When it comes to starting a new business in Nigeria, one of the first steps is registering the business name with the Corporate Affairs Commission (CAC). However, many aspiring entrepreneurs get confused about the difference between registering as an “Enterprise” versus a “Company.” In this blog post, we’ll explore the key distinctions between these two business structures and how they impact name registration.
What is an Enterprise?
An Enterprise is the simplest form of business structure in Nigeria. It is a sole proprietorship owned and operated by a single individual. The owner’s personal name is typically used as the registered business name. For example, “John Doe Enterprises or Mummy Tee Ventures” would be considered an Enterprise. An Enterprise can also include two or more persons carrying on business together with the sole aim of making profit. In this case, a uniquely formed name can be used for name registration. For Example, DigiStem Digital Enterprise or Edifice Place Ventures.
Registering an Enterprise with the CAC is a straightforward process. The owner simply needs to submit their personal details and proposed business name. There is no requirement to register as a separate legal entity.
What is a Company?
In contrast, a Company is a more complex business structure that is registered as a separate legal entity. Companies can have one or more owners, known as shareholders. The business name is distinct from the individual owners’ names.
There are several different types of Companies that can be registered with the CAC, including:
- Private Limited Liability Company
- Public Limited Liability Company
- Limited by Guarantee
- Unlimited Liability Company
Registering a Company involves more paperwork and legal requirements than an Enterprise. The registration process includes submitting the company’s articles of association, details of directors and shareholders, and paying the applicable fees.
Key Differences for Name Registration
The main difference between registering an Enterprise versus a Company name with the CAC is the level of formality and legal separation from the owner(s).
For an Enterprise, the owner can simply register their personal name as the business name. This is a fast and inexpensive process.
Registering a Company name, on the other hand, requires more time and effort. The proposed name must be unique and not too similar to existing registered companies. There are also restrictions on using certain words or phrases in the company name.
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Overall, Enterprises offer a simpler path to getting a business up and running, while Companies provide a more robust legal structure. Entrepreneurs should carefully consider their long-term goals and growth plans when deciding which option is the best fit.
Legal Structure
- Enterprise: The business is not a separate legal entity from the owner. The owner is personally liable for all business debts and obligations.
- Company: The business is registered as a separate legal entity. Shareholders have limited liability and are not personally responsible for the company’s debts.
Ownership
- Enterprise: Owned and operated by a single individual.
- Company: Can have one or more owners/shareholders.
Taxation
- Enterprise: The owner reports business income on their personal tax return.
- Company: The company files a separate corporate tax return.
Management
- Enterprise: The owner has full control and decision-making authority.
- Company: There is a board of directors that oversees major decisions.
In summary, The choice between an Enterprise or a Company ultimately comes down to the entrepreneur’s goals, resources, and growth plans. However, Incorporation of both is most paramount considering the benefits. ASC is known for her best delivery in Accounting, Tax, Advisory and Consulting Services. We are accredited so you can always reach us to get started.
