can both be used to acquire government grants
- Both protect the liability and the business operation
- One person can form and register both business name and company
Advantages Of A Company Over A Business Name Certificate
Dear business owners, it’s important to understand clearly, the difference between registering your brand either as a business name or a company.
If your brand is already registered as a company; just know you already have an edge over someone with a business name certificate.
Below are the major advantages of a company over a business name certificate
1. An Edge With Government Grant
As a business owner, if your brand is registered as a company you will always have an edge over someone with the business name when applying for and acquiring grants from the government.
Most times when the Federal Government makes the availability of grants to help support business owners, they make it clear how much registered company owners will benefit and how many business names will benefit.
In the end, those with company certificates are usually favoured with large sums ahead of business names. Unfortunately, business names sometimes don’t stand to have a chance.
In a scenario where people are applying for a loan of 2 Million with registered company certificates, you can not tender a business name certificate and expect to be favoured, they could just fling your certificate.
Conclusively, when registering your brand to apply for and acquire government grants and loans in larger sums, it is advised you register as a company and not a business name.
2. Ability To Accommodate 10 Nature Businesses Under 1 Company Name
Did you know you can register 10 businesses under 1 company name with CAC? interestingly, CAC makes it possible to integrate 10 nature of businesses under one company name, this is not possible with business names.
Let’s say you have a boutique, a POS shop, a dry cleaning shop, a computer centre, barbing salon, etc… you can register and integrate all these 3 names to form a company under one company name.
This is a major advantage of a limited liability company over the business name that you can always stand to benefit from. However, if you wish to register 10 nature of businesses under one company name, caution should be taken in selecting a suitable enough to accommodate all the nature of businesses without confusion.
For example, you cant have a name like ZICCO OIL & GAS LTD and integrate the nature of businesses under it like a boutique, barbing saloon, POS shop etc… it won’t just make sense.
However, ZICCO COMPANY ENTERPRISES or ZICCO NIGERIA LTD would stand out.
Conclusively, you should ensure always make research to be sure if your company name has not been used before.
3. Company Size
Generally, all company registration certificates imply that the business is larger than regular business names. Company registration is done for larger businesses while those whose businesses are just small or starting can always go for business names.
4. Company Certificates Comes With TIN (Tax Identification Number)
According to the innovations and integrations from CAMA 2020, all company registrations now come with TIN certificates.
As a business owner, once you register your brand as a company; the certificate will come with a default TIN. This will save you the stress of going to the FIRS office in your locality to get it done manually.
However, business name certificates do not come with default tax Identification numbers. If your brand is registered under a business name, you will have to process a Tax Identification number via an expert and extra charges could arise.
Conclusively, getting a free TIN along with a registered company certificate is a huge advantage for a company over the business name certificate.
5. Company Gives Room For Larger Business Operations
In terms of business operations, company certificates always have an edge over business names. Usually, when registering a company, there are things you require such as; share capital of the company, directors of the company, shareholders and share capital distribution.
It makes it possible for a company to carry out more advanced and complex business operations, thereby, keeping business names behind.
6. Company is Continuous
Business names are usually sole proprietor in nature and cases of death; there would be no legal documentation certifying his parents, family or wife to take over the business.
The company on the other hand provides room for 2 people above to form and register a company (even though a single individual can now form and register a company).
There is also a legal document certifying the continuity of a company, the person with significant control of the company is also stated, and a well-detailed shareholder agreement is taken down.
Conclusively, the legal documentation of a company gives room for continuous operations of the company effectively. However, negligence shouldn’t be exercised towards filing Annual Returns.
7. Company Ends With Limited or LTD
It is a rule that all company names must end with either Limited or Nigeria Limited (abbreviated LTD or NIG LTD).
On the other hand, business names do not end with Limited.
Businesses That Can Only Be Registered As A Company in Nigeria
Did you know there are certain businesses in Nigeria that business names won’t work for their registration? You will have to register them as a Limited Liability Company.
Below are businesses in Nigeria that can only be registered as a Limited Liability Compan and not Business Name
- Travels and Tour Agency
- Import and Export Trade
- Oil and Gas
- Security Services
- Savings and Loans
- Air Transport
And many more…
- Read Also: How To Register an NGO in Nigeria
Connect with us @ Legacy Benjamin Consult for a Smooth CAC Registration via WhatsApp at 08066108299
Conclusion: Advantages Of A Company Over A Business Name Certificate
Conclusively, If you are planning of registering your brand, I hope this guide has helped with highlighting the major advantages of a company certificate over the business name and the kind of businesses you should register as a company.
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