One of the major differences between a business name and a company, is that they technically mean different things. In the financial realm, a business is simply a set of activities that revolve around making profit. On the other hand, a company is an abstract entity which is legally allowed to carry out business activities.
In other words, a business is just those set of things you do, when you intend making some cash, while a company is like another human being carrying out business activities.
This further means that if a business run by a company falls into financial debt, the company (not you) would be responsible for repaying up the debt. And if the company doesn’t have enough to pay off the debt, the person being owed may end up not getting all their money back.
However, if a business that is being run by a person (and not a company) gets into debt, the person who owns the business would be expected to settle to debt, even if this means their house, cars, and other properties would be collected and sold, to pay off the debt.
In short, a company is like creating a servant you can use to carry out business. And if the servant (company) gets into financial debt, your servant gets punished, not you. However, this is not to encourage people to take advantage of this. Rather, companies are a way of ensuring you do not lose everything you have built, to some business problem.
Another major difference between a business name registration and a company, is that when trying to register a business name, it is very possible to avoid getting any help from a lawyer. The process is quite straightforward and easy. And if you can pay enough attention, you shouldn’t fall into any problem.
However, registering a company would almost certainly require help from a lawyer. In fact, it is recommended you do not go about this without a lawyer, unless you happen to be a lawyer yourself.
When registering a business name, you would be asked to provide your home address. But when registering a company, you would not only be asked to provide your home address, you would also be asked to provide the physical location of your company. In other words, if you plan creating a company, one of those thing you would need, is a building here in Nigeria.
The registration price for business name and company differ. As of the time of writing of this article, registration of a business name is N10,000. However, this does not include the miscellaneous fees you would have to pay, during the registration process.
Company registration on the other hand requires more money. And the exact amount you would be paying, would be based on the kind of company you are registering. You can head over to the CAC website, for details.
As we have indirectly stated during our discussion of the first difference between a business name and company registration, one of the differences between the two of them is liability. When you register a business name, your liability is very high. In other words, you could lose your house, car, and other properties to it.
However, if you register a company, you can protect yourself from serious financial liability. In other words, if you have enough money and time, registering a business is a thing we would recommend to anyone.
There is another major difference between a business name and a company registration. When you register a business, you are exempted from paying tax. In other words, if your monthly profit is N600,000, then all that N600,000 may go to your pocket.
However, if your run a company, you are very likely to pay tax. However, how much task you would pay, would depend on what type of company you run.
We stated earlier that anyone who has enough time and money should opt in for a company registration and not a business registration. Even though one of the reasons for this, is to protect you from financial liability, financial liability is however not the only reason.
Another reason why registering a company might be preferable is that companies are able to carry out some kind of financial transactions a business can’t. If you just intend running a small business, then this should not be a problem. But if you intend running a pretty big business, we recommend you opt in for a company.
Going public enables a business to raise a lot of capital easily. However, there are a number of requirements for a company to go public, and one of these requirements is the need to have registered a company, and not a business name.
Many Nigerians have no intention of taking a company public, so they might still have to spend some time thinking whether they should register a business name or a company. However, for a Nigerian who intends taking their company public some day, you do not have to think twice, before deciding a company to be what you need to register.
Ease of Creation
Ease of creation is one of those things a lot of people take into considering, when making this decision. And in terms of ease, a business is hands-down more easier to create, than a company.
Ease of Running
If you are a one-man team, and you also do not have enough capital, then what you should probably register is a business.Running a company requires man-power a single person can’t adequately provide, so a company may not be ideal for a one-man team.
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